Major domestic carriers are increasing their focus on the group corporate travel market with aggressive earned ticket programs and flexible pricing as they cling to growing meeting and conference sales, according to industry consultants. Buyers are taking notice.
American Airlines and Continental Airlines tied as corporate travel buyers' preferred carriers when negotiating group pricing, according to the seventh Business Travel News Annual Airline Survey
(BTN, Nov. 8). Industry analysts credited aggressive sales policies and flexibility for the carriers' success. "American and Continental are aggressive with their earned tickets and that is showing a good sign of flexibility to the traveler," said Terry Egger, regional director of Des Moines, Iowa-based Air Fulfillment Services, a third-party firm that manages group and meeting air travel for meetings management and incentive companies.
Continental, the overall survey leader, and American shared first place in the category of flexibility in negotiating group pricing with scores of 3.37. Major domestic airlines were ranked on a scale of one (poor) to five (excellent) in 10 categories addressing service and value by 534 qualified readers and members of the BTN research council.
While neither American nor Continental officially has offered any new benefits to corporate group ticket buyers, both maintain that they are open to negotiation. Egger said that American has offered him one earned ticket for every 25 booked during the past six months, up from the usual one for 40, if he returns the purchase contract to the airline within 24 hours.
George Coyle, product manager of group and meeting sales for American, denied a new one-for-25 earned ticket policy, but left the option open to negotiation. "It's a possibility, but it's not a given," he said. "You call me for a low-factor flight and ask for one for 25, it's not going to happen."
Coyle said AA takes a flexible approach to corporate group purchasing because buyers differ on what they see as a good incentive.
"I would rather see the discount be lower on the front end," said Kari Knoll Kesler, manager of meeting and events at Honeywell Inc. "It would be very compelling, though, if we could turn the contract around quickly and get a significantly higher ratio of earned tickets."
Kesler said she would rather see a flat fare for all of her meeting attendees. Major carriers often offer zone fares for group tickets, in which attendees pay a flat price depending on regional arrival and departure points.
"One of the toughest things about dealing with an airline is trying to know what you will be spending," Kesler said. Locking in a discounted rate, she said, even if it is not the cheapest possible flight, can benefit a corporate buyer. "You might be willing to settle for it because of the dependability that it would bring to your scenario," she said.
Kesler said she does see carriers taking more notice of group corporate travel, and has seen added flexibility despite the fact that buyers have a limited choice of airlines that fly to a particular destination.
"Especially in the current state, where the airlines are losing money hand over foot, you're going to see them realize that this is a new revenue stream opportunity for them," Kesler said. "They'll likely place more resources, or some resources as opposed to none historically, in this arena."
Air Fulfillment Services' Egger said that both Continental and American do a good job with service, which likely translated into higher marks from buyers.
"They're fast at answering the phone, they get you their contract fast, and it just seems to be a little more seamless. There is this underlying 'I want this group' kind of thing," Egger said. "They are back to viewing meetings and incentives as incremental business, and if they're aggressive, it helps their bottom line."
CO Unveils Pricing ToolContinental's MeetingWorks online pricing tool links to Continental.com and automatically finds the best ticket price for a customer—whether that is the published fare, the standard 10 percent group discount or a zone fare. The carrier in June launched the pricing tool in direct response to requests from buyers, said Joe Pizzitola, sales development manager for meeting, incentive and group sales.
"The biggest request we had was for the online booking tool and that had been in the process for quite some time," Pizzitola said.
AA Polishes GEMAA's Group Evaluation Model group pricing system also has proven to be highly popular with buyers, according to Coyle. "It actually will go out and price a unique fare for the agenda that is being requested," he said. "It will direct you to our low inventory flights. You might have asked me for the 8 a.m. departure, but I can tell you if you're willing to take the 11 a.m. departure, I can save you money. I may have more seats available for sale and, historically, that flight is running a little lighter than the other flights that we operate in and out of that particular market."
The GEM system has been in place for about four years, Coyle said, but changes this year included enhancements to the market valuations that are fed into the system, resulting in even cheaper fares.
Corporate group and meeting travel is important to airlines, Coyle said. Not only does that segment offer revenue, but it also can help to fill low-inventory flights.
"To some degree, groups are more flexible in terms of the time of day they travel, because if you want to go to a meeting in Phoenix, you might be willing to leave a day early. You're more concerned about the price of the ticket," according to Andrew Menkes, chairman and CEO of Princeton, N.J.-based Partnership Travel Consulting.
Corporate group travel does tend to be more flexible, Kesler said, but there are limits. Service still plays a role, and most meeting buyers would not want to force a cheaper fare on an attendee if it meant giving up seat upgrades and direct flights, she said.
Even if a planner decides to negotiate every aspect of their group fare, Kesler said, it's not an open-market decision with many carriers to choose from.
"You can't walk away from these negotiations," Kesler said. "It's not an option. You have to partner with the airlines and work with them."
Egger said other carriers will watch American and Continental closely to see if either makes a move to gain a larger share of the group and meeting market—but he doesn't expect any major changes in the near future. "It's just the little things, and it's nice to see some of the little things come back," he said.
Travel buyers who responded to this year's BTN airline survey were asked to grade only those airlines with which they had done business in the past year. Not every respondent rated every airline in the group and meeting negotiating flexibility category. Returns that rated the carriers with zeroes and ones across the board were removed.