Cos. Catch Air Break: U.S. Airlines Increasingly Seeking Corp. Mtgs. Travel
Revenue-starved major U.S. airlines largely have held the line on corporate transient fares, frustrating buyers, but some meetings and travel managers have found them more malleable—in some cases, outright aggressive—when negotiating group travel.
Many meeting buyers have been content to use the airlines' standard, publicly offered meetings discounts, corporate transient discounts or agency negotiated group fares, but those who have demonstrated they can drive volume to a particular carrier or can show heavy meeting traffic in certain city pairs can negotiate further savings.
Given that many corporations still are pushing meeting cost efficiencies, the news comes at a welcome time for buyers. Clearly, however, many still have not explored the opportunities of leveraging corporate meetings spending.
According to a Meetings Monitor survey of 137 corporate meetings buyers, only 20 percent of respondents are receiving greater discounts from airlines for meeting travel when compared with last year at this time. Still, that percentage is higher than last year, when only 7 percent noted discounts were better than in 2000.
Most found the market static. About 69 percent said discounts were about the same as last year, a number befitting the industry's tendency to use the airlines' standard meeting discount of 5 percent off published fares—10 percent if booked more than two months out—and zone fares, which can lock in prices for years.
"Our negotiations have remained about the same as a year ago, unlike the transient front, which has been strained," said John Hintz, manager of corporate travel services for New York-based investment firm Teachers Insurance and Annuity Association College Retirement Equities Fund. "It's not been as daunting on the meetings side. We use zone fares as a base and see if we can't do better because of our volume. Negotiating for meetings air is essential for us, because we primarily fly between a few high-price markets—New York, Denver and Charlotte."
One aspect of meeting negotiations that has changed is an increase in the airlines' aggressiveness, said St. Petersburg, Fla.-based Raymond James Financial Inc. vice president of corporate travel Sheila Kittle. "More than one airline has asked to match in certain markets, and are asking us to advise them before giving other airlines our business," Kittle said. "They want group and meetings business, and they will match fares and waive advance-purchase requirements."
Kittle, who said Raymond James will use its transient discounts, published zone fares or a flat discount for meetings, also said the airlines' local sales representatives increasingly are trying to sell group business, instead of referring that market to a central carrier group desk. "It's wonderful," Kittle said. "I've never had this kind of attention, and we can translate it directly to savings."
About 47 percent of respondents said they have used the airlines' standard meeting discount within the past year, by far the most popular choice, with zone fares running second. No more than 20 percent of respondents used any other type of meetings discount, including negotiating a free fare for a certain number of fares booked or a flat discount of more than 10 percent.
Northwest Airlines has not discounted deeper than the standard 5 percent off the lowest applicable fare, or 10 percent if the booking is more than 60 days in advance, said senior manager of meeting and incentive sales Gail Bill. However, the airline currently offers a free fare for every 30 fares booked, rather than its previous 1-for-40 program. Bill cited the airline industry's rationale for not offering deeper discounts: Meetings aren't going to come back to the air because of low fares alone. "It's going to take time," Bill said. "Corporations have to feel confident in their economic environment before they will spend money on meetings. We're being very proactive in going after corporate meetings, but we're not negotiating heavily, and we're not going to be held over a barrel."
About 16 percent of those polled said they always use their company transient discount to book meetings travel, matching the 2001 poll, but the number of those who said they never do so dropped from 39 percent to 25 percent. While there is evidence that further usage of transient deals is occurring (Meetings Today, Feb. 11), in some cases, this can be a function of agents booking travel without being told it's for a meeting.
"Some meeting travel is booked as transient travel because corporate agencies book those tickets under default corporate negotiated rates," Bill said. "Because of that, a lot of meetings business is tracked under a corporate discount. The only way around that is to educate them about meetings and group programs that might be better than their corporate discounts. It's kicking in, somewhat. It's a long and tedious process, but it's needed to make sure the agencies are doing what planners want."
By far, the meeting discount that dropped most precipitously in popularity was the usage of airport club meeting rooms, which plummeted from 21 percent to 7 percent of respondents.
That shouldn't come as a tremendous surprise, as not only are the clubs behind beefed-up security lanes, but airlines also have been conscious not to overload their clubs because of the number of travelers arriving at the airport well ahead of their departure times.
"After Sept. 11, there was a drop-off because of concerns about the time it would take to get through security and the credentials needed to get through security without a boarding pass," said Betty Hollan, general manager of customer lounge programs at Delta Air Lines. "But the Federal Aviation Administration does not require a boarding pass for Crown Room Club members to use security lanes, just a Crown Room Club membership card and photo identification. Since then, room usage has ticked up a little bit. They're still popular among members, but overall it's still off slightly from before Sept. 11."
Delta will consider including Crown Room meeting space as a part of more comprehensive corporate contracts, but the airline is loathe to overburden the rooms. "We feel this will even out, so we don't want to overcommit ourselves," Hollan said. She noted that the sales of one-day Crown Room Club memberships have increased nearly 40 percent in the past few months, which she attributed to travelers seeking club usage because of anticipated long waits at the airport.