Air France-KLM last week launched One Corporate Travel Solution, a single sales and account management program for multinational corporate clients that evolved from the pre-existing KLM One program. Though the merged carriers will not offer true integrated corporate pricing until next year, they are embarking on what could become the deepest corporate sales integration accomplished between large international carriers.
Following the official close of their merger last month, Air France-KLM began developing unified account management, a single data aggregation tool, new corporate online booking options, an information portal for travel managers, combined corporate card and meetings programs and other specialized corporate services. It also will unify agreements for travel management companies.
In the interim, Air France corporate contracts will include KLM codeshare flights and vice versa. Carrier officials expect such initial cooperation to take effect during the year as more codeshare flights come online.
As One Corporate Travel Solution matures into 2005, Air France-KLM will begin offering integrated corporate pricing, allowing clients to ticket any Air France or KLM flight on either carrier within the context of consistent contract terms. "We then should be able to have a proper integrated joint contract," said Vikram Singh, KLM director of B2B marketing. "From our knowledge of the competition, that would be a first."
Such joint contracts would stem from responses to global requests for proposals submitted by multinational corporations. The combined entity will rely on a data aggregation tool to assess corporate travel patterns and develop marketshare-based contract goals. "Although Air France does not currently use Prism, they are looking into it," Singh said, referring to a data collection and decision support system furnished by The Prism Group in Albuquerque, N.M.
KLM already uses the Prism system for about half of its global client portfolio, including most joint corporate deals with partner Northwest Airlines
(BTN, Nov. 11, 2002). Along with Northwest and its partner Continental, Air France ally Delta Air Lines also uses Prism for corporate client data processing.
Carrier officials also envision an integrated Air France-KLM-American Express corporate card, but for now will continue promoting existing but separately branded American Express card programs. On the meetings side, KLM this month plans to piggyback on an existing Air France relationship with Accor that provides to corporate accounts special rates at Accor hotels for delegates flying either Air France or KLM. Separate, pre-existing meetings programs—an Internet-based one at KLM and an offline one at Air France—will continue operating side by side.
In addition, global corporate relationships may include such customized services as private jets and ground transportation options.
Air France-KLM also plans to develop integrated override and marketshare deals with travel agencies. "We are now working to formulate a global trade strategy and work toward integrating trade contracts," Singh confirmed.
A final step would be complete SkyTeam Alliance integration, involving Continental, Delta and Northwest.
Once joint global deals are in place, accounts will have several options for an online booking tool. KLM will keep in place KLM Connect, a system linked to corporate intranets that eliminates agency transaction, GDS and credit card fees, but also plans to offer Connect Plus, an XML-based link between KLM's internal system and the customer's choice of booking tool. "It does not matter if you have a TRX or a GetThere booking tool," Singh explained. "You can still connect directly and get seamless Internet pricing." Air France also is working to enhance corporate online booking functionality.
Air France-KLM by September plans to deploy a single contract management system for monitoring corporate and agency account performance. This month, it will start providing travel managers with access to their contract performance data via extranet connections into a secure area on the combined entity's Web site. The reports will track client-specific expenditures and provide settlement information.
Accounts also can use the portal to access special fares and view such customer service metrics as ontime performance. On request from corporate clients, the portal also will include security-related information, an element developed in conjunction with the carriers' security services.
Account management, for now, is a parallel effort from the Air France and KLM teams, though Singh said joint meetings with some clients already have occurred. "Going forward, we want to simplify and have a single point of entry per account," he said. "Whether that account manager is from Air France or KLM should not make a difference." Global account managers will be supported by regional account teams.
Should Air France-KLM achieve seamless joint contracting by early next year, it would mark a level of corporate sales integration heretofore promised but rarely delivered by global airline partnerships. Though BTN has learned that some multinational firms in recent months have finalized alliancewide deals, many travel managers remain underwhelmed by the potential advantages of joint global contracting.
"During our bidder's conference, we asked all the heads of sales at the airlines to tell us we'd get the best pricing through an alliance deal. I only got one letter back," said Pfizer global travel director Phil Dunphy, referring to his company's recently constructed global airline program. "I don't know if it was the Pfizer scale or if airlines felt they would be more aggressive independently. It works for some companies but not for us."
"There still is too much infighting," said GlaxoSmithKline director of global travel procurement Janan Johnson, during this spring's Corporate Travel World conference in New York. Johnson also noted that alliance partners, in many cases, still do not have co-located airport facilities.
Certainly, airline alliances have progressed in terms of customer service. The recent spate of electronic ticket interlining agreements is one recent example. Multinational utility for corporate buyers, however, has been more difficult to achieve.
On a smaller scale, such programs as Oneworld's BusinessFlyer give corporations purchasing options. For example, Oneworld this spring brought the program to the French market, offering small and medium-size companies "heavy discounts on their business travel worldwide in return for a more regular relationship with the alliance and its member airlines."
Oneworld said the BusinessFlyer program, which it first launched in Germany in June 2003, has attracted hundreds of German companies. Oneworld said that it soon will expand the program, by "targeting markets dominated by members of a rival airline alliance."
Meanwhile, in an effort to strengthen their networks, major carriers continue to add partners. American Airlines, for example, this spring was granted antitrust immunity with SN Brussels Airlines, Belgium's largest carrier. The two airlines first formed a commercial alliance one year ago, including sharing codes beyond Brussels to destinations in Europe and Africa, and frequent flyer reciprocity. Antitrust immunity now allows them to more closely coordinate sales, marketing, pricing, yield management, route planning and distribution systems. "This will expand American's network and give our corporate customers even more flight and destination choices, especially with SN's growing network," an AA spokesperson said.
Continental and Northwest, however, are not ready to join mutual partner Delta Air Lines in the SkyTeam alliance. "I am a little disappointed in that it is not moving as fast as we hoped," said Continental CEO Gordon Bethune, who indicated early fall as the new target. Sales executives earlier this year suggested Continental and Northwest would be joining May 1
(BTNonline, Feb. 23).Separately, SkyTeam last month signed a memorandum of understanding with Aeroflot. The Russian carrier is expected to join the alliance sometime next year.
Over at the Star Alliance, it appears South African Airways will join the ranks, following newcomer US Airways into the largest global partnership.
But bigger has not always been better for Star Alliance carriers. Air Canada and United Airlines remain under bankruptcy protection, Varig's financial situation is precarious, Air New Zealand faced the brink of collapse before being restructured and Ansett disappeared entirely.
"You are no use to your alliance partners unless you are in good shape yourself," said British Airways CEO Rod Eddington, in a recent Business Travel News interview
(BTN, May 10). "One could have argued that Star was the strongest alliance, but it didn't stop those airlines from getting into trouble."
Another struggling carrier that may join Star is Swiss International Airlines, which last week terminated its partnership with British Airways and canceled its plans to join the Oneworld alliance.
New Swiss International management clearly decided it was uncomfortable with the prospect of British Airways assuming control of its frequent flyer program and its premium customer database. Swiss executives' ties to Lufthansa suggest that the airline now will turn toward the German carrier and its Star allies.
Domestic financial woes also may be weighing heavily as carriers try to align. "The pressure on Delta to integrate with Continental and Northwest, for example, probably is not very high on the priority list right now," one travel manager said.