Many discounts on group air tickets are drying up, said meeting buyers in an exclusive Meetings Monitor survey. After a year of fare reforms, restructuring and continued pressure of high oil prices, buyers said they are relying on their company's transient deals to protect them from rising air costs.
According to the survey of 186 corporate meeting buyers, 52 percent said group air discounts have remained flat compared with last year and 39 percent said they were receiving smaller discounts. In a similar survey taken in 2004, 67 percent of respondents said discounts had not changed from the previous year and 23 percent said they were receiving smaller discounts
(Meetings Today, Aug. 2, 2004)."It's harder to get the group discounts. The airlines are being squeezed so many ways and this is an area where they're more reluctant to offer a deeper discount. In a lot of cases, they're pulling it back," said John Asselta, senior vice president of Princeton, N.J.-based Partnership Travel Consulting.
Though other major carriers did not match Delta Air Lines' elimination of its groups and meetings product last year
(Meetings Today, Jan. 17, 2005), Asselta said they would if they could. "They'd probably be happy if they could get rid of them, but history with certain corporate clients won't allow them to do that," he said. "Where they can, I think they would like to pull it back, because it's another way that's cutting into potential revenues for them."
As in any vendor negotiation, more volume commitments yield better deals, Asselta said, and corporate meeting buyers should leverage transient spend. "They should be trying to couple their meetings spend with their overall air spend," Asselta said. "It would be to their advantage to work with the travel manager in working these things out with the airlines. Hopefully, they would be evaluated and rewarded on the overall business."
Many companies have been successful in leveraging their overall air spend, he said.
Pharmaceutical giant Pfizer Inc. is protected from rising airfares by its large volume of transient and group spend. The negotiated transient rates obtained by the company work well for meetings, said Connie Bocchieri, manager of group air and meeting services at New York-based Pfizer.
"We haven't seen a tremendous impact," said Bocchieri. "Some of the airlines have eliminated their group departments, which didn't impact us that greatly because we're then allowed to use our transient fares which, for our volume, are quite favorable."
Pfizer will use negotiated transient rates for groups, unless an event is placed in a market not covered by an existing agreement. "If we don't have an opportunity to use a group fare in a particular market, we would negotiate a separate contract. Those are coming through OK," she said.
This year, Bocchieri said greater focus is being placed on international group air spending. "Our biggest challenge is in the global market and the ability to establish group airfare pricing for intra- and overseas travel," she said, adding that cross-border ticketing is one of those challenges.
At Charlotte, N.C.-based General Dynamics Armament and Technical Products, senior event planner Adrienne Guyett said that her department uses the leveraging power of parent company General Dynamics, a heavyweight defense contractor, for its air negotiations. "We go through our corporation. General Dynamics has a little over 71,000 people," Guyett said. "We do not negotiate group airfares. They go through our contracted rates, which are better than we could get."
Stephanie Dillon, assistant vice president of global travel, meetings and events for Los Angeles-based investment management firm the Capital Group of Companies, said negotiated transient rates often are as good or better than group rates with her preferred airlines.
"We find typically that the discounts we get are as good as a corporation as they are in zone fares," Dillon said. "We're not seeing a big differential. It's probably easier in most cases to apply our own discount."
The company has used zone fares for some international events, she said. "Even though we're not a large company, we're a midsize company, and our market share to our preferred is pretty significant," she said. The company has 21 worldwide offices and a global air volume of $20 million, of which $12 million is domestic. Most events are located in the company's top transient cities, making it easier to consolidate volume.
Though zone fares traditionally have been the discount of choice for corporate groups, the survey indicates that flat discounts—often favored by low-cost carriers—may be offered more often. In the 2004 survey, 61 percent of respondents said they used zone fares. This year, only 37 percent of respondents said they did and 52 percent said they received flat discounts on group air tickets. Respondents were allowed to choose more than one answer.
Asselta said he has not seen airlines pushing flat meeting discounts over zone fares. "In the past, zone fares were better," he said. "Airlines could be more aggressive in areas they were looking to grow. On the other hand, the corporation would have a better sense of what it was really going to cost them if they had a meeting in that area. They could budget better."
This year, buyers can expect more of the same from airlines, he said. High oil prices will continue to impact airfares as carriers try to dig their way out of difficult financial straits.