American Airlines Rainbow Team

and its Strategy to Target the LGBT Market

MKT60010 Marketing Management

Date: 14 March 2017

Executive Summary

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This case study discussed the incident happened in 1993, where a group of LGBT
activists returned from Washington after a Gay Pride March LGBT Equal Rights
Liberation. The unpleasant experience propelled the LGBT boycotted, and rejected
the airlines. AA realised the crisis and anger caused by its crew member had gone
viral and took the immediate response, released a apologies statement to the LGBT
community. AA-pledged their commitment to establishing a friendly travel
environment by true respect and recognised the LGBT segmentation in the market.
The initiatives by its Rainbow TeAAm and its LGBT employees in handling and
overcome the various issues and challenges in targeting the fast-growing LGBT travel
market managed to make a U-turn for AA to become the most popular airline among
the LGBT market. The case study ended with the strategies adopted by AA in
maintaining and positioning its branding and market in this lucrative segment. Today,
the key to success of American Airlines is as a company is being an airline
customers want to fly, where employees want to work and shareholders want to
invest. Its about being an airline that embraces diversity and creates an
environment of mutual respect.

TABLE OF CONTENTS

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EXECUTIVE SUMMARY ........................................................................................... 2

1. INTRODUCTION
1.1 Background - How it all started ................................................................ 4

1.1.1 The pillows and blankets incident. ........................................... 4

1.1.2 The IV Incident ........................................................................... 4

1.2 A U-Turn from the Crisis ........................................................................... 5

2. MARKET SEGMENTATION

2.1 LGBT Community Relations Plan ............................................................. 6

2.2 Market Segmentation ................................................................................ 6

2.2.1 Demographic ............................................................................. 6

2.2.2 Psycho-graphic ......................................................................... 7

2.3 Dimensions of Service Quality (SERVQUAL) ............................................ 8

2.3.1 Reliability .................................................................................... 8

2.3.2 Responsiveness ........................................................................ 8

2.3.3 Empathy ..................................................................................... 8

2.3.4 Assurance ................................................................................. 9

3. MARKETING STRATEGY
3.1 Sponsorship ............................................................................................. 9

3.2 Website..................................................................................................... 9

4. OPPOSITION ....................................................................................................... 10

5. CONCLUSION ..................................................................................................... 10

REFERENCE ........................................................................................................... 12

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1. Introduction

American Airlines, Inc. (AA) with its global headquarters in Fort Worth, Texas, USA
was founded in 1930 by the conglomeration of 82 small airlines through acquisitions
and reorganisations. Since 1994, for close to two decades, AA has been a leader
airline in implementing fair-minded policies and practices to its lesbian, gay, bisexual
and transgender (LGBT) employees and customers. In the early 1990s, AA
experienced two major crises, which angered the LGBT activists leaders and defiled
the airline's reputation, which lead the organisation to reexamine its policies and
procedures(Ciszek 2016).

The crisis management turned American Airlines to be the first major airline in the
world to had recognised sexual orientation and gender identity in the workplace and
market segment with the implementation of non-discrimination policies; and also the
first major airline having a recognised LGBTs employee group. In 2000, AA became
the first major airline to offer same-sex domestic partner benefits and endorse the
Employment Non Discrimination Act (2008). The diversity and integration in the LGBT
national marketing and sales team - the Rainbow TeAAm brought American Airlines
to be the first Fortune 100 company to have a mainstream vertical market in the
LGBT community and supplier diversity program (Debapratim, 2009).

1.1 Background - How it all started -

1.1.1 The pillows and blankets incident.

In June 1993, many LGBT travellers from various parts of US travelled to Washington,
D.C.to join in a gay pride march LGBT Equal Rights Liberation. Due to the number of
LGBT activists on board in one of the returning flight; one of the crew members on
board sent a fax to the ground staff. The request was thorough change or having a
systemically sanitised of the linen used by the activists; for the fear that the next
passengers who in contact with these would contract HIV. The ground crew received
the message, transcribed as: inbd crew req complete chg of all pillows blankets due
gay rights activists group onbd (Ciszek 2016). Unfortunately, the internal memo was
leaked through a media Associated Press News-wire (see Figure1)

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Figure 1. American Airlines Apologies Press (Fairbank,1993)

1.1.2 The IV Incident

Several months after the incident, a late-stage of AIDS-related illnesss passenger

was removed from an AA flight as he had violated AA general medical policy. At that
time, AA only allowed IV to be administered on board by qualified medical
professionals. As a result, the airlines was protested by LGBT activists, including
AIDS activists, leaders of AIDS service organisations, workplace policy groups, and
medical research organisations. This backlash garnered negative national and
international publicity for the corporation(Gallagher 1993, p. 31).

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1.2 A U-Turn from the Crisis

These two incidents had sullied AAs reputation and aroused anger emotional of the
LGBT including activists, customers, and employees. The Management took
immediate approach engaged an approach by having a crisis communication and
engagement with LGBT (see Figure 2).

