Some of the companies that spend the most on travel—BP, Lockheed Martin, Wells Fargo and Intel—this year listed Southwest Airlines among their preferred carriers, according to Business Travel News'
Corporate Travel 100 report released this month. Though Southwest's penetration on the list remains limited to those four, they represent the carrier's largest presence yet on BTN's annual list of the biggest spenders on corporate travel in the United States.
Southwest in the past year has made moves to ratchet up its position in the corporate market. The carrier has entered into long-term—though limited—global distribution deals, bulked up its sales force, altered its boarding process from the so-called "cattle call," upgraded its frequent flyer program and added higher-benefit fare tiers.
The past year has represented a reversal of the old Southwest, which for years had played a different game with corporate clients than its major carrier counterparts, opting out of broad GDS participation and foregoing contracted fares.
"We've added new tools and a new suite of options that allow the managed travel environment to book us through their preferred channel," said Southwest director of corporate sales Rob Brown. "We've also expanded our sales team to develop more relationships than we've previously had."
When asked if Southwest negotiated discounted fares with corporate clients, Brown said, "I can't speak to the specifics, but I can certainly say we have a number of strategic relationships in place in the corporate marketplace. There are certainly terms built around those strategic relationships." Brown said those terms "absolutely" include marketshare agreements with corporate clients that set goals "to help a company meet their travel goals and help us grow our marketshare with that company." Neither Southwest nor its contracted clients would comment on how the carrier has structured deals.
Southwest in the past year expanded its corporate sales team and now courts corporates with the "largest dedicated sales force we've had" since Southwest formed a five-member team in 2004. Brown said the team, led by three national managers at headquarters, includes "15 corporate relationship managers based out in the field building those relationships on behalf of Southwest Airlines."
Though Brown claimed about 65 percent of the Fortune 500 has enrolled in the Swabiz product—the carrier's direct business portal—Southwest also has moved to list its content in broader corporate channels.
Adding to its long-held limited participation in Sabre, Southwest last year signed a 10-year distribution agreement with Galileo to provide its published fares and inventory—not including Web fares—to the GDS's subscribers. A similar Worldspan deal followed. Brown said Southwest content is flowing through those channels.
"We are continuing to develop that channel. In June, we provided all Galileo subscribers with the ability to input the Rapid Rewards number into the reservation as well as return ticket numbers to them at the conclusion of the reservation," Brown said. "We continue to move forward via an interactive sale connection, which is part of the distribution agreement we struck with them last year. It's continuing to develop."
Intel, which listed Southwest among its preferred carriers this year, noted that its travelers use the Swabiz corporate portal to book directly with the airline (see story, page 1).
One Corporate Travel 100 buyer who did not list Southwest as a preferred carrier said the travel department does "push Southwest," noting, "You're my preferred carrier as long as you're the cheapest fare on that ticket. You're as good as the last fare we purchased."
CEO Gary Kelly earlier this year said Southwest's new Business Select fare category would position it to win more corporate business and be "open to the possibility" of negotiating corporate discounts
(BTNonline, Feb. 4).CFO Laura Wright during a second-quarter earnings call in July said, "The revenue increase from Business Select for the second quarter was approximately $20 million, up from the first quarter's $15 million." Kelly said Business Select represents "about a $100 million annual revenue opportunity."