BTN's annual answer book for business travel managers everywhere. Added this year: travel risk management
Delta Air Lines this year for the first time took top honors
in the Business Travel News Annual
Airline Survey, earning the highest ratings from corporate travel buyers in
five of 10 service-delivery categories. The 2011 survey, BTN's 14th, shows a significant reshuffling, as mergers, evolving
distribution strategies and modified corporate agreements factored into travel
buyer perceptions of the five largest domestic airlines.
[Please click here to
download BTN's 14th Annual Airline
Survey, with full results and domestic carrier ratings.]
Last year's winner, Continental Airlines, subsequently has
been integrating with merger partner United Airlines; the combined entity using
the United brand landed second to Delta by two-hundredths of a point. Finishing
second in 2010, American Airlines fell to fourth, an indicator of perceptions of
declining service and the airline's aggressive—and to some, off-putting—efforts
to redraw its third-party distribution. US Airways, meanwhile, improved to
third place from a last-place finish in 2010, perhaps partly resulting from
reinvigorated efforts to court corporate business.
Southwest Airlines, rated along with merger partner AirTran
Airways, finished last. Respondents saw little flexibility from the carrier in
structuring preferred airline agreements and reported difficulty in booking
some of its airfares through preferred channels.
On average, the airlines rated in BTN's survey garnered lower overall scores than last year; a
relatively small percentage of the 406 corporate travel buyers surveyed this
year indicated they'd experienced improving domestic airline service.
Thirty-six percent agreed that overall airline customer service levels declined
in the past year, while 46 percent said they stayed the same.
Though corporations for years have lived with an
increasingly unbundled airfare product, many buyers remain dissatisfied with
ancillary fees, particularly with regard to a lack of thorough reporting and
negotiating opportunities, according to several survey respondents. Not
surprisingly, many also shared a strong desire for lower published fares and
deeper discounts from their preferred carriers, which have been more difficult
to attain as airlines solidify pricing power.
"Our spend is up, but it's almost entirely due to an
increase in fares," said Blue Coat Systems global travel manager Rick
Wakida. "On top of all of that, you layer in the ancillary fees, and they're
not going away. So, even if there's not been a fundamental shift or degradation
of service, the psychology of the experience is lower."
Despite a supply-and-demand equation that doesn't favor
buyers and a generally poor view of customer service, buyers this year
generally rated domestic carriers more flexible in negotiating transient fares,
meetings pricing and services and amenities, according to comparisons to the
Respondent Accolades For Increased Flexibility, Enhanced Reporting
Flexibility in structuring transient and meetings pricing
helped Delta clinch a first-place finish over United, according to survey
results. Delta also topped all domestic competitors in complaint/problem
resolution, quality of communications and the value of its network and
While some suggested Delta secured the top spot due to
United and Continental's navigation of the complexities of merger integration
and American Airlines' battles with some third-party distributors upon which
corporate clients rely, several buyers indicated Delta did not win the survey
merely by default.
"It's not a best-of-the-worst kind of thing," said
The Advisory Board Co. managing director of information systems and travel
buyer Steven Mandelbaum. "They've actually listened to companies, and they've
come up with some really smart agreements that work, as opposed to scenarios in
the past where, not just them, but other carriers would say, 'This is what we
want you to do. Take it or leave it.' It's very collaborative."
Delta in the past year has empowered sales managers to be
more collaborative, said vice president of global sales Steve Sear, who also
claimed improvements to the carrier's contracting processes and enhanced
reporting for clients. He also pointed to heightened staffing and increased
training in Delta's sales support center, as well as ongoing product
investments, both on the ground and aboard planes. As examples, Delta in the
past year launched a premium-economy product on some international flights,
rolled out more flat-bed seats in long-haul markets and expanded first-class
seating and added Wi-Fi on regional aircraft, having previously installed
Internet access across its entire mainline domestic fleet.
"If you think back even 12 months, we were just
finishing the merger and the joint venture," Sear said of the carrier's
acquisition of Northwest Airlines and its ever-closer ties with Air France and
KLM. "So, we're fully integrated from a sales perspective and a contract
perspective. While we finished those efforts, that was really just the
beginning of the focus on the customer. Our sales team is responsive and
flexible, and they've been empowered to make decisions."
Several buyers heaped particular praise on Delta's new Sky
Partner Review reports, which launched this summer and show client savings and
spending beyond core airfares. One such quarterly report obtained by BTN quantified the occurrence rate and
dollar value of frequent flyer upgrades, waived bag fees and elite status
The reports also detail by figures the passenger experience,
including the percentage of trips without baggage-handling complaints and the
rate of travel disruptions—including delays and cancellations—that impacted the
organization's travelers. Delta also reports the total number of bags that have
been checked by a company's travelers, including the percentage transported
with and without fees, giving buyers new insight on the elusive spend categories.
While many buyers await a broader solution to account for
bag fees, perhaps through more detailed corporate card reports, Sear
acknowledged that Delta's reporting is "still not an industry solution,"
but "follows our commitment to be transparent."
