Leaving the airline industry was a tough decision: Even with the perennial challenges of volatile fuel prices, intense regulation, high taxation and other uncontrollable factors, the world of air transportation has always been exciting. I never had a dull day. With the impact of an unprecedented global recession and the proliferation of new technology tools, the pace of change has accelerated for everyone in the business of managed corporate travel.
While these changes present great challenges, they also provide tremendous new opportunities. Because of intense senior management focus on travel and entertainment costs, travel management professionals are more visible and accountable. Travel procurement choices are more complex. The critical question is: How can airlines work collaboratively with their corporate clients to address these issues and support and communicate the benefits of managed travel?
Success depends on approaching these issues with open, honest and direct communication; being candid fosters creativity. Both corporate managers and airlines need to ask the tough questions. Why should we cling to traditional models when everything around us has changed? Fundamental objectives haven't changed, but the strategy and tactics that support them need to be adapted to the changing environment. There are three primary opportunities:
1) Rethink your concept of an airline network. One of the more recent, and dramatic, changes in the airline industry is the evolution of alliances. Global airline alliances have been around for more than a decade and the majority of benefits have accrued primarily to individual travelers, not corporate buyers. However, during the past few years the development of alliance terminals in major global cities and the significant growth and expansion of international joint ventures is creating a seismic change for both corporate customers and airlines. That shift will continue with Open Skies in Japan and will benefit corporate buyers by intensifying competition among the global alliances. I'll never forget the first time I saw the Star Alliance terminal at Tokyo Narita. Seeing a vast choice of connecting flights from different carriers all seamlessly branded and delivered was impressive. I remember thinking, "This is the future."
2) Build long-term partnerships. We all lose if we focus only on short-term goals and immediate returns. Airlines need to approach their corporate buyers as long-term partners. Each customer is unique, and airlines need to listen to each customer’s specific needs and concerns and work with the customer to jointly develop the right strategy. When customers select an airline or an alliance, they need to honestly commit and agree to realistic goals. Taking time to develop the best plan will ensure both parties are on the same page and will engage decision makers and commit stakeholders within both organizations.[PULL_1]
3) Embrace and apply new technology. New technology will continue to provide more choice, control and customer benefits across the travel process. Could you have imagined even five years ago that you wouldn't need a paper boarding pass or that you'd know your upgrade status instantly on your PDA or smartphone? Airlines can track items that corporate buyers may find useful, such as total spend, net effective savings, points of sale, carbon emissions, how many bags were checked and how many travelers are members of the frequent flyer program. Airlines also are working to find a solution to provide transparency for the purchase of ancillary services. The key is to mutually identify what technology and data are needed for the partnership to flourish and then set the appropriate priorities.
As corporate buyers and airlines move forward, they need to quantify the return on investment of travel and show the value proposition. Airline sales managers should work collaboratively with corporate buyers to help frame the issues and collect the data.
When we look back at this specific point in time,we'll see that the severity of the economic crisis drove many positive, albeit difficult, changes. None of this will be achieved if corporate travel professionals and airlines don't work together effectively and learn from their collective experiences. I believe they can, and will. If ever there was a time to be bold, now is the time.
Larry Kellner, former chairman and CEO of Continental Airlines, is president of Emerald Creek Group, a Houston-based private equity firm.