MGM Grand Air Breaks News of Coach-Class Seats to Top-Flight Fliers

No passengers choked on their caviar. And none fell out of their specially designed sleeper seats. But there was a hushed mumbling among pampered passengers on a recent MGM Grand Air jet from Los Angeles to New York. They were among the first to learn that the airline that had prided itself on first-class-only service was about to introduce--horror of horrors--coach class.

What next? Vinyl handbags at Gucci? Brass rings at Tiffany? Or maybe a Rolls-Royce with an optional V-6?

Top executives at MGM Grand Air knew that breaking the news to customers would be mighty tricky. So they carefully tempered the announcement in a specially made, four-minute video that raved about all the improvements planned for the company's two new jets. More air phones. More first-run films. Even fax machines. And oh, yes, 40 seats reserved for coach-class passengers.

"We've spent 1 1/2 years looking at this change," said Charles L. Demoney, president and chief executive of the luxury airline. "One can only hope we've made the right decision."

And how to make this change?

"Very skillfully," said Leigh Kimball, director of sales and marketing. "You have to begin to isolate the two classes at curbside." That is, give them separate lounges, separate security checkpoints and even separate entrances to the plane.

Bear in mind, MGM Grand Air has a list of regular passengers that looks more akin to the guest register at the Ritz-Carlton. Michael J. Fox, Steven Spielberg, Eddie Murphy--and, of course, Madonna--all regularly ride the hoity-toity airline that some call "Snob Air." Now, the biggest names in Hollywood will soon be sharing airspace with a bunch of nobodies.

Welcome to the harsh realities of the frugal '90s. On Monday MGM Grand Air broke a new TV ad campaign that specifically contrasts its highly polished coach class with that of its rivals. The service is more akin to business class than coach, but it has a full-price coach fare of $623 one way. It is called "grand class coach"--hoping to attract the growing number of executives whose companies no longer permit first-class travel.

The looming question is: Can MGM Grand Air broaden its market without scaring away wealthy customers? Certainly, others have tried similar actions in recent years. Mercedes-Benz and Cadillac introduced less expensive models. Neiman Marcus and Nordstrom opened stores that carried their leftover merchandise at discount prices. Designers ranging from Anne Klein to Calvin Klein broadened their appeal with moderate-priced lines. And even American Express cards are now commonly carried by the very middle class.

Executives from several companies that have broadened their markets say they have done so without tarnishing the company names.

Neiman Marcus, for example, has several Last Call for Neiman Marcus stores--named after Neiman's famous sales--that sell leftover merchandise at steeply discounted prices. The store in Austin is so popular, in fact, that the city mentions it as a highlight in its tourism literature. "It hasn't tarnished our image," said Pat Zajac, manager of media relations for Neiman Marcus. "It's improved it."

Long before Mercedes-Benz introduced its lower-priced 190-series cars in 1983, the company interviewed hundreds of longtime customers to find out if they felt it would cheapen the Mercedes name. Most said it would not--as long the quality of the new line remained high.

The trick to attracting buyers of $29,000 Mercedes models, without scaring off those who prefer the $62,000 versions, "is to have enough distinction between the car lines, but also enough family resemblance," said A. B. Shuman, manager of public relations at Mercedes-Benz of North America. Already, the 190 series accounts for nearly 20% of the company's sales.

Experts who specialize in creating images for companies generally say fiddling with an upscale image can be risky.

"There's a certain appeal to snobbery, particularly in Los Angeles," said Robert Kahn, executive director of the Los Angeles office of the corporate identity firm, Landor & Associates. "If people perceive this as a downgrading of MGM's product, it could really hurt their business."

Added Alan Siegal, chairman of the large New York corporate identity firm, Siegal & Gale Inc., "It may look like they're compromising their product."

An executive from the agency that creates ads for Rolex watches says the Rolex cachet would be lost if the watchmaker were to introduce a second-tier Rolex. Similarly, said James K. Agnew, executive vice president of the Los Angeles office of ad agency J. Walter Thompson, "I have a feeling this could dilute from and distract the airline's target market."

But not everyone is a naysayer. Nancy Shalek, president of the Shalek Agency in Los Angeles, which created ads for MGM Grand Air before losing the business several months ago to Lintas: Campbell Ewald, described MGM's marketing move as "a slam dunk." Explained Shalek, "Snobs need someone to be snobby at, or there's no snob appeal."

Defying the Laws of Advertising Gravity

It seems that just about everyone was amazed by the Honda commercial that featured a car driving away from its spot on an art gallery wall. But executives at the agency that created it, Rubin Postaer & Associates, have quietly agonized over the lack of premiere awards the ad has won.

It didn't win the sought-after "Sweepstakes" award this year at the prestigious Belding Awards sponsored by the Advertising Club of Los Angeles. Nor did it win the coveted Clio Award for best overall TV spot of 1989. But last week the agency made off with one of the most significant awards in West Coast advertising. The American Advertising Federation christened the agency's Honda campaign "The Most Effective Campaign Created in the West in 1989."

That competition takes into consideration not only creativity, but also sales results from all print, billboard, TV and radio spots used in the campaign. And while Honda's domestic car sales were up only a tad in 1989 compared to 1988, many other importers saw double-digit declines in their sales.

Thompson Catches 2, Angles for Big Fish

It has not been a banner year for the Los Angeles office of J. Walter Thompson. But after losing one of its biggest clients--20th Century Fox Film Corp.--the agency is oh-so-slowly trying to bounce back with small wins.

Last week, it picked up two clients that together total about $3 million in new billings. The clients are Chipsoft, a San Diego software company that produces financial software packages, and Bekins Box & Ship, an offshoot of the moving company.

But the agency's eyes remain fixed on the $30-million New Line Cinema account now handled by New York-based Independent Media Service. The account has been in review for several months. Thompson is one of a half dozen contenders for the account--the largest currently in review on the West Coast.

No Rest Stop for Ad-Weary Travelers?

OK, highway drivers. Tired of all those billboards that beg you to buy everything from BMWs to beer? Well, someday soon when you pull off at the roadside rest stop to get away from all the billboards, guess what may be awaiting you: more advertising.

The ads could come courtesy of Reststop Advertising, a Louisville, Ky., company that is trying to persuade federal and state government officials to allow it to sell advertising space on special kiosks and on restroom panels at rest stops.

"Sure, people probably see too many ads already," said Arthur J. Gerlach Jr., chairman of Reststop Advertising. "But we'll only provide the types of information that highway travelers want." That is, the ads will mostly be for restaurants, hotels and service stations along the interestate. What's more, he noted, in most cases the ads will not be visible from the road.

There are no ads permitted now at rest stops along California interstates. But Gerlach is licking his chops at the prospect. After all, California has 85 such facilities--a number second only to Florida, which has 93.

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