Buyers seem to like the new transparency. "The
reporting that we got back from Delta last quarter was very enlightening,"
said Westinghouse Electric Co. global travel manager Dan Cooper. "It was a
lot of information in a great format, and they provided a lot of detail on
savings and additional services. Of course, all carriers will tell you what you
get from your discount, but these are the beyond-discount savings. I haven't
really seen that from other preferred carriers. You can see they're listening to
what buyers want and giving it back."
The New United
Airlines Navigates Through Integration
While Continental has finished first in BTN's annual survey—matching American for the most wins during the
past 14 years—merger partner United typically has finished in the middle or
bottom of the pack. The new United already may be harnessing Continental's
history of goodwill in the corporate marketplace, given its second-place
overall finish and first-place rating in three of 10 categories. Still, there
remains the "herculean task of putting two very huge airlines together,"
according to United senior vice president of worldwide sales Dave Hilfman.
Those efforts have been ongoing throughout 2011 and will
continue into 2012. "Integration is tough," Hilfman said, "but
we're pleased thus far with the progress. There's a lot of work yet to do both
in terms of people and programs."
The carrier mostly has completed integrating sales personnel
in North America, Latin America and Asia, while combining sales forces in Europe,
the Middle East and Africa has taken longer due to "regulatory, labor and
legal issues that come in to play," according to Hilfman. "We're
trying as hard as we can to get that process finished, because we want
everybody to feel settled, and clearly we want to get our final, end-state
sales organization in place. For the bulk of our sales professionals, we're
There remains "an enormous amount of work to do"
on corporate customer programs, Hilfman said, "but we've been out working
diligently to consolidate our Continental and United programs. Our corporate
clients have been very patient with us, and we're appreciative of that patience
as we're getting out and re-pricing thousands of contracts."
That work will continue into the first half of next year. "We've
always been focused on customizing our deals," Hilfman continued. "If
you go out with cookie-cutter programs, it's easy, but we don't do it that way,
and we know our clients wouldn't go for that. It does take time to go through
the negotiating processes, so that meters out the number of programs that we
have signed and implemented, but we feel we're making decent progress. As we
get into 2012, we'll be well down the road to have all of our programs ready to
Meanwhile, United expects new agency incentive agreements to
go live this month. "We've been in some initial discussions with a lot of
our key [travel management company] partners. You may not have everything
signed at the start of the fourth quarter, but we're working hard to make sure
we get everything presented, discussed, negotiated and implemented in the
As sales integration continues, the company awaits a single
operating certificate from the U.S. Federal Aviation Administration—expected in
the first half of next year—which will allow Continental and United to operate
fleets and deploy crews as one entity.
To further harmonize its service identity, United in the
first quarter of 2012 expects to launch a common passenger services system. "In
any merger, technology plays such a key role and is critical to delivering what
would be a very seamless customer experience, whether it's at the beginning of
booking a reservation, through the agency or online, and then all the way
through the experience at the airport and onboard," Hilfman said. "Once
we get on a single passenger services system, it really looks and feels like
United also expects to launch a unified frequent flyer
program, the details of which were announced this month. "We feel like we've
come up with a program that appropriately rewards our most loyal and valuable
travelers," Hilfman said. "I think people will be very pleased by
this new program. It's combined starting Jan. 1, 2012, but even then, until you
get on that single passenger services system, it won't feel quite as integrated
until we finish that off."
With United's personnel, programs and processes in flux for
much of the past year, survey respondents shared varying views of the newly
combined carrier. One respondent noted that "the Continental effect on
service delivery has had a positive influence on United," but another
called the new carrier "highly distracted and confused."
Said Hilfman, "We tell customers and our employees all
the time, 'Thanks for your patience, because we're under construction.' We're
really building a new culture, and when we get it done it's going to be
spectacular, but it just takes a little time."
US Airways Reverses
Course, Reclaims Corporate Sales Growth
US Airways in the past year continued to bulk up its
corporate sales efforts, adding more than 100 new North American accounts and
building out to its corporate sales force. Following its merger with America
West Airlines in 2005, US Airways de-emphasized the corporate market when it
positioned itself as a "low-cost carrier," culled corporate accounts
and reduced sales staff. During the past two years, however, the carrier has
worked to reverse those moves and refocus on the corporate market.
"They've struggled for a long time to figure out if
they're a low-cost carrier or a network carrier," Advisory Board's
Mandelbaum said. "They've realized there's business in being a network
carrier. Particularly if business travel rebounds at these airfares and leisure
doesn't, a network carrier sort of wins that game."
Corporate travel buyers have recognized a more active and
flexible US Airways, placing the carrier third overall in BTN's survey and bestowing the highest rating in two categories:
the value of relationships with account managers and overall price value. That
compares with a last-place finish in 2010, which had been a more familiar spot
for the carrier throughout much of the history of this survey.
"We've seen a change from US Airways in that they're
starting to say yes a lot more, and they're starting to understand the value of
the customer," Westinghouse Electric's Cooper said. "They're making a
concentrated effort to move up, and we're certainly seeing that."
US Airways now claims 500 North American corporate accounts.
