Delta Air Lines for the second straight year topped its
major domestic competitors in Business
Travel News' Annual Airline Survey, earning the distinction of being the
first carrier in the survey's 15-year history to garner the highest score in
each category rated by corporate travel buyers.
Fraught with a messy merger integration, last year's
second-place finisher, United Airlines, fell to the bottom spot in this year's
survey, while American Airlines—despite an ongoing Chapter 11 restructuring and
some recent, high-profile operational issues—clawed its way to a second-place
[Please click here to view the digital edition of BTN's
2012 Airline Survey, featuring all charted data and airline rankings in
individual categories, downloadable as a pdf.]
Southwest Airlines, meanwhile, improved to third place from
a last-place spot in 2011, just one-hundredth of a point ahead of this year's
fourth-place finisher, US Airways.
Apart from United, each carrier maintained or improved its
overall score from BTN's 2011 survey.
Still, nearly 31 percent of the 377 corporate travel buyers surveyed this year
indicated domestic airline service worsened during the past 12 months, while
nearly 40 percent saw no change in overall service. Thirty percent said they
Apart from Delta and American, carriers this year drew lower
scores than last year from buyers rating them on flexibility in structuring
corporate transient discount programs. Asked what their preferred carrier could
do to improve relationships, many buyers pointed to something they're not
likely to get at a time of relative strength in airline pricing power and
constrained supply: better discounts.
Delta "must be reaping it in," said Autodesk
director of global travel Bruce Finch. Indeed, Delta executives this year have
cited share shift as a key reason for persistently better-than-average
corporate revenue gains. Even as some recent indicators pointed to slower
growth for corporate travel demand—or declining volumes, in some cases—Delta
during its third-quarter earnings conference call reported corporate revenue growth of 8 percent. "We continue to gain traction in corporate revenues,"
declared president Ed Bastian.
Throughout the year, it was clear to airline investors and
those studying industry booking data that Delta was winning business. BTN's survey shows the carrier also has
been winning respect.
"They actually want the business," said Finch. "They
are hungry in the sense that they are willing to do the things that are
necessary to get a company's business. They're not hiding behind the corporate
stance of, 'This is all we're willing to give.' They're willing to step up and
do what's necessary. Our rep is phenomenal."
Buyers speaking with BTN
struggled to find any harsh words for Delta. While two survey respondents
bemoaned service reductions in Memphis and Cincinnati—two markets Delta
deemphasized following its merger with Northwest Airlines—the majority praised
it for upgraded corporate client reports, flexibility in structuring deals,
onboard and on-the-ground service and operational prowess. The latter has been
evident in strong U.S. Department of Transportation performance metrics for
on-time arrivals, completion factor and baggage handling.
As United continues to get its house in order following a
merger with Continental, and as American navigates a flight path out of
bankruptcy, Delta has been a stable force in the league of major corporate
Delta appears "really focused on improving the customer
experience," according to a client email sent by Steve Glenn, chairman and
CEO of Lincoln, Neb.-based Executive Travel. "With all the challenges
faced by United and American this year, Delta appears to be the leader of the
pack for positive service improvements."
Delta senior vice president of global sales Steve Sear
attributed Delta's sweeping finish in BTN's
airline survey to the "hard work of the 80,000 Delta employees worldwide,"
but travel buyers also singled out Sear, vice president of global sales Bob
Somers, president Ed Bastian, CEO Richard Anderson and their individual account
"Richard Anderson has set the benchmark for
consolidation," said First Data Corp. global strategic sourcing director
Pamela McTeer. "He's done it right for Delta and Northwest. Certainly, I
think the other carriers are playing a lot of catch-up on that. He does it
right and listens to his customers. He's one of the few CEOs of airlines that
really gets out, though [Southwest CEO] Gary Kelly really does that as well."
In a June memo to corporate customers, Sear highlighted
Delta's efforts to gain and retain corporate business, citing the carrier's
investments in sales and sales support teams, expanded client reporting that
includes "new information about corporate ancillary spend, the traveler
experience and sales support value-added touchpoints," and numerous
upgrades to onboard and airport products. Delta in the past year also opted to
expand sales of its premium-economy product to global distribution system
channels and maintained its position as the airline with the most Wi-Fi-enabled
aircraft in the domestic skies.
Years removed from bankruptcy and a subsequent merger with
Northwest, Delta's "entire focus is on the customer, because everything
else is behind us," said Somers. "From a sales perspective, we're
feedback junkies—we have advisory boards, surveys, regional town hall meetings.
