Following the merger late last year of US Airways with America West Airlines, the newly formed company, flying under the banner of US Airways, has opted to use a typical low-cost carrier model for its corporate groups and meetings business—pushing low base fares over additional discounts, zone fares and earned tickets, said the airline's head of sales and marketing.
"What we found on the America West side is that the old model doesn't fit particularly well with the reality of airline economics today and also the reality of low fares. Despite the fact that prices have come up over the past few months, fares are still at relative historic lows," said Travis Christ, vice president of sales and marketing for Arlington, Va.-based US Airways.
The carrier does not offer zone fares, and offers a "very limited ability" for earned tickets, he said. However, the groups and meetings desk remains.
"There's still a substantial volume of calls that come in. Our prices are generally so good to begin with anyway that people still want to book with us despite the fact that we're not giving these large discounts. It is important that we be able to manage the inventory properly, so we do want to book the groups together with people who know what they're doing so they can communicate that properly to revenue management," Christ said.
Many corporate customers assume that the more tickets they buy, the cheaper fares should be, he said, but the economic reality of the airline industry means that customers must pay deposits if they want to reserve a large number of seats.
"None of us like a lot of the things that have gone on in regard to the economics of the airline business, but customers are understanding of it and travel agents and meeting planners have made adjustments in the way that their businesses work, just like the way we're making adjustments in the way our business works. Generally, it's working OK for people. We have a nice relationship with agencies and meeting planners and it seems to work fine," Christ said.
Other low-cost carriers' offerings for and philosophies about corporate meetings vary, although an extensive network of standard meetings discounts is rare at any carrier
(Meetings Today, Nov. 8, 2004). An exception is AirTran Airways, which offers a 10 percent discount off standard fares from groups and meetings of at least 10 attendees.
Like other LCCs, US Airways has foregone negotiating corporate contracts, though it has not completely abandoned the practice
(BTN, May 15)."The low-fare environment continues to validate the strategy we've taken in regards to groups and that is to let the published fares speak for themselves," according to Christ. "They are generally at historic low levels. That works generally perfectly well for individual travelers and generally perfectly well for groups and meetings as well."
After Delta Air Lines discontinued its groups and meetings desk in early 2005 as part of its SimpliFares reorganization, the carrier announced plans to create a group booking tool directly on its Web site
(Meetings Today, Nov. 14, 2005). US Airways in May planned to convert the America West Web site to the new brand and shut down the old US Airways site, but there were no immediate plans to include a group booking tool, Christ said.
"Someday we might do something like that. I don't think it's the next most important project for us to work on because there's generally not that much demand on the Web. It's still relatively complex. To expect people to handle something like that with a Web tool would be great, but today I'd expect that we'd get less traction with that than we would with some other tools for individual travelers that we're still working on," he said.
US Airways is relying on its wide legacy network to gain marketshare and its low-cost carrier pricing model to win customers. The challenge is in convincing customers that the price they see is generally the lowest price the airline can offer, Christ said.
"Typically, in the past, customers could have called around and played one airline off against the other. We're really not getting into that in any big way today at all," he said. "If somebody goes out and finds a lower price from some other airline, then that's fine, they do what they need to do—but we'll manage our business in such a way that we think leads to us being able to run a profitable operation."