It also has increased the size of its international client base. "We spent
2009 reevaluating the sales force and what we wanted to do with it, particularly
around the corporate piece of business," said US Airways managing director
of passenger sales Michael Schmeltzer. "We decided, going into 2010, to
expand the sales force." Between April 2010 and April 2011, US Airways
increased its domestic sales force by 50 percent to 42 full-time sales
positions, building a presence not just near hub markets, but also around "some
of the key spokes," according to Schmeltzer. Those include markets in
California, Illinois, Minnesota and Texas.
That expansion dovetailed with a similar focus on
international markets. "We hired new people in markets where we were a
little lighter, like Brussels, Zurich, Ireland and Scandinavia,"
Schmeltzer said. "Then we also added full teams in our newest markets, Tel
Aviv and Rio." US Airways' international sales staff is 30 percent larger
than it was three years ago, he noted.
Schmeltzer said the carrier also added sales support. "We
did that to centralize a bunch of things," he said, "but the biggest
thing was the RFP process, to get that off the plates of the sales team so they
could really focus on the client needs."
Fall To The Bottom
Following a second-place finish in 2010, American Airlines'
scores this year declined in every category, with the largest decreases related
to buyers' perceptions of the value of its network and partnerships, quality of
communications and availability of distribution channels.
It is unclear to what extent American's disputes with
distributors have impacted its standing in the corporate travel marketplace,
though its score in the distribution channel availability category fell this
year to 3 from 3.51 last year.
The carrier acknowledged "frustration [among] corporate
customers," according to court documents filed this summer in relation to
a suit brought against Sabre, with at least one account threatening "to
stop doing business with American" as the result of distribution battles.
American, however, has laid the blame on Sabre, particularly
after the global distribution system operator in January temporarily buried AA
airfares in search results. That alone "severely undermined American's
goodwill and good relations that have been built up over many years with
corporate customers," according to the carrier's court documents.
Still, even if the survey's distribution category was
disregarded, American would have maintained a second-to-last place standing,
and its overall score would have improved by only one-hundredth of a point. AA
finished last in the categories of quality of customer service, overall price
value and quality of communications.
Meanwhile, Southwest Airlines ranked lowest for flexibility
in negotiating both transient and meetings pricing, for services and amenities,
and for distribution channel availability. The carrier generally does not
provide negotiated discounts and has limited participation in third-party
distribution channels. Southwest finished above average in the quality of
airline communications category.
Southwest's prior dominance in the overall price value
category collapsed this year, with its rating plummeting to 2.97 from 3.96 in
2010. Southwest last year not only rated highest in that category, but its
score represented the highest for any carrier in any category rated. Now,
buyers perceive only American Airlines to offer less value for price.
Southwest in May closed its acquisition of AirTran, and the
two carriers were rated as a single entity in this year's survey. "It will
be very interesting to see how the Southwest-AirTran merger plays out," said
Advisory Board's Mandelbaum. "Southwest has traditionally shunned
corporate travel, and I'm not saying they have avoided it, but they certainly
haven't embraced it. They've made themselves somewhat challenging to procure.
AirTran has been somewhat the opposite. They've done some product
differentiation, they've sold some seat assignments, they have a front of the
plane, and they went after corporate clients. The question is: What happens
The 14th annual Business
Travel News Airline Survey is a unique measure of corporate travel buyer
perceptions of airline performance in negotiating for and delivering service
and maintaining preferred relationships. This year, BTN again contracted Equation Research to host and tabulate the
The categories presented in the questionnaire were developed
through a series of exchanges with travel buyers, corporate travel agency
managers and airline sales executives to reflect more clearly the way in which
corporate air travel buyers perceive each airline.
Asked to grade only those airlines with which they had done
business in the past year, respondents ranked domestic carriers in 10
categories on a scale of one (poor) to five (excellent). BTN averaged scores in each category to create the overall score
for each carrier. All categories were equally weighted.
Not every respondent rated every airline in every category.
Those participants who offered no response for a particular category or airline
were not included in that average rating.
BTN from Aug. 16
to Sept. 7 collected responses from more than 250 travel managers and buyers
who have joined the BTN Research
Council and a randomly selected subset of qualified readers from publications
produced by The BTN Group, including Business
Travel News and Travel Procurement.
The total sample size was 713 respondents, 406 of whom represented
organizations that spent more than $500,000 annually on airline tickets.
Respondents whose organizations spent less than $500,000 in
annual U.S.-booked air volume were excluded from the results in an effort to
restrict the survey to managed travel programs.
Twenty-six percent of those 406 respondents had between
$500,000 and $1.9 million in annual air volume, while 36 percent had between $2
million and $11.9 million and the remaining 38 percent spent more than $12
The survey contained a list of the largest domestic airlines
as identified by the U.S. Department of Transportation, excluding regional
affiliates of major carriers. Airlines that elicited responses from less than
40 percent of the survey base—Alaska Airlines, Frontier Airlines and JetBlue
Airways—were excluded from this report. Reflecting the closing of their
respective mergers in the past year, AirTran Airways and Southwest Airlines
were treated as a single carrier, as were United Airlines and Continental Airlines.