Airlines Headline ACTE In Dallas

By BTN / April 23, 2000

Airlines Headline ACTE In Dallas

The 12th annual meeting of the Association of Corporate Travel Executives, held this month in Dallas, was the first to feature educational sessions on meetings management and a BTN/ACTE survey about travel management technology deployment--but it was the airline sessions that gave the program its greatest sizzle.

From Delta senior vice president of sales and distribution Vince Caminiti's "Industry Perspective" that helped kick off the conference to the "Perspectives From The Skies" general session that closed it, airlines were in the spotlight and talking more clearly and openly than ever about direct connections and other ways to court corporate customers.

Caminiti told more than 350 buyers and 600 other participants that company-based booking engines will put travel managers in the driver's seat as e-commerce continues to evolve. "Buyers not only will be able to leverage share for discounts, but now distribution dynamics and related economics will be on their side as well," he said, noting that this will "quantifiably improve distribution so much for so little cost." Caminiti told BTN that five companies had begun to beta test Delta's e-commerce solution.

Delta reflected its commitment to ACTE by bringing a dozen representatives to the conference, but many other airlines were well represented including Northwest, airline of conference co-chairman Phil Stumpf, manager of national sales. "The Perspectives from the Skies" panel of industry sales veterans briefed attendees on such hot-button subjects as airline alliances, codesharing and e-ticketing.

"The alliances are working," said Fay Beauchine, vice president of sales and customer relations for Northwest Airlines. "Besides, for an airline to expand on its own is just too capital intense."

The alliances eventually will mean additional savings to the corporate buyer. "Individual airlines can only go so far on savings," said Niels Conradsen, general manager of corporate sales for British Airways.

Citing the latest figures, panelists said international airfares have gone down 17 percent. That's for travel from a U.S. interior city to a U.S. gateway city and on to an international gateway and then to an international interior city.

Panelists acknowledged that the current system is far from perfect. "It's not yet the seamless product we'd all like it to be," said June Bennett, vice president of sales for Continental Airlines. "That won't happen until the technology catches up to where we want it to be."

Similarly, panelists acknowledged the widespread confusion over codesharing. "There needs to be one flight number," said Beauchine, "as well as one dispenser of boarding passes and one baggage handling operation."

"In terms of consistency of service on different carriers, we want the travelers to only be aware they're flying different color metal," said Bennett.

Regarding e-tickets, the day is fast approaching when travelers will face a surcharge for requesting a paper ticket. Last month's threatened shutdown of US Airways in a labor dispute brought home many travelers' trepidation about electronic ticketing: that e-tickets issued by US Airways wouldn't be honored by competing carriers. The panel said these concerns were valid and had no ready solution.

One recently introduced customer service initiative--American Airlines' decision to remove seats from coach, thereby creating more leg room for passengers and United Airlines' decision to create another level of coach--got a mixed reaction among their competitors on the panel.

"We're taking a wait-and-see attitude," said Beauchine. "What we're hearing is that people really want the middle seat left open and when there are fewer seats on the plane, there's less chance of that happening." *  *  *

In the "Creative Airfare Programs" session, the focus was on saving dollars by using alternative carriers and being creative in airline deals. Brent Garback, CEO of Total Travel Management, said that as more carriers are willing to fly different places there are more opportunities for cost savings.

Holly Hegeman, founder and CEO of Planebusiness.com, identified alternative and low- fare carriers and provided a financial perspective on individual airlines. Hegeman said it is important to consider financial status because "if a carrier is losing market share, it puts you in a position to leverage a better deal." However, Hegeman warned travel managers to be wary of an airline offering deals that seem too good to be true. "You don't want to put people on an airline in financial trouble because it will tend not to get people where then need to be when they need to be there," said Hegeman.

Betty Moilanen, global manager of T&E at Denver-based J.D. Edwards, rethought her carrier strategy in a marketplace that has some of the highest fares in the United States--where costs on one-way business fares had risen 85 percent. She found that aggressive secondary carriers were willing to offer three times the discounts offered by the primary carriers. By targeting very specific markets where carriers were competing, the new program already has saved $670,000 in nine months of a potential savings goal of $880,000. *  *  *

The deployment of travel management technology is reaching critical mass among medium and large companies with a lot more to come in the next year, according to a poll of ACTE delegates making use of the Cyber Café computers next to the conference rooms at the Wyndham Anatole.

Nearly half of the 94 travel buyers who responded said their companies' corporate intranets already have online booking and expense reporting systems on them and one-fourth of them already have end-to-end systems in place. Meanwhile, about one-third of the companies plan to add systems in each category to their intranets in the coming year.

