BOC Inks Global Air Deals

<I>Surrey, U.K.</I> - The age of the global airline alliance deal has arrived: Manufacturing and distribution multinational The BOC Group has become one of the first companies in the world to strike deals with two such alliances for the majority of its $75 to $90 million worldwide air spend.

One deal consists of United Airlines and its partners, including Lufthansa and SAS; the other is with British Airways and Qantas, which means it will include American Airlines if that partnership is approved.

To fill some of the larger gaps not covered by these two mega contracts, BOC has cut smaller deals with Cathay Pacific and South African carriers South African Airways and Comair. The latter now operates as a BA franchise holder, but BOC started negotiations with Comair prior to that time.

All told, the five deals represent 80 percent of BOC's annual air spend. Forty percent of that expenditure originates in the United States, with another 40 percent coming from the United Kingdom, where the group has its headquarters. Most of the balance originates in the Far East, although this percentage is growing fast. BOC has 40,000 staff in 60 countries.

Group travel manager Pam Koles hailed the deal as "a new era for airlines." Instead of negotiating with each carrier in the alliances, she worked only with lead airlines BA and United, which communicated in turn with their partners.

"It was extremely gratifying for everyone. The alliance partners were very cohesive,'' Koles said.

Although she would not divulge any financial details, Koles said she had not encountered the reported problems of other buyers, which are said to have been offered worse deals by new alliances than by their individual members (see story, Page 9).

"We wouldn't have moved forward if it hadn't been a win-win situation," Koles said. "We realize they have to make money and they realize we have to save it.''

Koles said that her firm's strong track record of meeting its volume agreements helped clinch the deals. "We have developed a very strong credibility, and the airlines know that when we make a guarantee, we will deliver on it," she said. "Some of the airlines have had their fingers burnt by corporates promising and not delivering."

BOC was able to make many of its reassurances through its relationship with Rosenbluth International, through which it has consolidated its travel management worldwide over the past 12 months (BTN, Feb. 24). The Rosenbluth connection has provided credibility in two different ways. First, it proved that BOC is capable of completing a global travel consolidation. Second, it is generating the essential unified data.

"We have to have the data to understand the route structure," Koles said. "We spent an enormous amount of time doing the research. The airlines told us that Rosenbluth was giving them very clean data."

Through Rosenbluth, BOC will give carriers a disk each month containing all its ticketed data. The airlines will then verify it with their own flown data, which is finally becoming possible to collect.

"The technology was not there five years ago," Koles said. "Now the carriers can gather flown data without waiting seven months to collect tickets from all around the world."

BA refused to comment on the BOC agreement.

BOC also has just wrapped up a worldwide car rental deal with Hertz, and hotel contracts are set to be signed within the next month. Supply management group manager Craig Lardner said he would be pleased if he could restrict the number of chains meeting BOC's accommodation needs to fewer than five.

BOC will renew long-standing relationships with properties in territories not served by the chains and will add some hotels recommended by Rosenbluth.