Even as airlines relax restrictions on many of their corporate group and meetings offerings, including zone fares, some corporate travel and meetings managers have found that airfare price reductions have made their negotiated transient deals a better bargain for meeting attendees.
Several carriers have been flexible with restrictions of late, particularly on zone fares, which traditionally require a two-night stay, at least a seven-day advance purchase and at least 10 attendees traveling to the same destination city in exchange for long-term locked-in fares based on city-pair geographic areas. In the past, most carriers had been resolute on those restrictions but have wavered in the face of a withering slump due to the recession and Sept. 11.
Even with those restrictions waived, many travel managers have found their own transient discounts represent the better deal. Most such contracts entail a percentage off full fares in return for a percentage of market share, and as full fare prices have dropped, so have negotiated transient fares.
"We conduct air analysis for each of our clients, but since airfares are lower than they were, often the transient corporate discount is better," said Susan Owens, director of operations for the Stamford, Conn.-based Northeast region of Navigant Meeting Services.
Key restrictions that Owens said some carriers have waived or lessened include a two-night stay requirement for zone fare purchases. In some cases, she said, airlines are allowing zone fare passengers to stay one night but pay a surcharge in the neighborhood of $100 instead of staying the second night. Also, the seven-day advance purchase restriction can be lessened to two or three days in some circumstances, she said, however, the zone fare minimum of 10 passengers still appears inviolable.
Also, Owens doesn't believe the airlines group product negotiability is temporary, even when the carriers' fortunes reverse themselves. "No, it's here to stay," she said.
"We have seen some overall flexibility on meeting products and on nonrefundables," said Annette Morris, manager of meeting and travel services for St. Louis-based Nestlé Purina PetCare Co., the new name of Ralston Purina after its acquisition by Nestlé in December. "The carriers have tried to create harmony with their corporate clients. We've seen flexibility both on fares and restrictions and we use zone fares when feasible, but our meeting volume is way down."
Restriction negotiability may be an essential component of airline strategy as carriers see traffic slowly rise but their bottom lines still weak. Restriction waivers don't directly deny carriers revenue, as fare cuts do. Some travel managers already have noted a new inflexibility in corporate transient negotiating (BTN, Jan. 21).
"We always have been open to individually tailoring travel programs that meet the needs of our customers with a goal of ensuring that our customers are given the most competitive program available," said US Airways spokesman David Castelveter. "We will offer a percentage discount, zone fare or combination of both if warranted. We will work with the customer specifically to create programs that are mutually beneficial, even if it means deviating from standard programs. We compete vigorously for this business and our actions are a function of the competitive environment and the customer's needs. Different cities and geographical regions have different needs, and competitive dynamics influence the negotiations with each client."
To be sure, some corporations with large market share commitments or favorable deals for years have found their transient discounts are unmatched, even by zone fares, and book attendees accordingly. That isn't necessarily the norm, though, and as zone fares grew in popularity from their evolution in the latter half of the 1990s, primarily because of the cost certainty involved—airlines typically set such fares no less than 12 months in advance—and the lack of a Saturday-night stay restriction, airlines actively prohibited corporations from booking zone fares for transient travel.
The reverse isn't true: Continental Airlines, for example, will even include a separate identifier for meeting attendees booked at negotiated transient rates for easier corporate tracking, said group sales director Candie Gerakos Webster, though that does not necessarily result in a lower fare or any type of discounting.
Other travel managers have negotiated zone fare agreements net of all travel agency commissions and overrides, offering additional savings, even beyond negotiated transient rates (Meetings Today, Aug. 14, 2000).
Some airlines, though, said there was no great move to booking attendees at transient fares. "It's not happening," said American Airlines group and meeting sales product manager George Coyle. "Our group and meeting travel products include amenities that are important to planners and not available through corporate agreements. Earned tickets, name changes, refundable or changeable tickets, as well as delayed ticketing deadlines, are important to meeting planners and not seen on the transient side."
"After Sept. 11, GMT implemented several campaigns that passed additional savings to meeting attendees," Coyle said. "These incentive discounts proved favorable in building group business. We continue to work with customers to negotiate pricing and establish terms that provide mutual success, and we continue to price every group opportunity aggressively. We will do all possible to secure the business in every market."