At first blush, you might wonder why the largest U.S. airline would suddenly announce that it is launching a brand new wine delivery service, given the many other pandemic-related challenges that it is currently facing.
But in American Airlines’ own words, the answer is rather simple: “Wine Not?”
According to a press release, the Texas-based airline is launching what it calls “Flagship Cellars,” a joint venture with online wine retailer Vinesse that will offer home delivery of a specially curated menu of selections normally only sold to its super-premium Flagship passengers.
“We created Flagship Cellars to provide more ways for customers to enjoy our Flagship wine even if they aren’t flying in one of our premium cabins,” Chief Customer Officer Alison Taylor said in a statement, which also noted the deep connection between wine lovers and the places they visit.
Fancy Clearance Sale
What the statement didn’t say, however is that high-end and business travel volumes have plunged 70 percent during the pandemic, and many airlines — including American — are not even serving alcohol on flights right now as a way to limit interaction with passengers to prevent the spread of COVID. According to media reports, the combination of fewer flights and less beverages being sold is adding up to “a lot of leftover booze.” So instead of storing it, why not (or wine not) sell it, and promote the business along the way?
“It also gives them a taste of what you can enjoy in Flagship First or Flagship Business,” an American Airlines spokesperson said.
By all accounts, the wine delivery venture is not designed to be a huge revenue driver. In fact, the company’s spokesperson said the new at-home service is targeted to generate only about $40,000 to $50,000 in sales in the first three months. By comparison, even in its current reduced capacity, American still did $3.2 billion in revenue in the third quarter, which works out to roughly $35.5 million per day.
Tough Times, New Thinking
The fact that the wine delivery program also includes a two mile per dollar spent perk for American’s AAdvantage loyalty program members further underscores its promotional underpinnings. That said, American — and other carriers — are actively seeking new ways to jumpstart the lucrative but ailing business travel segment, while also adapting to the many changes brought about by the pandemic.
One such side venture that American has already taken on is its involvement in the cold-chain shipment of COVID vaccines, a massive logistical program that it has been participating in since mid-December.
“We know this is the first of many shipments to come, and we are ready to scale our operation as additional vaccine is produced and ready for distribution,” American Airlines Cargo President Jessica Tyler said, noting the many thousands of doses that would need to be shipped.
However, given the scope and scale of the vaccine distribution program, as well as the fact that it requires thermal packaging and precise operational handling procedures to ensure the medicine remains stable during transit, it is not really an applicable comparison to the much more modest wine delivery service.
Not surprisingly, American said it is the “only airline to have at-home wine offerings” from its onboard selection. Customers can select from individual bottles as cheap as $13, create a basket of their choosing, or opt-in to a $99 monthly subscription model that will deliver three bottles to your doorstep.
American is set to report its fourth-quarter and full-year results next Thursday.
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