Buyers said the biggest single obstacle they face in deploying online booking at their companies is speed, the answer given by 28 percent of the buyers. That was followed by lack of senior management support. Respondents then tied on service and value. Cost was the biggest obstacle for only 15 percent.

The number of buyers using online meetings Web sites to book meetings will double from 32 percent last year to 60 percent next year.

Meanwhile, 156 travel suppliers, when asked if they would offer direct connections to their sites via extranets from corporate customer intranet sites, nearly 70 percent said they already do or soon will, one-fifth said they never will, and half of the rest intend to offer it next year. When it comes to the percentage of business travel bookings made using the Internet or corporate intranet. In 1999, 44 respondents said zero, and 70 respondents said in the 1 to 25 percent range; by 2001, only 26 respondents said zero and only 47 said between 1 and 25 percent. *  *  *

Earl Foster, director of global travel management at Joseph E. Seagram & Sons, officially passed the gavel of ACTE presidency to WorldTravel Partners West Coast agent Ron Wagner. Wagner told the group he would address some basic questions about ACTE's strategic direction for the group that is now 36 percent corporate, 22 percent agent and 42 percent supplier. Wagner, whose 33 years in the business included a lot of airline as well as travel agency experience, said he would work with his leadership team to face those issues in "zero time." Wagner announced that Dell senior manager of travel services Julie Thomte Raeburn has joined that team as vice president of technology.

ACTE also handed out awards for industry and business professionalism. The Industry Professionalism award went to former BTN executive editor Mary Ann McNulty, recognizing her 12 years in "raising industry awareness and teaching us about the business travel industry, particularly the technological aspects, as a travel management writer," said Nancy Holtzman, ACTE's executive director. McNulty worked for Corporate Travel Magazine and Meeting News before joining the BTN staff in 1994. She left that position six months ago to join Web-based meeting planning company StarCite.

The Business Professionalism award was presented to Angie Attena, who succeeded in getting travel management mandated for World Bank's travel program (see story, page 1). *  *  *

ACTE leaders of what in December became the Europe, Middle East and Africa region told BTN about the group's growth in those parts. Regional ACTE chairman Ian Epps, director of emerging markets for American Express, regional staff director Herman Mensink and EMEA education committee chair and consultant Annika Ortmark-Selebo said ACTE now has 700 EMEA members and is particularly aiming to grow membership in France and Germany. The organization also wants to build on the foothold it established in Spain.

Meanwhile, ACTE has added members in the Emirates and Saudi Arabia and on June 6 it will hold a one-day forum in Johannesburg featuring the COO of South African Airways. ACTE's educational forums have been driving its recruitment efforts. Following a Frankfurt forum, the organization recruited 82 members. Forums in Europe will be held in London on May 4, Paris on June 27 and Helsinki on Sept. 12.

Contributing to the growth of ACTE, if not because of it, has been the dissolution of many long-lived national entities of large spending corporations, such as Geode in France and a Swiss association. Also drawing members to ACTE is the organization's visibility and interaction with the European Commission, which has sought member feedback on passenger protection as well as competition policy. *  *  *

Described as the "Next Frontier in the Area of Travel Management," meetings consolidation was the subject of a two-part panel discussion by that name. "While the amount spent on corporate meetings is growing 10 percent a year, however, attendance at meetings is only growing 1 percent, indicating that the cost of the meeting itself is increasing," said moderator Beth Truett, senior vice president of global business solutions at McGettigan Partners.

Where the panelists disagreed is whether it makes sense, both economically and time-wise, to consolidate transient travel with group travel or to manage the two functions separately.

At Eli Lilly and Co., the two are combined. "It allows for a one-stop-shop with all the benefits of centralized management and controls," said panelist George Odom, manager of travel services and corporate meeting services. "By enabling us to capture a much greater portion of Lilly's total spend, we're able to bring more leverage to negotiations with key suppliers and derive considerable savings as a result.

Odom acknowledged a downside, however. "There are simply more issues to resolve because meetings have a different set of objectives than transient travel," he said. "Then too, it forces people to work together for the good of the ultimate customer, which is the company."

Yet for companies considering consolidating, Odom advised not stressing dollar savings when working with the end users. "Rather, emphasize all the service improvements they'll see and that they will still retain full control over things like the business agenda, social functions and so on," he said.

