1st-Class Upgrade Aims At Business Travel: TWA Bets On Biz

Known in recent years for its aggressive corporate discounting, TWA is now doing its darndest to offer a product that complements those sales efforts.

The airline announced in late May that it will expand by 60 percent the number of first-class seats in its narrow-body aircraft and has made no bones about its expectation that few people will pay for it. What TWA wants is for business travelers to pay full coach and upgrade.

In addition to the usual frequent flyer upgrades or certificates available through corporate deals, TWA also confirms upgrades at the time of booking a full-coach ticket for most flights to and through JFK and St. Louis. The carrier also has a program for purchased upgrades within two hours of departure which are priced according to the flight's distance.

"We did a lot of research into this," said vice president of sales Jan Wood. "We found that the business customers understand they have to pay more to book last-minute but that they wanted more value for the dollar. After frequency and reliability, the ability to upgrade was the most popular example of such value."

First class will be expanded in 155 aircraft by October. The number of first-class seats will increase from 12 to 20, from eight to 16 or from eight to 12, depending on the aircraft.

Meanwhile, TWA is opening up its airport lounges to travelers who have purchased a F, C or Y ticket as well as those traveling on a corporate discount fare. This courtesy entrance program is good throughout 1997 and gives users all the amenities of club membership except for the ability to bring in a guest.

Wood said TWA also is planning some modifications to its frequent flyer program in order to provide new advantages for those customers booking full-coach and corporate fares.

Wood said that not only do these changes benefit the individual business traveler, but the corporate travel manager as well. "We use soft dollar resources in discounting with corporations that accelerate their business on TWA. With the expanded first class, that gives travelers more opportunities to upgrade through whichever method they have access to, including negotiated upgrades. We'll be doing a number of new negotiated agreements," she added.

These moves clearly point to the business traveler as a major component of TWA's turnaround plan. The problem TWA is trying to solve was illustrated by one travel manager last year, who said, "There are no hurdles in dealing with TWA--they're easy. But getting corporate travelers to fly on them isn't."

This new focus on business travelers has been in the works for some time. But, Wood said, the airline felt it would be premature to start offering such new services amid the abysmal operational performance of last year. "TWA has a long history of serving the business customer well," said Wood. "But starting with the operational difficulties of last summer, we did not do it well."

In addition to business travelers, three keys to the airline's turnaround TWA Chairman and CEO Gerald Gitner has targeted are reliability, cost control and hub maximization.

With this focus, the carrier's on-time performance is up by over ten percent year-over-year for each of the first four months of 1997. The airline ranked second in on-time arrivals in April and is even guaranteeing on-time flights during June with awards of 1,000 frequent flyer miles for late arrivals. TWA also is canceling about 500 fewer flights per month than last year.

"Our objective is to consistently perform in the top 25 percent of the industry in the three DOT performance rankings of on-time arrivals, customer complaints and baggage mishandles," Gitner told shareholders in May.

TWA is phasing out older aircraft and this year "gave up a long-held distinction--namely that of having the oldest fleet in the industry," said Gitner. The carrier also has streamlined its JFK gateway and is focusing on creating a megahub in St. Louis.

Meanwhile, however, the airline faces contentious negotiations with the airlines pilots union, which sued TWA earlier this month claiming violations of rules on payroll practices.