We're not only telling them the Delta story, but also finding out what we can
do." He added that investments in fleet, facilities and Wi-Fi are
improvements that have been requested by "bread-and-butter corporate and
Delta had a head start against its major domestic
competitors in reorganizing and then merging with another carrier, but those
competitors hardly are standing still in pursuing corporate accounts. "Given
that it's a competitive industry, we're going to stay humble and continue to
earn their business every day," Sear this month told BTN.
For a carrier that has been beleaguered by labor issues,
daunted by below-average operational performance, humiliated by seats coming
unhinged mid-air and challenged by bankruptcy, American surprised several
travel buyers with a second-place ranking in BTN's survey. For example, Autodesk's Finch called American "a
company in bankruptcy that is not delivering."
Despite such sentiments, American rebounded from a
lackluster finish in 2011 to more familiar environs among the top two airlines
rated by BTN. Its scores were aided
by perceived strength in negotiating services, resolving client issues and
employing what buyers rated as a strong sales force relative to peers.
After all, airlines in this survey are not rated
specifically on the stability of finances, timeliness of arrivals or even the
adhesiveness of seats, but more so on how they build relationships with and
deliver services to corporate clients. These are areas in which AA consistently
has excelled during 15 years of BTN
"They're really good at relationships," said
Steven Mandelbaum, vice president of information systems and travel buyer for
the Advisory Board Co. "They've done it for years and have very, very deep
relationships with agencies and corporations. People always say, 'Who can we
work with?' Well, you can work with American. In the past couple years it's
been tougher for them, but others have been way worse."
One buyer respondent praised "competitive pricing"
and "a good relationship" with the carrier, while another noted that "with
all of the changes at American, they have done an excellent job of
communicating changes and upcoming issues." Yet another respondent wrote, "American's
rep stays in touch with me regarding our travelers on a biweekly schedule. He
has promoted some of our road warriors' high status when they are near a
threshold. Our rep personally handles complaints and sees them through to
In the run-up to its November 2011 filing for Chapter 11
protection, American had been losing corporate market share, according to data
obtained by BTN. By May 2012,
according to a memo to AA managers, "Since our filing, we have renewed or
won more corporate account agreements compared to the same period last year."
AA vice president of global sales Derek DeCross claimed that AA's monthly unit
revenue metrics have outperformed those of the carrier's peers and provide
evidence of winning business. "AA delivered the best unit revenue growth
in the industry every month during the second and third quarters," he
DeCross said AA's reorganization process has enabled it to
not only invest in products and services, but also re-evaluate how it
approaches corporate clients.
Since filing, DeCross said the carrier has restructured "the
entire global sales organization." While that meant the departure of at
least one familiar face—former global division passenger sales managing
director Frank Morogiello, who left on July 1—it also meant placing account
managers closer to clients. For example, DeCross said AA moved a sales director
and five strategic account managers to New York from Dallas for that reason.
DeCross also said AA has developed divisions specializing in such key market
segments as banking and entertainment.
He added that AA in the coming months will improve the level
of detail in reports sent to corporate clients. While DeCross declined to
detail the new metrics, he said he expects AA to "provide greater detail
on each corporation's traveler experience."
As it restructures, AA also is making capital investments in
its product. DeCross pointed to "plans to take delivery of more new
airplanes than any other U.S. carrier by the end of this decade." Those
will feature upgraded premium cabins and other amenities, including
premium-economy seating and Wi-Fi. Regarding the latter, DeCross said he expects
AA by year-end to provide Wi-Fi on 91 percent of its domestic U.S. flights.
While AA's full book of aircraft orders continues for years to come, the
airline already "is taking deliveries of new 737s every day," DeCross
"Going though this restructuring, we made a lot of
changes to our sales force that we think position American's sales team to
differentiate ourselves," DeCross said, "and not only demonstrate the
pride we have for our airline, but the passion we have for our customers."
Value Still A Strong
Suit For Southwest
Southwest this year rose to third place from last year's
fifth-place finish. The carrier in September 2011 assumed corporate sales
functions from AirTran, which it previously had acquired, and the combined
sales team now is responsible for selling both brands. While AirTran is
expected to maintain its own identity into 2014, both sales and distribution at
AirTran ultimately are expected to follow the Southwest model.
"The goal there is really to continue what we've done
on the Southwest side: Meet with preferred customers and position both brands
as preferred carriers in their program," said Southwest director of
corporate sales and distribution marketing Rob Brown. That combined sales force
is "hitting the streets very aggressively," Brown added.
