In what may be one of the more simplistic yet truly global airline deals ever crafted, British Airways since March has been providing to the various agencies of the United Nations two consistent point-of-sale discounts, one for short haul and one for long haul. The deal enables U.N. travelers to secure the negotiated rates almost anywhere in the world by directly contacting a British Airways reservations center or, in the case of North America, a contracted travel agent.
For BA, the deal still is considered an experiment. It required an adaptation of a meetings and convention tool used in the United Kingdom that allows delegates to use British Airways call centers or city ticket offices to book special fares. "It is a specific strategy for the U.N. that is just in testing," said Drexel Lewis, an account manager in British Airways field sales who helped negotiate the U.N. deal. "There is the potential to roll out the model to other accounts. We do not know how far it could go."
The new BA contract stemmed from the U.N.'s first effort to leverage its global air spend, which exceeds $200 million annually when including independent but affiliated organizations and offices around the world. Such a large piece of business normally is quite attractive to international airlines, but the U.N.'s decentralized structure discouraged most potential bidders taking part in a meeting last year in Geneva.
"When we told the major European airlines, and the alliances they represented, that we would not be centralizing, they responded negatively and we were bummed," said Anton Bronner, U.N. chief of travel and transportation services. "But BA said they'd see what they could come up with. Within a few weeks, they came back with a deal."
That deal includes feeder flights provided by British Airways' Oneworld partners. BA, however, must operate transoceanic and other long-haul flights.
In North America, the discounts only can be booked through contracted travel agents. In all other markets, travelers directly call BA res centers and use a code to identify themselves as authorized U.N. travelers. The same deal is used whether travelers call direct or book through a North American agency. "British Airways put in a lot of work behind the scenes to set up every call center," Bronner said. "After being less flexible for years, this truly was a brainstorm for the airline."
The new global U.N. discounts are separate from pre-existing local British Airways contracts. Bronner said local deals oftentimes offer better terms and still are used whenever possible. For example, most travel from North America remains covered under an existing regional deal. From New York alone, U.N.'s spend across all airlines tops $40 million. "A small office in Chad wouldn't have its own local deal, but when you bring 180 offices together it starts adding up," Bronner explained. "The main advantage is tapping uncovered markets that have gone unmanaged. Before, in small offices, it was airline to airline with no discount deals."
The arrangement also will help the U.N. to aggregate data and more accurately determine the size of its program. Data collection has matured in such larger markets as Bangkok, Geneva and New York but remains underdeveloped in smaller and more remote markets.
Andrew Toh, U.N. assistant secretary general for central support services, has been advocating initiatives that promote common services and pool resources inside the U.N. system. Toh was named to his current post one year ago, after restructuring the U.N. secretariat's procurement division. After finalizing contract specifics, Bronner's team disseminated details of the newer global deal to all worldwide offices so travel management staffers would know whether to use the new discounts or any existing local deals. "British Airways took a leap of faith on this one," Bronner said. "After this new deal is in place for awhile, we will have good figures and we will see where we can go from there."
BA's Lewis said the carrier "already is beginning to see people from around the world use this deal."
The new BA arrangement is not the first unusual airline deal crafted by Bronner and the United Nations. In addition to employing three in-house international rate experts, Bronner in 1999 negotiated deals with 12 preferred carriers providing business class seats at full economy fares
(BTN, March 22, 1999).