Airlines' flexibility on meeting and group travel pricing dropped across the board, according to the results of Business Travel News' annual airline survey of 172 corporate meeting buyers
(BTN, Oct. 28). Carrier officials maintained that no major changes to prices or restrictions on meeting and group fares or pricing programs occurred—as they did in the transient arena—but buyers said every single airline has been less flexible this year than in 2001.
American Airlines, though its flexibility rating dropped to 3.36 from 3.53 on an ascending scale from one to five, topped all other airlines in meeting pricing flexibility. AA dethroned 2001 champ Continental Airlines, which slipped to second place and 3.17 from last year's 3.55 score. The two major carriers were followed by troubled US Airways in third, a tie between Delta Air Lines and Northwest Airlines in fourth and United Airlines, which slipped from third in 2001 to seventh this year. Overall, the airlines' aggregate rating on group pricing flexibility declined to 3.05 this year from 3.21 last year.
Meeting and group pricing is often a function of transient pricing. In its most basic form, in packages available to any group that includes a varying minimum of attendees, fares are based on a 5 percent or 10 percent discount off full coach fare. It seems likely the stringent changes made to carriers' dealings in the transient sphere, including the exemption of certain lower classes of airfares from corporate discounting and strict new restrictions placed on the reuse of nonrefundable fares, have affected buyers' perceptions of meeting pricing flexibility or they are using transient-based fares.
AA's product manager for group and meeting sales George Coyle said the view of an increasingly inflexible stance on meeting negotiating is a misconception probably influenced by the carriers' changes regarding unrestricted transient fares earlier in the year. In fact, he said, AA has been more flexible throughout 2002, often replacing free-ticket amenities with hard-dollar discounts. "If a corporate buyer is particularly price-driven and wants the lowest possible fare and doesn't want earned-ticket amenities, we may do that," Coyle said. "A lot of this business today is price-driven, and there is less interest in amenities."
American has adapted and enhanced its proprietary Group Evaluation Model group yield management tool to allow its agents to find flights quickly on which all discounts can be offered in dollars, instead of amenities, Coyle said. The expected load factor of a given flight plays a large part in that decision.
AA also has shown more flexibility in delayed ticketing, or allowing a group to hold seats on a flight. That flexibility takes place when the corporate group has a history with the airline, Coyle said, and the carrier feels confident the group will use that space.
Other types of meeting pricing packages, particularly zone fares, largely are stable because carriers routinely set prices on zone travel at least one year ahead of time. Some carriers also have made significant changes to meeting programs that have not necessarily impacted the actual price of the fare, including decreasing the amount of advance booking time required to receive an additional 5 percent discount off full coach fares within public meeting packages
(Meetings Today, Aug. 12), or Northwest's decision to allow any account with at least $1 million in corporate travel volume to qualify for a combined meeting and transient contract
(Meetings Today, Sept. 23).Yet, some travel and meeting buyers who have negotiated wider deals with carriers, including those that combine meeting and transient or those that encompass multiple meetings, said some airlines are moving away from such arrangements. "They're becoming less flexible out of need," said Steve Clark, assistant vice president of conference and travel services for Madison, Wis.-based CUNA Mutual Group.
Clark has seen his dealings with carriers this year change drastically. Clark had leveraged CUNA Mutual's mandated and consolidated meetings program to negotiate a blanket corporate meeting contract for internal corporate meetings, which comprise about 95 percent of the company's events, offering certain discounts for each meeting. "That is going away," Clark said. "We're back to meeting contracts based on negotiated zone fares."
Clark said carriers are more inclined to negotiate meeting contracts on a one-by-one basis and less inclined to talk about more comprehensive deals, although some still occur. "We can package meetings and we're still packaging them, but it is set up meeting by meeting," he said.
Airlines also are much more interested in, and capable of, measuring meeting contract performance, ensuring that terms governing minimum numbers of attendees are followed and seeking redress if they are not. "I'll say that we have 25 people attending a meeting, and they'll say 10 of those must qualify for the discount," Clark said. "If not, we have to pay for the difference. Previously, these measurement tools didn't exist."
However, not every buyer is seeing much difference in flexibility on the meeting side of corporate travel.
"We've seen pricing stay about the same," said Terry Sullo, manager of travel and meeting services at Cambridge, Mass.-based Akamai Technologies Inc. "The dollars we've spent have been about the same as they were in 2001, but we don't separate the meetings and transient business. More of our volume is transient, and most of our meetings are not large enough to negotiate more than zone fares. We haven't pushed real hard as compared with transient."
Sullo has seen a significant increase in the quickness of response time by airline representatives as compared with previous years to requests for meeting pricing, a key concern among corporate meeting buyers in this age of the short-term event
(Meetings Today, Oct. 14). "They are very fast," Sullo acknowledged.
The dethroned leader of the airline survey, Continental, also denies any difference in its meeting and group pricing philosophies between 2002 and 2001.
"It's the same as always," insisted Continental sales development manager of meeting, incentive and group sales Joe Pizzitola. "We work with customers individually, and if we don't meet what customers are looking for, we have other options, including price and schedule to work with. There's still discounting, but buyers are not looking for one specific thing now, each is different. We look if it makes sense."
One constant from the end of last year and the end of this year is the dire financial straits in which airlines find themselves, a situation that leads some buyers at least to sympathize with any decline in flexibility the carriers implement.
"It's hard to begrudge the airlines," CUNA Mutual's Clark said. "I'd rather them try to do this and stay in business. What good is an airline discount if the airline goes away?"