United Targets Smaller Cos.

<FONT SIZE="+3"><B>United Targets Smaller Companies</B>
<i>Carrier Tests First Formal Corporate Program For Accounts Under $500K</I>

By Jay Campbell

United Airlines has signed more than 100 new accounts in the past month through a new corporate program that targets a relatively neglected market-companies with annual air volumes of $40,000 to $500,000.

While small to midsize accounts represent the majority of total business travel air spending, airlines have traditionally been reluctant to set up a formal program for dealing directly with this segment, preferring instead to work with such companies on a case-by-case basis. With this initiative, United becomes the only major airline to offer such a program.

Called Perks Plus, the program is being tested in four cities: Buffalo, Chicago, Kansas City and Phoenix. If all goes well, it will become available throughout North America next year.

To lure buyers, United is initially offering discounts off GTE Airfones and car rentals, as well as free United Connection booking software. Based on volume in $10,000 increments, companies will earn free confirmed upgrades, free tickets and premier frequent flyer status.

Although the airline is not offering a discount off airfares, participants said they like the fact that United is taking notice of the small and midsize market, and agreed that soft-dollar perks are enough to motivate them to shift share.

"We're not a big fish," said Dana Pair, flight/travel manager for Kansas City-based Bernstein-Rein Advertising, which purchases between $400,000 and $600,000 annually in air. "But we should be some kind of fish."

United has gone from being a supplier that Bernstein-Rein rarely used to a preferred supplier. Pair expects to provide United with about $50,000 in business per quarter, which would earn five upgrades, two travel certificates and four premier memberships in the Mileage Plus program, good for the remainder of the calendar year.

"In the past, United had about 4 percent of our business, with American at about 14 percent," said Pair. "I would expect to see those numbers reversed, since from where we are, American and United are interchangeable in terms of where they fly."

United also has become a preferred carrier for Jamie E. Clark, travel and events specialist for Kansas City-based Business Men's Assurance Company. "This gives us something to shoot for," she said. "We don't mandate air carriers, but if we're looking at the same fare, same time and same connection, United will be the choice."

According to Anthony Toth, United's strategist for North America and the manager of Perks Plus, this is United's first formal program targeting accounts of this size.

"It's very difficult to get to this type of customer," Toth said. "We're doing it through direct mail and telemarketing. We weren't sure who makes travel decisions at a lot of these companies, so we sent information to the president or CEO. In about 20 percent of cases, there was someone else dedicated to travel management."

The airline will track quarterly performance using a ticket identification number. The United Shuttle is included in the program, but United's foreign partners are not. Although the plan allows for flexible involvement of a travel agency, some suggested this is yet another means for the airline to circumvent agencies, because traditionally it is the agencies that gather up such business.

In addition, some industry observers said the deal may not be as sweet as it seems. "Though this is a somewhat new phenomenon and I'm heartened that United is paying attention to the smaller market, if they're not offering a percentage off the fare, they're not offering what travel managers really need in order to change their travelers' behavior," said Tom Wilkinson, president of the Travel Management Group. "I would want airlines to recognize these companies in more than symbolic ways, but I still tip my hat to United for raising the issue."

Wilkinson added that in recent weeks, he has noticed United offering some better-than-usual deals for Washington, D.C.-based companies in the $2-to-$4 million air volume range, sometimes for as much as 10 percent off.

Bernstein-Rein's Pair saw the reasoning. "It seems like United has some good insight here," she said. "If you have 50 smaller accounts like mine instead of 2 huge ones, you're making the money and your risk of losing a big chunk of business is lower.