How Can JetBlue Make the Spirit Airlines Acquisition Work?

Is there a brand transition team? Is there a plan in place during the first 12 months post-acquisition focused on brand implications? Does the team have a seat at the table?

If the answer is yes, the acquirer has put itself in the best position to succeed. If the answer is no, there is a high likelihood the deal will end up as another statistic in the long history of failed acquisitions.

Let’s take a look at the key factors that determine whether this acquisition will fly or fail.

Differing brand positioning could be an issue

Looking at JetBlue’s acquisition of Spirit specifically, the general tone from both Wall Street and industry experts is fairly negative. A primary reason for this initial skepticism is that you have two fundamentally opposing brands combining into one.

Even in the best of situations where there are clear synergies, opportunities to extend customer segments and greater access, the necessity of having a brand transition plan is critical.

This acquisition is akin to merging Nordstrom and Walmart or the New York Times and the New York Post.

John Huntinghouse

There are numerous potential pitfalls that lay ahead for JetBlue, from potentially losing market share, to internal culture and expectation clashes. One does not need to look any further than their respective vision statements to see how different these two brands are.

On the one hand, you have JetBlue’s “inspiring humanity” with full amenities on all flights. On the other, you have Spirit’s focus on “delivering the best value in the sky,” with no business or first-class cabin and no in-flight televisions.

This acquisition is akin to merging Nordstrom and Walmart, Fortnite and Roblox or the New York Times and the New York Post. You fundamentally have two distinct groups of customers being serviced in two very distinct ways. JetBlue ranks No. 1 in the business segment and first in the premium economy segment. Compare this to Spirit’s lackluster loyalty program, primarily because its customers view air travel as a commodity and the brand consistently ranks low in customer loyalty.

The customers are equally far apart

The best way for JetBlue to retain most of the value from this deal would be for it to create a sub-brand that pulls the brand value from JetBlue and still services Spirit’s “ultra-low cost” customers, all without damaging the overall brand that JetBlue has created.

This would protect JetBlue’s current brand reputation and customer expectations and prevent losing market share to Frontier, which is keenly aware of the price sensitivity of Spirit’s customers and in a great position to fill any void.

The cardinal rule for any brand architecture needs to be clarity for the consumer. Unfortunately, what almost always gets lost is the customer. These mergers typically are executed by high-level executives who, while meaning well, often fail to fully consider the brand implication of the merger and consequently waste much of the value of the brand being acquired.

It is not good enough to simply consider branding—it needs to be the primary guiding light in the decision-making process. That is why it is so important to have a qualified brand team integrated with the business team.

What will make this merger fly

The deal will be successful if JetBlue puts together a cross-functional business, finance and marketing team to focus on the following:

• Fully understanding how to think through transitioning brand equity from Spirit.
• Creating an “assumption checklist” that allows them to test and document assumptions around the brand, to validate both how important the initial assumptions are and how accurate they turned out to be.
• Shifting the brand perception of Spirit’s current customers—and if this is not possible, creating a sub-brand that will capture (and defend) much of the brand value being purchased.
• Identifying and implementing processes to amplify the synergies between the two brands and understanding how they create real value for customers. If synergies cannot be found, they’ll need to know how to capture brand value through differentiated sub- or endorsed brand organization structure.
• Outlining what each brand brings to the table through a detailed brand migration plan. This plan needs to show what success looks like, what metrics will be tracked to highlight how effectively the migration is proceeding and any areas of improvement.
• Communicating to the customers what this transition is going to look like—if the voice of the customer is critical to the brand, then their voice and feedback need to be part of the process. Extensive communication to gather customer feedback along the way will be essential.

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