Three United Kingdom-based travel managers have refused to
sign confidentiality-clause waivers requested by British Airways so the carrier
could share details of their corporate contracts with new joint venture
partners American Airlines and Iberia, the travel managers told BTN in the past week.
Speaking on condition of anonymity, the travel managers all
expressed fears that surrendering the data would at best bring no value to them
and at worst lead to inferior deals to the ones they have now.
However, a fourth travel manager told BTN he did sign the waiver in the hope that it would lead to a more
attractive offer from American than he has achieved in the past. BA head of
U.K. and Ireland sales and marketing Richard Tams responded that the waivers
are not mandatory and are designed to facilitate joint agreements that will be
better than those currently offered by individual partners of the JV.
The three joint venture partners announced the formal
signature of their agreement on Sept. 29, having received antitrust immunity in July. Last week, the airlines staged a press conference to promote the benefits
of the agreement, including coordinated schedules and frequent-flyer programs, as
well as the launch of new routes that the joint venture said would be
unsustainable for any one of the partners to operate alone.
Yet travel managers have expressed a clear sense of skepticism.
They fear consolidation, not only by the new Oneworld-based joint venture but
also existing ventures among members of SkyTeam and Star Alliance, is reducing
competition and is far more in the interests of suppliers than buyers.
"My negotiations with BA were quite difficult this time
around," said one of the buyers, who recently concluded a corporate
agreement with the airline. "Richard Tams wasn't kidding when he told BTN that BA has toughened up its
strategy for dealing. It is taking a very aggressive stance. I declined the
request to waive confidentiality to BA's joint venture alliance partners, which
seemed to come as a huge surprise to them, and they did imply that if I didn't
agree to waive it in the new contract it would be a deal-breaker. Fortunately,
that was a threat rather than a promise.
"I would categorize our two companies as having a very
good relationship. We have worked out many bumps in the road, particularly in
the past two years, which have presented so many challenges, not just with the
economy but with operational difficulties on their side and reduction of spend
on ours. However, on the subject of their joint venture with AA and IB, I don't
trust that corporate customers will come out better off. I'm fairly sure we
will be worse off. There is no motivation for me to hand this valuable
information to AA, BA and IB on a silver platter without any assurance of a
quid pro quo."
Another buyer expressed almost identical fears, saying, "The
carriers are going to get very bullish. It's going to be less competition and
prices are going to go up. They wouldn't be doing it otherwise, and I don't see
that they are going to bring any benefits to our business. Going to tender
right now seems the wrong thing to do until the alliances have worked out what
they are doing."
A third buyer also expressed surprise at being approached by
BA for the waiver with no negotiations for a new deal imminent. "We're in
mid-contract," the buyer said. "There are no commercial benefits
evident to us. Why would we want to share our existing contracts with other
partners before they can disclose what it's going to mean for us? It's very
early. The ink isn't even dry on the joint venture agreement yet. We are taking
the view that signing a waiver of confidentiality will not deliver any value,
so we won't do it."
In response to the question of timing, Tams said, "We
decided we would go out to all our customers at once, even though some of them
do not have contracts coming up for renewal. It isn't mandatory. Without the
waivers, we cannot share the details of what we currently have with our JV
partners, so we can look to see what will be the position moving forwards."
Tams vigorously refuted the accusation that the joint
venture deals would leave corporate clients worse off. "If it's worse than
what they have got at the moment, then they are not going to sign," he
said. "It will have to be attractive for them. We're not trying to
railroad customers. The idea is to bring them a better program and not a worse
one. It is clearly incumbent upon us to explain that. We're not going to force
them to sign a deal with new partners."
However, U.K. travel managers are concerned that they will
have little bargaining power with the new joint venture because of its
overwhelming marketshare on many U.K.-U.S. routes and therefore they will have
little choice other than to sign what is put in front of them. Once again, Tams
denied this suggestion. "There are plenty of alternatives," he said. "That's
why I have a sales force."
Another travel manager with substantial transatlantic
business told BTN he had no problem
signing the waiver. "We have a good deal with BA, so I am hoping to
piggyback off that to get a better agreement with AA," he said.