Delta Air Lines plans to roll out an automated group-booking tool in early 2006 to replace the groups and meetings department it eliminated nearly one year ago. The carrier eliminated group and zone discounts as part of the fare-simplification strategy it announced on Jan. 5
(Meetings Today, Jan. 17). Bob Somers, director of corporate sales for Delta, said the tool would let meeting buyers directly book group seat blocks on the carrier's Web site.
"We are looking at developing a Web-based technology that allows you to block seats for a certain fare level but pay a premium for doing so," he said. "Most of the meetings and most of the groups, to our detriment, were booked at all the lower buckets." The new booking tool will allow Delta to capitalize on meeting buyers willing to pay a premium to secure group seats on high-demand flights, he said.
Delta has not yet formally launched the tool, but Somers said the program was in the last stages of development.
The tool is aimed to capture corporate meetings business that was lost when Delta eliminated its groups and meetings product.
"SimpliFares was going to be the answer for meetings," Somers said. "SimpliFares, when it was created, was more cost-effective with less restrictions than our meeting program, whether it was a percentage off or a zone fare. The manpower associated with administering the meeting program was significant. So we felt that SimpliFares was the answer and using a corporate sales agreement for meetings was going to be the answer."
Somers said the move produced "mixed results." Using a corporate sales agreement for meetings has helped companies to better track their group volume, he said. The carrier employed 200 to 300 staff members on its groups and meetings programs who have been eliminated during restructuring, Somers said.
Somers also drew a line between meetings and group business, and said the new Web-based application was being designed to give access to meeting products to high-volume corporate meetings buyers sending 10 or more people to a specific destination at the same time. This will not be an automated solution for tours, family reunions or other premium groups. Somers said corporate meetings have remained a key market for Delta.
"If there were seats, there would be no problem, but SimpliFares has filled the airplanes. There are not seats available for group business," he said. "There are not enough seats there for you to go and block 20 because the fare structure has filled the plane. It's a battle."
Even as the airline focuses on transient business to fill seats, Somers said corporate meetings are an important stream of revenue. "There's got to be a structural option for a corporate travel manager to say, 'I've got a business meeting in Chicago with 25 people.' We need to capture that business," he said.
Andrew Menkes, chairman and CEO of Princeton, N.J.-based Partnership Travel Consulting, said Delta's move might be an attempt to reach out to meeting buyers directly. Other carriers likely will wait to see how customers react before adopting similar strategies.
"It's an interesting concept. It sounds like a way to bypass the travel management company transaction fee," Menkes said. "If they're going directly to Delta.com, then the advantage to Delta is they're not paying global distribution system segment fees. The perceived advantage to the traveler is that by going to the Delta site instead of through the travel management company or through an online booking tool, the traveler is avoiding the agency transaction fee."
While there would be no fee, direct bookings would not be included in agency reporting, he said. Many companies also want all travel transactions through a single source to manage risk, he added. "As long as Delta can provide data back to the corporate customer, which I imagine they would in terms of arrival/departure lists, etc., it sounds like it would provide advantages to those that could make use of it," he said.
A direct online booking option for groups goes against corporate attempts to centralize and consolidate meetings air volume, said Kari Knoll Kesler, co-chair of the NBTA groups and meetings committee and manager of meetings and events for Honeywell Inc. "I wouldn't encourage behavior that caused people to go outside of our policy and our TMC," Kesler said. "Suffice it to say that it would go directly against what we're trying to do."
Unless Delta is able to show "overwhelming value" in booking groups directly through the Web tool, Kesler said it doesn't make sense for companies looking to consolidate their air volume.