Op-Ed: NBTA's Attempt To Standardize The Airline Request-For-Proposals Process Is A Misguided Undertaking

The National Business Travel Association has generated a standardized request for proposals for corporations to use in soliciting airlines for pricing and service concessions. Why?

When characterizing legacy airline behavior, the lemming comes to mind. All operate hubs and generally monopolize routes to and from those hubs. O'Hare is an exception; maybe Newark is an exception, too. In fact, it may be a stretch, but Dallas/Fort Worth—the area, not the airport—is not a monopoly. All woodenly follow their brethren whenever they change their fares on connecting schedules. This rarely happens on nonstop schedules because most hub-based flights are monopolies. One airline starts charging $15 for a checked bag and almost all others follow. One stops giving free food and others follow.

Airline pricing is far from creative. It's always "follow the leader," even if the leader is, in Robert Crandall's words, your "dumbest competitor." Because discounted fares on connecting service are likely to be what airlines will offer, a standardized RFP will generate reduced corporate airfare costs mostly if travelers are forced into using connecting flights—say, using Northwest Airlines to fly from Philadelphia to Los Angeles via Detroit, Memphis or Minneapolis. Using connecting service when nonstops are available is a foolish waste of corporate productivity. Almost every connecting schedule adds at least two hours on routes that have alternate nonstop service, not to mention such problems as weather.

A few transcontinental routes are competitive and might be worth using a process that includes a standardized approach, but corporate travel managers know which airline is hungry for business on those routes, so formal RFPs aren't needed.

International flights may be a different story, but if you send a lot of people to London, Frankfort, Sydney and Paris, don't expect much mercy on fares to those locations. And don't expect Star Alliance members to undercut their allies, although this is being done today.

Every corporation and airline has a unique collection of needs. Some routes have high demand, mostly on Friday and Sunday. If you can accept a day-of-week limitation on your most popular destinations, that pitch might get an airline's attention. After all, if they are full on Sundays, why should they discount fares for that day?

Another gambit that can vary broadly from company to company is use of international traffic to leverage lower fares on some domestic routes. Enough competition exists on transoceanic routes that you can often get business class upgrades on full-fare economy tickets if you meet a carrier's demand requirements. Yet those can be stiff and difficult for corporate travel managers to meet as trips are being replaced with less expensive communication options.

When dealing with a carrier in a duopoly situation like Dulles-Heathrow, United Airlines or British Airways may demand as much as 95 percent of your traffic and Prism can tell United or BA if you are not meeting that standard. Otherwise, fare concessions don't make sense to airlines in 60 percent of situations.

Standardized RFPs will produce standardized results, which means you will never get concessions on fares better than those your neighbor across town gets. It sounds like a good idea in principle, but airlines will resent lengthy RFP forms that waste time when simple exchanges between buyer and seller can solve a problem of rising air costs.

No standardized RFP can convey forecasts of future traffic accurately, so negotiation to determine mutual needs and mutual opportunities, though less statistical, is a far better approach to establish any buyer-supplier relationship. As stated before, every buyer has unique needs and every supplier does also. Marrying those needs will produce better results than a cookie-cutter form ever will accomplish.