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Business Travel Trends and Forecasts Toronto
Westin Copley Place - September 10, 2019
New York Marriott Marquis - September 13, 2019
Continental Airlines for the third consecutive year secured
top honors in Business Travel News'
Annual Airline Survey, while its merger partner and new namesake, United
Airlines, once again landed at the bottom of the heap. Roughly two months into
their integration, the carriers face the challenge of preserving the goodwill
Continental has developed among corporate travel buyers, as demonstrated by a
consistently strong performance in the 13 years BTN has measured buyer satisfaction with airline negotiating and
Download BTN's 13th annual Airline Survey with full results and domestic carrier rankings.
Continental has finished first in the annual survey six
times, tying American Airlines, which placed second this year, for the most
number of wins, while United—rated this year ahead of only one carrier, US
Airways—has hovered in the middle or bottom of the pack.
"It will be interesting to see whether good or evil
prevails," said Advisory Board Co. information systems managing director
and travel buyer Steven Mandelbaum of United and Continental's pending
corporate sales integration. "I don't know if there's anything you'd want
to borrow from the United side, except for the fact that they have more planes
and more locations."
Other respondents similarly were critical of United. Asked
what their preferred airline could do the in the next 12 months to improve
their relationship, one Continental client responded, "Remain independent
of United Airlines."
That won't happen, and respondents were divided as to the merger's impact on their travel programs, according to a separate survey of 189
travel buyers BTN fielded in May.
While 36 percent expected the merger to have no impact and 30 percent said it
would provide new opportunities and network coverage, 34 percent viewed it in a
negative light, fearing increased pricing, reduced capacity and degraded
service levels. One respondent to the May survey said, "We feel that
Continental is one of the top airlines from a customer-service standpoint, with
United and US Airways at the bottom. Our concern is this merger will not only
negatively impact the already depleted competitive marketplace, but the quality
of service of Continental. If United's lack of customer care filters over to
Continental, we are going to be in trouble."
Some United clients, though, see the possibility of better
corporate customer service. Westinghouse Electric Co. global travel manager and
travel buyer Dan Cooper, who is negotiating his corporate air deals, said he is
encouraged by Continental's strong performance in the survey. "We've
historically had a partnership with United, and looking at Continental sitting
on top of the ratings this year as well as many other years, we're very excited
about that aspect of the merger," he said. "It was good news from a
travel management perspective to hear that the sales team at the new United
will have such a Continental influence."
The challenge is not lost on senior vice president of worldwide sales Dave Hilfman, who is heading the merged carrier's corporate
sales efforts. Asked about Continental's results versus United's, Hilfman said,
"You can certainly look and recognize the difference. What I'm most
focused upon, having the privilege to lead the new United's worldwide sales
effort, is going forward. Clearly, our team is going to be tasked to focus on
those areas where we can improve so that we can achieve across the new airline
the top ranking. We're going to have to look top to bottom within our sales
processes and within our approach to the market to make sure that the new
airline, now the world's largest and working to be the world's leading airline,
replicates those things that were very much appreciated and recognized by our
key corporate buyers."
The new United sales team has Continental DNA all over it.
Of the three vice presidents named by press time—John Slater for the Americas;
Charles Duncan, who handles Europe, the Middle East, India and Africa; and Jim
Mueller, who covers Asia/Pacific—only Mueller previously was a United employee.
All report to Continental vet Hilfman, who reports to former Continental chief
marketing officer Jim Compton, now United's chief revenue officer. At the top
sits president and CEO Jeff Smisek, formerly the chief of Continental. The new
United plans to determine its next layer of leadership in early December,
appointing managing directors, a head of distribution and other key positions.
Hilfman said getting the right people in place is key to the
success of the merged carrier's sales efforts. He expects the rest of the
corporate sales positions—"all the way down to our front-line sales
professionals"—to be filled by early next year, advancing the merged
carrier's goal to "have one voice in the market within the first quarter
According to the survey results, Continental this year led
its peers in the value of respondents' relationships with the carrier's account
managers and sales reps, which is "really the front line for corporate
travel buyers," Westinghouse's Cooper said.
The United management team also is "evaluating and
reviewing a lot of things we do today at both airlines, and we're trying to
pick the best of everything we do at both, because you want to be at the
highest common denominator," Hilfman said. "You want to have the best
stuff, and I think the market will start to see that as we make our way out of
the first quarter."
Transitioning corporate contracts to the new United likely
would follow the internal organizational changes. "We'd love to be
expeditious, but you want to make sure you get things right," Hilfman
Integration will be a challenge. Regarding Continental,
Mandelbaum said, "I don't think there's anything special about them. It's
not like when you go to Vegas and some hotels have fountains in front of them
and some don't. There's no gee-whiz with them, but what they do, they do very
well, and that's what impresses people. They get the basics right, and the
basics are the easiest thing to screw up in an integration."
Delta's Model Merger
Pointing to the most recent U.S. mega-merger between Delta
Air Lines and Northwest Airlines, Mandelbaum said, "United and Continental
can only hope to be half as successful as Delta was." Though Mandelbaum in
last year's survey was critical of some aspects of the Delta-Northwest merger
process, claiming they advertised more integration than they delivered, he said
the carrier has grown to be responsive and accommodating while improving its
product, including the ongoing fleetwide rollout of inflight wireless Internet.
To one buyer, it was telling that Continental and United are
using Bain & Co. as their integration consultants—the same advisors that
helped navigate Northwest and Delta's transition. Still, that buyer said, "There's
a lot of questions about the culture of United and Continental. These are two
very different operations."