Figure 2: Crisis communication and activist relations (Ciszek 2016)

2. MARKET SEGMENTATION

2.1 LGBT Community Relations Plan

The common perceptions, cultural and social attitudes towards LGBT people, are
complex; they always targeted for exploitation and abuse because of their social
stigma and weak social positions (UNDP 2014).

The crisis put AAs corporate image and public perception on the line. AA decided to
partner with a consulting firm - Witeck-Combs Communications who is specialising in

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LGBT workplace issues and marketing relationship. After a few meeting and
investigation, AA agreed to build a meaningful relationship with LGBT by honest,
transparent, and authentic communication with the fellow LGBT individuals and LGBT
professionals. At the same time, they also consulted the gay and lesbian
organisations and AIDS organisations, asking activists how to rectify their wrongdoing
in this incidence(Ciszek 2016).

In 1994, GLEAMs was formed by AA LGBT s employees with a mission to work with
the management and its allies and other employees to accept and support all
company diversity policies and programs. AA-pledged to diversity, through a broad
range of community, cultural and employee initiatives. AA expanded Diversity
Leadership Strategy, Supplier Diversity program, Careers, and Awards and
Recognition for LGBT (Smikle 2008).

2.2 Market Segmentation

There are four groups of segmentation variable to slice up the market such as
demographic, geographic, psychographic and behavioural. LGBT travel purchase
behaviour is mainly influenced by the demographic and psychologic.

2.2.1 Demographic

A market research by Paisley's group showed that LGBT people are travel more trips
than the average person. The demographic variables identified is that lesbians and
gays tend to be in dual-income households with no children (Kovner 2015). According
to Macias, LGBT consumers react more favourably when an ad is tailored to the
LGBT community. Most marketing ads that targeted for LGBT now tend to be
premium and luxury that see outreach to gays as an opportunity to capture the
predictable sales pattern (Halpert 2014).

2.2.2 Psycho-graphic

In the early 1990s, LGBT employees were not overwhelmingly to open about their
sexuality in the workplace. There were no federal laws, or few state and local statutes
existed to protect the rights of LGBT people. They also not covered with domestic
partner benefits, medical benefits that included same-sex partnerships. Only a few
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corporations began to offer health benefits to same-sex couples, but largely
management did not recognise the importance of extending equal employment
benefits to LGBT employees(Cahill 2006).

2.3 Dimensions of Service Quality (SERVQUAL)

2.3.1 Reliability

AA made the decision to see eye-to-eye with LGBT public and communicated with
LGBT communities through honesty and trust. AA Corporate Communication
Department acknowledged their wrongdoing by issued a formal apology in the
mainstream media press. They also presented plans for fixing the issues(Ciszek
2016).

2.3.2 Responsiveness

AAs management recognised the importance to educate its staffs about the HIV and
AIDS. At the same time, the corporate no-IV policy also reviewed and was revised
to permit personal IV use on board. AA responded to this crisis by partnered with
HIV/AIDS organisations including:

i) National Association of People With AIDS

ii) National Business Coalition on AIDS and

iii) American Foundation for AIDS Research

They worked hand-in-hand with the organisations to demonstrate corporate

awareness of the LGBT public, fundraising and flying panels. They also implemented
new corporate non-discrimination policies that cover sexual orientation and offering
health benefits to employees' same-sex partners (Friess 2005).

2.3.3 Empathy

Customers are no longer settling as a one-size-fits-all service experience. Perceived

service climate and employee empowerment have a larger impact on two key
constructs in identifying an opportunity to adapt a service, empathy and anticipation of
customer need (Kelly et al.2014).
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AA showed their strong support towards the activist group during the 25th anniversary
Stonewall March and Pride celebrations in New York City, they provided funding for
air transportation for special guests, including LGBT leaders and speakers(Ciszek.
2016).

2.3.4 Assurance

Crandalls letter stressed that AA would be implementing a very active program of

AIDS education for employees that conduct with the American Red Cross (Tiemeyer
2013). AA implemented the corporate non-discrimination policy that included sexual
orientation. This move made AA spearheaded the U.S. airlines to contain the sexual
orientation as a protected classification in the aviation industry. In conjunction with the
new policy, AA started the new policies by education and training program. A 10-
minute training video was developed about the significance and niche of the
Stonewall March to LGBT. AA Senior Vice President of Operations Bob Baker, (later
Vice-Chairman) noted that its LGBT employees would be participating in the parade
and articulated the importance of the parade and the celebration to the organisation.
He stressed that the LGBT travellers who may have HIV/AIDS that would be travelling
via AA deserve to be respected (Ciszek 2016).

3. MARKETING STRATEGY

3.1 Sponsorship
LGBT community is a lucrative market and brand. Most travel companies are catering
more to the needs of women traveller, and also the minorities and the more narrow
niche of gay travellers. In 2005, AA initiated its marketing strategy in the LGBT
community by providing sponsorship deals with Gay and Lesbian Chambers of
Commerce (Michael 2006).