When calling on corporate customers, "we discuss both
brands, we look at where there are opportunities to grow with those corporate
customers on either brand and we put together one agreement that represents
both brands," he explained.
To that end, Southwest this past summer began testing with
10 corporate accounts a new customer service help desk, Brown said, with plans
to expand it to other clients. The limited initiative already has drawn "a
lot of positive feedback," he said.
While Southwest has focused on Fortune 1000 firms and other large private companies, the carrier
during the past year dedicated a new salesperson to growing its small and
midsize customer base. One focal point will be the Swabiz business-booking
portal, for which Brown expects to launch within a year new functionality and
enhancements, including plans to "enrich" the reporting features.
Though Southwest is well-known for its preference to
directly control much of its product distribution, Brown said the carrier has
been "diligent about expanding the distribution portfolio over the past
several years to make certain that our sales team has tools necessary." A
three-point distribution strategy has focused on direct access for certain
corporate booking tools, the Swabiz portal and the limited GDS participation,
but when it comes to distribution, Southwest continues to underperform all
peers in the BTN survey.
Though buyers rated Delta highest in every category,
Southwest finished in a first-place tie for overall price value, a
traditionally strong suit for the carrier. Though Southwest long has cast
itself as a low-fare alternative to network carriers, by mid-October it had
served as the moving force behind five of the seven successful 2012 domestic
U.S. airfare hikes, according to FareCompare.
Still, at least one buyer noted that Southwest makes low
fares more readily available than network carriers. "Though they match the
Southwest fares, the number of offerings [from network carriers] are far fewer
since they've reduced the low-bucket fares to three seats on a flight,"
said First Data's McTeer.
US Airways Sharpens
After jumping last year to third place from a last-place
finish in 2010, US Airways finished fourth in this year's survey. Its overall
rating from 2011 remained flat at 3.07.
After de-emphasizing the corporate market following its 2005
merger with America West Airlines, US Airways since has refocused efforts to
generate new corporate business.
Between April 2010 and April 2011, US Airways increased its
domestic sales force by 50 percent to 42 full-time sales positions. While that
number since has stabilized, the carrier continues adding to its portfolio of
corporate clients, according to US Airways managing director of passenger sales
"We'll still be pretty aggressive in terms of talking
to new clients," he said. "Of course, the history was that we weren't
as available as we are today. We really want to be known as the most responsive
sales force and flexible to work with."
US Airways landed second behind Delta for flexibility in
negotiating transient pricing with corporate clients. It is one of the few
large domestic carriers that does not use systems furnished by The Prism Group
to analyze client performance and structure contracts. Schmeltzer said US
Airways also has shunned "a cookie-cutter approach" to structuring
Following a path blazed last year by Delta, US Airways in
July began detailing client-specific data on bag fees by showing in monthly
reports the number of bags checked by corporate travelers, the sum of fees paid
and the number and value of fees waived for frequent flyers. Schmeltzer said
the new reports have been "very well-received" by clients. The
carrier next year plans to expand those reports to include client spending on
such ancillary purchases as its preferential Choice Seats economy-class seating
and details on upgrades granted to corporate travelers through their
Schmeltzer said US Airways also is exploring reports on how
clients' travelers are impacted by service disruptions, "whether that be
cancellations or significant delays. It's one thing to see our DOT
reporting—that's great. But traveler managers like to see how their travelers
specifically were impacted."
Meanwhile, travel buyers this year rated US Airways second
in the "distribution channels" category. The airline recently began
selling Choice Seats via Sabre channels.
United: Blighted, But
The bottom of BTN's
Annual Airline Survey is terra incognita for United senior vice president of
sales Dave Hilfman, who for years led Continental's sales force to a consistent
position among the two highest-rated carriers. Even last year, following the
United-Continental merger, the combined United placed second behind Delta.
During the subsequent year, United was beset by numerous challenges—from a
buggy consolidation of a passenger services systems to a series of operational
struggles during the summer. The bad news hit travel buyer consciousness at
about the same time BTN fielded this
Even before the carrier's fateful shift to a single
passenger services system, United hastened to "merge 2,500 agreements
together at one time to hit that March 2 date, prior to the cutover, to have
fares filed," said managing director of worldwide sales resources Chuck
Crowder. "We didn't want to any of our customers to go dark and not have
But in the aftermath of the March cutover, United customers
faced unsynced passenger name records, missing itineraries, check-in issues,
mileage accrual problems, upgrade difficulties and long hold times to speak
with customer service agents. Additionally, United suspended sales of Economy
Plus seating through global distribution channels and halted its prepaid
United CEO Jeff Smisek in July acknowledged the carrier "added
new stress to the system by simultaneously converting to a single passenger
system, implementing hundreds of new processes and procedures, rerouting
aircraft across our network and harmonizing our maintenance programs. Those
changes were in large part responsible for the degradation of our operational
performance," which included what he called declining performance "on
metrics such as on-time arrival, mishandled bag rates and cancellations."
