ACTE Releases Airfare Reform White Paper

The Association of Corporate Travel Executives today issued a white paper on airfare reform, pinpointing several reasons for change, including an overly complex fare structure, unpredictable and oftentimes unaffordable prices, arbitrary surcharges and counterproductive incentives, such as cheaper but less trackable Web fares.

"The objective of any reform should be to induce sufficient business travel demand at high enough yields to return the airline industry to sustainable profitability as soon as possible," ACTE said in the paper. "True reform must broadly focus on the whole process from product offerings all the way through to customer relationship management."

ACTE suggested possible solutions that would minimize the acknowledged risk to carriers wary of making changes that may not guarantee increased revenue. They could include "ironclad customer obligations" to test new programs either in a handful of specific citypairs or involving just a few corporate customers.

But the paper pointed to obstacles, including the pervading view among airline executives that business travel recovery is linked directly to general economic recovery and that any reform effort "would be weakly committed to by corporate customers and subsequently sabotaged by competitors." It also noted that fare reform is dependent upon airline labor reform, which analysts have said is, at the least, becoming less unthinkable.

ACTE said the white paper, "The Need for Domestic U.S. Airfare Structure Reform," was developed as a result of a series of summits conducted since Sept. 11 and linked with a recent survey completed by the Business Travel Coalition. The paper is being discussed this week at ACTE's Global Conference in Montreal.