Many travel and meeting buyers are reconsidering the use of transient fares for group and meeting travel following the recent spate of changes and restrictions major carriers have placed on corporate transient airfares, particularly the exclusion of most lower-fare classes from corporate discounting programs and the increase in restrictions on changing nonrefundable fares.
Many buyers have increased scrutiny of meeting air expenditures, and must more closely analyze transient fares as well as zone fares and even public meeting fare offerings for a given meeting.
The new restrictions have alerted those buyers who have, of late, relied on discounts off generally low transient fares to book meeting travel
(Meetings Today, Feb. 11, 2002) that other options might be preferable. Even as airlines have restricted transient discounting, they have placed no new restrictions on zone fares or meeting fares, giving buyers additional options, but each possibility has its drawbacks as well as its rewards.
Zone fares, which do not require a Saturday night stay, can be set more than one year in advance, offer buyers cost certainty, and, unlike with transient fares, buyers can block space on a given flight and change the names of attendees flying with no penalty. However, as zone fares are set much earlier than transient fares, and each zone covers hundreds of potential city pairs, the zone fare charged on a given city pair has the potential to be higher, sometimes significantly so, than a later-set transient fare.
Though earlier this month many major carriers temporarily rescinded change fees on transient travel, and the rest said they would in the event of a war with Iraq
(BTN, March 10), the new landscape of restrictions leaves those corporations booking transient fares for meeting travel susceptible to high costs in the event of a meeting cancellation or changes in attendees.
"We have a higher pickup of zone fares because of the elimination of the corporate discount on lower fare classes," said Harriet Washburn, vice president of travel for Chicago-based Aon Corp. "Heretofore our least expensive option was corporate fares over a weekend. Zone fares did not used to be a great value for us, but now they can be." The result, Washburn said, is that Aon now must weigh each meeting individually, based on the event's timing and the city pairs in question. "We have to compare everything closely. As such, the viability and use of zone fares has definitely increased."
"Fares change every day, all day, every year," said Lisa Trenda, manager of worldwide travel services at Minneapolis-based Cargill Inc. "We have to analyze each situation separately." Cargill meeting buyers frequently are better served by an advance purchase airfare package using negotiated transient rates that include a Saturday night stay than by the airlines' zone fare packages, which do not require a Saturday stay. "They are all over the board, and we'll go with the best option," she said, "but there have not been many changes on that part."
Still, the decision should not necessarily be restricted to zone fares versus negotiates transient fares, according to at least one consultant. The carriers' public meeting fares, which are available to any group that meets the requisite number of attendees regardless of their relationship with the airline, offer a 5 percent discount off full coach fares, which increases to 10 percent if the advance purchase time is long enough—either 30 or 60 days, depending on the carrier.
Air Fulfillment Services, a Des Moines, Iowa-based third party that manages group and meeting air travel for meeting management and incentive companies, estimated that at their most valuable, standard meeting fares can offer more than 40 percent savings over negotiated corporate or zone fares on particular city pairs, said vice president of business development Yvonne Long. "You can get the fare category secured with no pressure to supply names until a certain deadline," Long said. "With transient, you just book the travel under a name so there can be change fees or cancellation penalties if there are changes. Zone fares can be good or they can be awful. It varies route to route."
The new scrutiny by some buyers has not yet translated into the relative growth of a particular meeting product, according to the airlines.
Northwest Airlines senior manager of meeting and incentive travel Gail Bill has not seen great fluctuations in usage of one of the carrier's group and meeting products over another, but noted most large Northwest accounts often avail themselves of more than one product. "It's hard to tell at this point whether there are more zone fares being used because published fares are more restricted," Bill said. "There's a risk with published fares: If they're not traveling, there's nothing they can do. It depends on the company. Some will take that risk. Published fares can be an opportunity, but if that's their choice, they have to live with the terms."
"We do watch this, and the level of discounts versus blocked space is negligible so far," said George Coyle, American Airlines product manager of group and meeting sales. "We can't draw a conclusion on that, but zone fare usage is up overall, much of which we attribute to higher awareness of the product. It amazes me, but there are people that still don't know we have it." AA's meeting product offerings, Coyle said, continue to be far more customized than they have been in the past. "If the bottom line is price instead of amenities, we can do that," he said. "We can't assume everyone will want one free fare for 30 booked, or one for 40 or a productivity bonus. Some people want to net it all down."