As United worked through such issues, sentiments from the
corporate travel community were harsh. "Their two-year merger process with
Continental Airlines has caused even their best customers to start using other
airlines as one bad situation after another seems to cause a domino [effect] of
delayed and canceled flights, lost luggage, seat assignment mess-ups, computer
system failures, frequent flyer system failures and the list goes on and on,"
wrote Executive Travel's Glenn.
The challenges certainly have not gone unnoticed at the top.
Smisek described United's recent third quarter as "one of the toughest
quarters of our integration." Carrier executives acknowledged some
corporate share shift, likening operational and technology issues to a
roadblock that prompted a detour by some clients.
The Buckingham Research Group airline analyst Dan McKenzie
estimated that "the loss of corporate travel revenue given integration
difficulty that resulted in poor operations" during 2012 could represent
up to $750 million.
Resolved to mend corporate relationships and regain
business, Hilfman told BTN that
United has taken to heart the grief of corporate travel buyers. "We pride
ourselves on being easy to do business with, and we weren't easy to do business
with following all of these changes," he said. "That involves staying
close to our customers, and, even in the tough times, we have to be highly
visible with our clients."
Now, United executives claim that system integration issues
are in the rearview mirror and operational performance has improved. The
carrier also is working to improve programs for corporate and agency clients.
Crowder said United not only has "added staff in the
corporate programs division" to speed response times, but also is in the
midst of "simplifying contract terms," including "the legal
structure, terms of ticketing instructions, etc." The carrier also expects
to "develop new products based on different industry types," he said.
"Typically everyone just got a standard corporate
discount agreement," Crowder said. "There was some customization to
it, but there were also pieces that were very standard across every industry
and every corporation. Now, we're trying to better segment that and find where
we're lacking a customized program."
As for products that fell to the wayside during system
integrations, United officials expect the PassPlus program to be back online
this year, while Economy Plus sales also could be reinstated in global
distribution systems in that timeframe.
While Delta and US Airways added new details to their
corporate reports, Continental was a pioneer in the space, though some
reporting details also were suspended during integration.
"Something that Continental did in the past was our
customer experience report, which gave different metrics based on the specific
corporation and what their patterns are," said Crowder. "That's going
to be rolled out shortly. During this integration, we had to make some changes
to that reporting with the different IT platforms. Other carriers have brought
that to the marketplace. We're getting back to our baseline, and we're
enhancing what we have."
In short, Hilfman said United in 2013 should look much
different to corporate clients than it did this year, a prospect for which
several travel buyers expressed hope, even if some laced it with a shred of skepticism.
"If United's plan comes to fruition, they'll be someone
to contend with," said Autodesk's Finch. "Do I want my folks to wait
two years for that to happen? Probably not. We need reliability now."
The 15th annual Business
Travel News Airline Survey uniquely measures corporate travel buyer
perceptions of airline performance in negotiating and maintaining preferred
programs, delivering service and providing value.
Survey categories 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
"either negotiated a contract or booked a meaningful amount of
business" in the past year, respondents ranked domestic U.S. carriers in
10 categories on a scale of one (poor) to five (excellent). BTN averaged scores in each category to
create an 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 June 28
to Sept. 24 collected responses from travel manager and buyer members of the BTN Research Council and a randomly
selected subset of qualified subscribers to The BTN Group's Business Travel News and Travel Procurement publications. A total
of 641 qualified respondents completed the online questionnaire, 377 of whom
represented organizations that spent more than $500,000 annually on airline
In an effort to restrict the survey to perceptions of those
involved in managed travel programs, respondents whose organizations spent less
than $500,000 in annual U.S. booked air volume were excluded.
Of the 377 included in the final sample, 23 percent
represented organizations with U.S. booked volumes between $500,000 and $1.9
million; 41 percent represented those spending between $2 million and $11.9
million and the remaining 36 percent represented those spending more than $12
The survey listed the largest domestic airlines as
identified by the U.S. Department of Transportation, excluding regional
affiliates of major carriers. Alaska Airlines, Frontier Airlines, JetBlue
Airways and Virgin America elicited responses from less than 40 percent of the
survey sample and therefore were excluded from this report.
Equation Research hosted the survey and tabulated results.