The SkyTeam airline alliance last month took a step forward in its efforts to attract multinational corporate customers when it announced the availability of an integrated global program. Days later, however, the U.S. Department of Justice formally objected to SkyTeam's request for six-airline antitrust immunity. The U.S. Department of Transportation at press time had not made a final decision on the application, which, if approved, would provide more flexibility for participating airlines.
Meanwhile, the Star Alliance said it is moving closer to developing a common IT platform for member carriers, with Amadeus soon expected officially to snare the contract. The common platform is one of several projects underway within Star to drive cost efficiencies across the alliance and improve global customer service for individual travelers and corporate clients.
With similar intentions for multinational customers, SkyTeam said it stands ready to negotiate on a global basis. Initial development of joint corporate contracting predates the involvement of Continental and Northwest in the alliance
(BTN, May 22, 2003), but travel management sources said the partnership's corporate sales efforts have progressed more rapidly this year.
SkyTeam cited the advantages of harmonized discounting, integrated account management and consolidated contract performance reporting. Though the alliance said it is in talks with "several" multinational companies, it would not identify any corporate clients currently using the global program.
Meanwhile, SkyTeam carriers Alitalia, Air France, CSA Czech, Delta, KLM Royal Dutch and Northwest airlines at press time still had not received a final answer from DOT on their joint request for antitrust immunity. Regulators likely were assessing DOJ's filing last month, which cautioned on possible anticompetitive ramifications and questioned the potential benefits.
"The requested immunity is not likely to lessen competition on the transatlantic routes, but does threaten to reduce competition in related domestic routes," DOJ said, suggesting any DOT approval should come with conditions to prevent potentially anticompetitive conduct by Delta and Northwest. DOJ also said that "unlike many previous applications, the proposed alliance will not advance Open Skies."
SkyTeam rival Star Alliance—already having launched unified corporate contracting to varying degrees, depending on the client—is pursuing a larger base of potential accounts. During a media briefing last month at the National Business Travel Association's annual convention
(see story), vice president of corporate office Christian Klick said Star had secured about one-third of the business represented by the world's top 130 global companies and now is targeting another 4,000 companies for the Corporate Plus program.
These developments are meant to improve corporate-contracting processes and drive incremental market share by helping multinational travel buyers find value in alliancewide deals. Despite the enthusiasm voiced by various airline sales executives, however, many buyers remained skeptical. "We have a few alliance deals," said Citigroup vice president of global services sourcing Norma Rohrbach, "but the base problems are the alliances themselves, which cannot work well together."
John Heilner, vice president of consulting firm Management Alternatives, who was speaking with Rohrbach last month during the NBTA convention, suggested buyers could gain an advantage by pitting member carriers against one another: "In some cases, on a key route, it is better to negotiate directly with that international carrier than in an alliance."
In other cases, international alliance deals appear to work for some companies, like American Honda Motor Co., whereas domestic partnerships do not. "Domestically, I have not been real thrilled," said Charles Franklin, the car company's manager of corporate services. "Travelers say that once you get on that codeshare flight, you are a nobody."
To be sure, the major global alliances are more closely integrating products and processes with each passing month, with a goal of finding cost efficiencies for member carriers and developing seamless services for travelers.
Star Alliance, for example, is progressing on plans to implement a common IT platform across many, if not all, of its carriers, covering reservations, inventory, departure control and other functions. Key participants, including Lufthansa and United Airlines, have "firm commitments" to employ Amadeus for the project, according to Klick. A United spokesperson said Amadeus "has been selected as a preferred vendor but no agreement has been signed." United currently uses Cendant Corp.'s Galileo for much of its IT needs.
The alliance already has established StarNet, a central database linked to all member carriers. Star members also cooperate on fuel purchases, electronic ticket interlining and self-checkin kiosks.
In fact, Klick said self-checkin kiosk trials are underway in London, Munich and Tokyo, with a total of 40 airport rollouts planned by year-end. Other airport projects underway include joint terminals, concourses and connection centers.
Klick said responses to a request for proposals sent to distribution firms this summer were due by the beginning of this month. Star plans to select one or more distribution partners by year-end.