Northwest Airlines, in what appears to be an industry first, has created a single contract covering both transient and meetings travel that is open to any client with at least $1 million in combined volume with the carrier. The product offers meeting attendees access to transient and zone fares and eases some restrictions on zone fare usage.
While combined contracts are nothing new—nearly all major carriers have at least dabbled with them, usually with major corporate clients interested in such arrangements—Northwest's product, dubbed MICE Corp., is believed to be the first that is open to any client that books any significant amount of travel.
Northwest already has crafted about 20 such combined deals under the terms of the product, which debuted in the spring, said senior manager of meeting and incentive sales Gail Bill. "A lot of customers asked us about it, and we developed the product for that reason," Bill said. "It took us awhile to convince our corporate people that this was a good idea, so we received more customer feedback."
Under the terms of the combined contract, corporate meeting attendees may book the corporate negotiated transient fare or Northwest's boilerplate zone fare, whichever is lower, Bill said. The carrier will not negotiate the price of given zone fares, she added, but there are ancillary benefits with the product, including possibly lowering the threshold of attendees needed to qualify for zone fares—20, in Northwest's case—or perhaps allowing for shorter booking windows. "The terms and conditions are looser," NWA's Bill said. To qualify for the product, corporations must have an existing transient deal in place with Northwest.
A key aspect of the program is the ability for Northwest and its clients to track all combined volume booked with the carrier, enabling corporations to receive credit for all meeting and group fares. "We had multi-meeting contracts, but not all the pieces were tied together like this," Bill said.
One company that has a multi-meeting contract with Northwest is Cargill Inc. of Minneapolis. Manager of worldwide travel services Lisa Trenda said that agreement covers zone fares, but does not track combined group and transient volume. "We're evaluating the extra benefit we could receive from that tracking," Trenda said.
Other clients agreed a combined tracking component that could present an attractive option. Suzanne Fletcher, director of travel and meetings for Federal Way, Wash.-based Weyerhaeuser Corp., said the ability to track and receive credit for the company's group and meeting volume would pose the key to any such deal.
"The zone fares have to apply to our volume, otherwise it makes more sense to use our transient discount for meeting travel," Fletcher said. "Up until now, our transient discount was usually more advantageous anyway, but I don't know if that will be the case in the future."
Others, though, were less optimistic that the new product would have a tremendous impact on their bottom lines. Pointing to Northwest's decision late last year to eliminate all corporate discounts on lower bucket fares (BTN, Nov. 12, 2001)
, Sheila Kittle, vice president of corporate travel at St. Petersburg, Fla.-based Raymond James Financial, said her company's corporate transient discount on eligible seats outweighed zone fare discounts.
"I've rarely seen a zone fare on one of my preferred carriers that beat what we already had," Kittle said. "It's not like you can't use transient rates for group travel. We may be interested, though, based on the ancillary benefits."
While some other airlines said they have crafted such deals with their clients, they did not commit to offering a similar, public product. "It's logical, in some cases, that companies would want to combine the two so that it's one negotiation for the corporate travel manager," said American Airlines managing director of groups, company meetings and specialty markets Mark Nickells. "And we are doing that, but we don't want to compete with ourselves and we don't want to fight over who tracks the receive." Nickells added that American has not crafted many such contracts and said he hasn't seen a groundswell of demand for such offerings.
Continental Airlines has had internal processes in place to link transient and group contracts for about one year, said Joe Pizzitola, sales development manager of meeting, incentive and group sales, but does so only on an ad-hoc basis.
"We evaluate this on a case-by-case basis, and we have a handful of accounts doing this," Pizzitola said, adding that they are primarily large companies with high meetings volume seeking the ability to track total booked volume. He didn't anticipate offering that service in a public product "at this time."
Although Pizzitola said Continental does not vary the amount of travelers necessary to qualify for zone fares, that number is only 10, half of the number needed to qualify on Northwest.