3.2 Website

External and internal forces affect the creation of an LGBT Web site. On November
22, 2005, AA launched the first microsite-AAVacations.com/Rainbow, a new travel
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website targeted at LGBT travellers. The subsequent year, on 21 October 2006, AA
launched the AA.com/Rainbow web. This American's award-winning Website, is a
user-friendly with easy access to check and book fares, with additional personalised
news, information and travel offers.

4. Opposition

AA also faced pushback from conservative political activists and religious group after
implementing policies aimed at inclusion and protection of LGBT publics.
DenounceVAnita Bryant, a singer and former spokeswoman for the Florida Citrus
Commission, denounced that AA conducting an immoral benefits program which
leads to A paedophilia market (Southern Poverty Law Center, 2005, para. 62).
However, another 19 conservative and religiously affiliated organisations wrote a
public letter to CEO Bob Crandall, opposing its corporate policies toward LGBT
people and claiming that AA was promoting homosexuality culture. In March 1998,
AAs management felt that it was a set-up and convinced that the critics were not
picking sides in any culture war The next day, AA replied with a statement that they
did not make such commitments. Despite the letter and ad, threaten from the boycott,
AA ensured the LGBT that they would stay on non-partisan and maintained on their
business direction and objectives. The newly implemented non-discrimination policies
and procedures remained in place (Witeck & Kincaid, 2011).

5. Conclusion

AA understands the issues and challenges in their market segmentation, targeting

and positioning. AA also offered the LGBT travellers and employees same-sex
domestic partner benefits, non-discrimination policies, and first to have a recognised
LGBT employee resource group. With the ongoing competition in the travel industry,
changes in the nations political and social climates, LGBT is becoming a hot topic in
the travel sector. AA is tapping the LGBT segment dedicated to promote public
understanding of gay and lesbian issues through innovative education and
communication strategies. AA has worked hard to earn a good reputation for fairness,
inclusion and equality.

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To maintain the market segment and spearhead of the LGBT travel industry, AA
needs to diversify its target niche market not only to LGBT, but also to multi-ethnic
groups and international travellers. Social media is an important tool to tackle the
market; AA may create some excitement and shareable moment portal to its
customers; which enable them to communicate the value of the travel experiences
among their friends and families; exchange of value resources such as
accommodation, point of travel or special events.

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References

Ciszek, E., A Corporate Coming Out: Crisis Communication and Engagement with
LGBT Publics.. Case Studies in Strategic Communication, 5, article 5.

Witeck, R., Combs, W. & Books24x7, I. 2006, Business Inside Out : Capturing
Millions of Brand-Loyal Gay Consumers, Dearborn Trade, A Kaplan Professional
Company, Chicago.

Gallagher, J., 1993. Flight risk. The Advocate, pp.31-32.

Michael David C. Tan, 2014. UNDP, U., 2014. Being LGBT in Asia: The Philippines
Country Report. Bangkok: USAID.

Ken Smikle, Editor and Publisher, Target Market News, April 22, 2008, American
Airlines Expands Diversity And Inclusion Information. Retrieved from:
http://www.targetmarketnews.com/index.html

AMERICAN AIRLINES ISSUES STATEMENT ON FLIGHT 701 INCIDENT 1993, , PR

Newswire Association LLC.

McBrearty, J. 2007, Policy Issues Affecting Lesbian, Gay, Bisexual, and Transgender
Families, American Library Association CHOICE, Middletown.

Tiemeyer, P., 2013. Plane Queer: Labor, Sexuality, and AIDS in the History of Male
Flight Attendants. Univ of California Press.

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Kovner, G. (2015, Jun 22). Sonoma county taps into LGBT tourism market with annual
gay wine weekend. TCA Regional News Retrieved from
https://search.proquest.com/docview/1690205707?accountid=14205

Friess, S. 2005, Corporate America's marketers embracing LGBT niche, e5 Global

Media, LLC, New York.

Halpert, J. 2014, "Tiptoeing out of the closet; Will Chevrolet's bold advertising
breakthrough lead to more spots targeting LGBT consumers?", Automotive News, vol.
88, no. 6620, pp. 19.

Wilder, K.M., Collier, J.E. & Barnes, D.C. 2014, "Tailoring to Customers Needs:
Understanding How to Promote an Adaptive Service Experience With Frontline
Employees", Journal of Service Research, vol. 17, no. 4, pp. 446-459.

LUONGO, M. 2006, Breaking a Travel Stereotype: Women, Minorities and Gays

Make Business Trips, Too, New York Times Company, New York, N.Y.

Anonymous 2008, American Airlines: American Airlines Remains Travel Industry

Leader On HRC Corporate Equality Index; Airline Receives Top Score for Seventh
Consecutive Year; One of 13 U.S. Corporations to Achieve 100 percent since CEI
Inception, Normans Media Ltd, Coventry.

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