SmithKline Beecham, by contrast, treats the two functions separately and intends to continue doing so. However, panelist Janan Johnson, who is Smith-Kline's global travel manager, does have responsibility for the airlines piece of the meetings. "The objectives are just too different," she said. "Individual travelers have more options as to when they're going to travel and where they're going to stay. Meeting attendees, on the other hand, are much more locked in." *  *  *

Edward O'Connor, president of Corporate Travel Directions, presented information on deconstructing agency fees, breaking down issues such as airline commissions and overrides, and agency revenue stream, overhead, direct expenses and fees. O'Connor said the key is to understand the difference between agency overhead costs and direct expenses, and to be aware of how each agency may unbundle and present cost elements in different ways. He demonstrated in an agency price comparison that the lowest fee per transaction is not always the best price due to hidden fees.

Dan Riley, travel services manager at Times Mirror Co., said unbundling agency fees is crucial, but stressed that "you really have to keep after an agency to unbundle fees." Riley, who is responsible for travel for nine different operating units within the company, operates four onsites and one BTC staffed with a combination of Times Mirror employees and agency employees. Riley is piloting an online booking system that will bring in additional data to improve policy compliance across the board. "It is the tool to really run a good solid program," Riley said. "It closes the whole loop with agency and card data."

Kathy Samuel, director of travel operations for Walt Disney Worldwide Services, agreed that data is a key component to controlling a decentralized operation. Samuel said at Disney, which has six corporate travel offices in the United States operating on four different GDSs with four different back-office systems, "the real challenge is to share data and support each other." Samuel said the issue is solved, in part, by consolidating all domestic data through TRX, but that they still are working on achieving operating consistency. *  *  *

Elaine Triggs, corporate travel manager for First Union Corp., outlined a six-step process for determining and selling a travel management strategy to senior management.

For Val Cordell, director of corporate travel at Oracle, the greatest challenge in determining travel strategy was to manage the enormous growth of the company. Cordell chose to implement a self-service model in which everything--travel booking and expense reporting--was done by employees. "The data is much more accurate, there is much less rekeying, fewer errors and a high degree of integrity," Cordell said.

Cordell also said that travelers are changing their behavior as a result of seeing options on the desktop, and consequently driving down costs. The company has reduced U.S. travel costs by $96 million over five years, approaching a goal of $1 billion in savings.

Henix Teegardin, corporate travel manager for Consolidated Stores Corp., parent company of K-B Toys based in Columbus, Ohio, introduced a Corporate Travel Department as a means to provide the highest level of service. Consolidated Stores completed the CTD transition in two phases, by first completely insourcing all travel and then officially becoming a CTD. Teegardin said the benefits of being a CTD include an enhanced relationship between travelers and agents, total control over finances, services and information, higher agent productivity and better policy compliance.

Cathy Spivey, senior manager of travel services for Home Depot also implemented a CTD, which she felt paralleled the overall culture of the company and mentality of keeping services in-house. It was an easy transition because Home Depot already had a rent-a-plate structure. "It is a more direct relationship, without the third party," said Spivey. *  *  *

Julie Thomte Raeburn, senior manager of global travel at Dell Computer Corp., and Scott Guerrero, vice president and general manager of Maritz Travel GTM discussed strategic agency partnering. Both partners said meeting face to face and having an open dialogue was the key to achieving a specific and mutually satisfactory business plan. Guerrero stressed the importance of creating a dynamic contract that can be changed if necessary and continually reviewed and updated.

For Raeburn, understanding corporate culture and translating corporate goals into corporate travel goals was key. As part of an overall strategy to reduce cost per transaction, she introduced automated expense reporting and online booking. She has seen 20 percent usage of the booking tool in the first three months and a 40 percent cost reduction. *  *  *

Pablo Gomez, director for global purchasing Latin America EDS, said that cultural and language differences from country to country pose the greatest problem in Latin America. He said the same word in Venezuela could mean something different in Mexico, so communication and consistency is crucial in developing a centrally managed travel program.

Guilherme Ricci, South America procurement manager for Proxair Group, in 1998 began a sourcing project to centralize travel in Latin America. The company leveraged volumes to introduce supplier agreements, negotiated with single suppliers for common routes and introduced common policy within all South American countries. Proxair also cut its number of agencies, going from 99 travel agencies to one in Brazil alone.

Chris Kroeger, senior vice president Latin American and Caribbean for Sabre, said it is common for a corporation to use multiple agencies in one country because there is much fragmentation in the agency market.

Latin American is Sabre's fastest growing market. Sabre has seen its booking share in Mexico, Central America, South America and the Caribbean grow from 7 percent to 52 percent over the past three years.

More