Amex's Lilja Roils SAS, Rolls Out AXI In Europe

<B> Amex's Lilja Roils SAS, Rolls Out AXI In Europe</B>

By Amon Cohen

<I>Stockholm</I> - American Express this month introduces its AXI interactive travel management system to Europe with a beta test at Xerox Corp. in the United Kingdom. A full U.K. commerical launch follows in September, and tests commence in Germany and Scandinavia in October.

With Sabre's Business Travel Solutions also finally crossing the Atlantic, Maria Lilja, American Express' senior vice president for business travel in Europe, believes the traditional European wariness of travel automation (<I>BTN,</I> June 22) may just be about to change.

"My experience is that clients definitely want technology where it is appropriate," Lilja said. "Maybe there has not been much enthusiasm so far because there has not yet been a good product in the market."

But although Europe may lag in technology, Lilja's home region--Scandinavia--is leading the world when it comes to redefining the nature of the agency-client-airline relationship.

The pace is being set by SAS (some say as the guinea pig of Star Alliance partner Lufthansa), which will reduce commissions to 4 percent beginning Jan. 1, with a cap of Skr250 on top. All overrides and other incentive deals also will be scrapped (<I>BTN,</I> June 22).

Although fully accepting that the commission system needs replacing, Lilja is unhappy that, in her view, SAS is taking from both agents and clients but giving nothing to either in return. She is surprised that clients have not protested more loudly about the airline's reticence to offer better corporate deals. "I wonder why clients are not saying more," she said. "The airlines are keeping a huge amount of money for themselves."

Lilja, for one, is saying more. With commissions on their way out, she believes, like U.K. Guild of Business Travel Agents chairman Tony Hughes, that agents must still be remunerated by airlines for the valuable work they do.

"With the cap, our commission will effectively go down to 3.7 percent," she said. "We have not accepted this yet--I have told SAS that we must agree on the services we do for them and then we must agree what we shall be paid for it. Commission on ticket prices is not right, but could the airlines do what we do for free if we disappeared overnight? Of course not. Let's forget about price--they should be a paying us a transaction fee related to the time needed for the work," Lilja said.

There are other distribution options open to Amex, such as bulk purchasing deals similar to the one negotiated by the agency in the United States for Continental Airlines seats on Virgin Atlantic flights to London. "We are investigating that in Europe but I would not say we are talking to anyone right now," Lilja said. "I would prefer to get net fares from airlines and then it will be up to us to be productive and competitive."

There also have been early moves by SAS to do net fare deals with clients that require the customer to book through the airline's dedicated reservations system. Lilja claimed this ultimately would be counter-productive for corporates. "At first, it looks attractive because there are good financial deals, but it is going back to the days when the airlines controlled the computer reservations system," she said. "How will you get alternative choices if you don't like what the airline is offering you?"

Lilja has seen a faster rate of change than ever before in business travel since she took the helm of Amex Europe two years ago. External developments have been mirrored by internal restructuring. One major change is the new strategic emphasis on joint ventures in Europe, an option that was simply not on the agenda when Amex bought Lilja's agency in 1992.

American Express already has tried joint ventures with agencies in France and Belgium (although the former, with Havas Voyages, did recently turn into a 100 percent Amex takeover) and Lilja said more are in the pipeline.

She also claimed that profitability is up for the mega-agency in Europe, though declining to give figures, and that not a single account has been lost through the campaign to convert all clients away from the traditional commission and rebate system.

Current strategic priorities include widening the Amex service offering to include related areas, such as fleet management, and closer integration with the company's card business. Lilja also predicted a more consultative role for Amex and that employee numbers will fall, although not necessarily through redundancies. Like Carlson Wagonlit Travel, Amex also plans to consolidate to fewer locations and larger call centers.

Lilja believes this will help Amex improve its cost effectiveness, as will technology solutions such as AXI. Clients can continue to buy their travel from Amex in a more traditional way--but at their own expense. "If customers want us to deliver in a less cost-effective way," she cautioned, "we will have to charge them more.