The group and meetings programs at US Airways have remained static despite the recent upheaval—including labor troubles and executive changes (BTN, April 26)
—but the implementation of some new airfare structures and a direct challenge from Southwest Airlines in its largest hub airport may yet impact the meeting strategies of the nation's seventh-largest airline.
The introduction of a simplified airfare structure on certain flights to and from Philadelphia, in part, offers to transient travelers some of the traditional benefits of group and meeting zone fares. The new structure (BTN, May 10),
dubbed GoFares, features one-way fares ranging between $29 and $499 that no longer require a roundtrip purchase nor, like zone fares, a Saturday night stay. Though zone fares have proven popular with meeting travel buyers due to prices that are set well in advance—offering budgetary certainty—one of their major selling points is the lack of a required Saturday night stay.
It's possible that some buyers now will opt to wait to book GoFares, said US Airways manager of group and meeting sales Kim Hepola. "That is absolutely possible," he said. "Buyers like to use zone fares for budgetary reasons, but if GoFares offer lower fares, they are free to use those. There is no obligation to use zone fare pricing if the GoFares price is lower and the inventory is available. But zone fares offer great flexibility and the advance purchase."Drug Co. Potential
Philadelphia is a critical market for corporate meeting and group revenue, as the abundance of pharmaceutical firms—typically more resistant to economic trends than other sectors in regard to meeting volume levels—in eastern Pennsylvania and New Jersey offers airlines a relatively consistent base of that business.
"We've seen a 20 percent bump in meeting and group passengers in spending in the first quarter, but there's so much potential because of the pharmaceutical meeting segment and the association segment," Hepola said. That figure is relative to the first quarter of 2003, which was very weak for all meeting suppliers due to corporate concerns about group travel as war with Iraq loomed.
On the whole, Hepola said there have been some recent trends in the types of fares corporations have used for meeting and group travel.
"We're seeing more use of corporate negotiated transient discounts, especially in the last minute," Hepola said. "There's also been an uptick in the use of excursion fares. Zone fare use has been tremendous; pharmaceutical firms really rely on them, and it's been about 50 percent to 55 percent of our meetings business overall."
Meanwhile, Southwest Airlines' challenge took on a different form in the meetings and groups arena after the carrier decided late last year to eliminate all of its meetings offerings, noting that the program did not generate enough revenue to justify its cost, and that all of its fares inherently represented a discount (Meetings Today, Dec. 8, 2003).
Without a formal Southwest meetings structure to react to, US Airways will concentrate on the big picture, Hepola said. "We will paint with a broad brush," he said. "We can't limit our strategy to Southwest. There is still tremendous competitive pressure systemwide, so we have to be chameleons."