One respondent whose company annually spends between more
than $12 million on U.S.-booked air, seconded the positive perceptions of the
Delta-Northwest integration, noting, "Delta has moved beyond the merger
craziness. They are proving to be a very strong partner."
Delta placed fourth in BTN's
survey this year, with performance below the industry average in overall price
value and customer service, but with average or above-average performance in
the remaining eight categories, including the top rating for its network,
partnerships and frequencies.
Delta and Northwest did not receive their single operating
certificate as one carrier until December 2009 and were rated as separate carriers
in last year's BTN survey, with Delta
scoring a 3 rating on an ascending scale of 1 to 5, and Northwest garnering a
3.03. Delta's 3.24 score this year bested both.
Though the carrier declined an interview for this report,
vice president of global sales Steve Sear wrote in an e-mail, "We're proud
of the results considering the unprecedented changes Delta experienced last
year. Delta had the largest overall year-over-year gain among the carriers and
showed vast improvement in each category. This is a testament to the hard work
of our sales professionals, especially at a time when we were finishing the
merger integration and implementing the transatlantic joint venture with Air
AA Targets Customer
Finishing second by four hundredths of a point, American
Airlines led the industry in flexibility in negotiating meetings pricing, a
category in which it has outperformed its peers for years, and flexibility in
negotiating services and amenities, but fell below industry averages in quality
of customer service and overall price value. "We never like to come in
second," said AA vice president of sales Derek DeCross. "We're
dedicated to the number-one spot."
Of particular interest to the carrier, DeCross said, is
improving its quality of customer service through its Customer Experience
Leadership Program, which "looks at hundreds of different areas and the
ways we can improve. We've been doing that for more than a year, and we
continue to make strides on products and services." The program has led to
new online customer service functionality, improving operational performance
and new technology, he said, including Your Assistance Delivered Anywhere
mobile devices, which allow airport agents to provide flight information to
customers throughout the airport.
DeCross in August took his position at the top of the sales
force after a brief stint as president of AAdvantage. He said he has yet to
make any sweeping changes, and his focus is in the realm of cultivating small
and midmarket business, refining the carrier's distribution and merchandizing
strategy and coordinating sales with joint business partners British Airways
and Iberia on the Atlantic and Japan Airlines on the Pacific.
Though Southwest Airlines rated highest in more categories
than any of its competitors—and scored the best in four: complaint/problem
resolution, quality of communications, customer service and overall price
value—the carrier's performance in providing distribution channels to
corporations proved an albatross. Without that category, Southwest's overall
score would have bested first-place Continental's.
Southwest has only limited participation in Sabre's and
Travelport GDS's global distribution systems, but corporate sales and
distribution director Rob Brown said the carrier has moved to make its content
available through third parties, including through direct connections with
corporate booking tool providers Concur and Rearden and, most recently, an
agreement with Travelport GDS to access its Universal Application Programming
Interface, which agents can tap into.
"We want to continue to listen to our corporate
customers and continue to take the steps that we've taken in the past three
years in expanding our distribution portfolio to meet their needs," Brown
said, though he noted that no new availability through third-party channels is
"They make it very difficult for a corporate buyer to
buy from them," Mandelbaum said. "They've made major investments,
they've put sales staff on the ground, and I think they've done a lot, but it's
not the same game. Can I book them in the GDS? No, not really. They're not in
the mall. I have to drive to a different shopping center, park my car and go
US Airways' New
Following its merger with America West Airlines in 2005, US
Airways began to de-emphasize the corporate market, positioning itself as a
low-cost carrier, culling corporate contracts and making deep cuts to its sales
force. The carrier for years has sat at the bottom of BTN's annual survey, and this year's scores in each category remain
below-average. Still, the carrier's overall score rose to 2.85 this year from
2.64 in 2009. Only Delta had a greater rate of year-over-year improvement,
though each carrier's score was higher this year than last.
CEO Doug Parker during US Airways' third-quarter earnings
call last month said, "We've actually made a real push to get more
corporate business, and that includes a lot of initiatives in Europe to get
more corporate business. Our corporate sales team has done a good job of
getting a lot more corporate on the books so we have more up-front business
demand." The carrier did not return requests to speak with BTN for this report.
Westinghouse's Cooper, who worked for US Airways before
becoming a travel buyer, has seen evidence of such a new stance. "That's
one carrier where we've seen a tremendous increase of flexibility," Cooper
said, adding that US Airways has been "reinstating their recognition of
the corporate traveler.
"Immediately after the merger, there was a devaluing of
the corporate traveler, where they were treated in the same way as a leisure
traveler. Those are some ongoing conversations we've had with them over the
years, and we've seen improvement. I do have to applaud them. They went to such
an extreme, but now they're coming back, which is good. They've been more
business-friendly than they've been since the merger."
The 13th 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 did
business in the past year, respondents ranked domestic carriers on a scale of
one (poor) to five (excellent) in 10 categories. BTN averaged scores in each category to create the overall score
for each carrier. All categories are 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 late
August to early October invited by e-mail a randomly selected subset of
qualified readers, producing 459 responses, 249 of whom 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-five percent of the 249 respondents spent more than
$12 million in 2009 U.S.-booked air volume, while 35 percent spent between $2
million and $11.9 million, and 40 percent spent between $500,000 and $1.9
The survey contained a list of the 10 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 35 percent of the survey base—AirTran Airways, Alaska Airlines, Frontier
Airlines and JetBlue Airways—were excluded from this report. Reflecting the
closing of their merger at the end of 2008, Delta Air Lines and Northwest
Airlines were treated as a single carrier—Delta—in this year's survey.
This report appears in
the November 29 issue of Business Travel News.