The restrictions on the recent and significant changes in transient air pricing philosophies have made the majority of such negotiated fares an unattractive option for meeting travel, leaving buyers with less weaponry in their negotiating arsenal and fewer options with which to book.
The changes include an increase of restrictions on nonrefundable fares, limitations on fare classes on which transient discounts may be applied and, most recently, a fare increase. As the airlines focus most of their energy on the transient market, they are less than willing, by and large, to extensively negotiate for meeting travel
(Meetings Today, May 12)."The airlines are tighter all around, with cuts and service restrictions," said Yvonne Long, director of business development at Des Moines, Iowa-based Air Fulfillment Services, a third party that manages group and meeting air travel for meetings management and incentive companies. "But meeting buyers sometimes have trouble understanding that the airlines' problems do not translate into cheaper fares."
Currently, meeting packages fall into one of two areas. One is the airlines' public discounts, which anyone with the requisite number of attendees—usually 10, sometimes 20—can use. Those programs offer 5 percent off roundtrip fares, with an additional 5 percent taken off if the booking meets advance purchase requirements—30 days on some airlines, 60 days on others. The other meeting package is zone fares, which offer set fares between geographical zones that do not require a Saturday-night stay.
"Zones are very route-specific," Long said. As for negotiated transient fares, "it depends on the corporate discount on a case-by-case basis, but meeting fares are typically still cheaper."
The general lack of lead time many corporate meeting planners face also increases the allure of meeting packages, as zone fares, too, require short advance-purchase times—sometimes seven days, sometimes 14.
"We're still seeing fewer meetings and their timeframe is a lot closer in," said Gail Bill, senior manager of meeting and incentive sales at Northwest Airlines. "Some are even within 30 days, but at 30 days you can still qualify for the same meeting products."
Bill added that most buyers, to date, seem to be gravitating away from using transient fares for meeting and group travel. "I think so," she said. "We usually capture a lot of the meeting business, though it's hard to say. Zone fares are usually better, so it doesn't really make any sense. If they're published fares, forget it: They're truly nonrefundable, and you can't change anything."
The structures and restrictions of meeting products, which occasionally are tweaked by the airlines in response to market conditions, are likely to remain generally constant for the near future.
"We continue to watch the competitive landscape and we will make adjustments as needed," Bill said. "Right now, there is nowhere that is needed. Transient products have become more restrictive, so meeting products look a lot more desirable. You can do things there you can't with published fares."
In general, some experts said, the rapidly changing transient air landscape contrasted with the relatively stable meeting-package landscape illustrates the folly of negotiating multi-meeting or volume-based agreements for group air travel.
"Never pre-negotiate airline discounts because of supply and demand," said Andrew Menkes, chairman and CEO of Princeton, N.J.-based Partnership Travel Consulting. "The pricing metrics of meeting air are significantly different than more inflexible transient air. The transient rate was not meant for meeting travel."
Menkes said the airlines will negotiate, but only when a buyer can fill a specific need. "The airlines' standard will be to guide buyers to zones," he said, "but they will negotiate on a case-by-case basis if they have a need or if they have excess capacity. Arizona is a classic example. If you book a meeting there in the summer, you'll find negotiability. Yet, corporate discounts are going to be the same into Phoenix year-round."
Though basing site selection decisions on airfare costs can be difficult—as the number of planners that have the power to command site selection changes are few—Menkes said the concept is growing in popularity among buyers attempting to rein in meeting costs.
"In general, our clients are looking at meeting airfares," he said. "If a different city offers better fares, they will move the meeting. To me, it's a best practice: Look at three or four cities and make your budget decision based on the air and hotel costs, not food costs because food is food."
In general, some analysts are optimistic about the amount of business that airlines see from the corporate meetings market.
"It was dormant earlier for a few months, but now it's starting to creep back," Long said. "Corporations were afraid to make decisions for a while, but they've resurrected some programs that were in abeyance."