Buyers Combat High Hub Fares By Pulling Traffic

<H1>Buyers Combat High Hub Fares By Pulling Traffic</H1><H3>By Jay Campbell</H3>Corporate travel managers are getting ruthless when it comes to negotiating air travel in and out of hub cities.

And why shouldn't they? Airlines have long been known to take advantage of their dominant market positions by hiking fares and tightening corporate discounts.

"Airlines in hubs have frequently taken the approach that they won't give discounts there," said consultant Tom Wilkinson, president of Alexandria, Va.-based Travel Management Group. "So the question is, how can corporate travel managers get preferred pricing simply because of volume?"

Some travel managers are answering that by pulling travelers off certain airlines when they don't get what they want. Dallas-based Electronic Data Systems Corp., frustrated by negotiations with American Airlines, pulled $40 million worth of air travel-half its domestic total-off American and used Delta instead, according to an industry source. It didn't take long before American came back to work a deal.

Late last year, the Church of Jesus Christ of Latter-Day Saints (LDS) moved 80 percent of its Delta traffic-close to $9 million worth of travel for its 500 missionaries-off Delta after they "couldn't come to terms," said director of purchasing and travel services Calvin E. Smoot. LDS purchases $45 million in air worldwide and $32 million from its headquarters in Salt Lake City, where Delta and its connection carriers have over 70 percent of the market share.

"They wanted more market share at an increased price, and we wouldn't do it," said LDS' Smoot. "Although we have a long-term relationship with Delta, it was purely a business decision."

One source said Salt Lake City's second largest travel purchaser, Novell, also pulled its Delta traffic, although the company would not confirm that.

Atlanta-based Georgia-Pacific in 1994 moved 60 percent of its Delta traffic to other carriers (BTN, July 11, 1994). Now it flies some routes using airlines, like Kiwi International, that need it more than it needs them.

The problem with shifting travelers is one of controlling carrier choice, which some travel managers can't do. Smoot's control is enviable: Missionaries, who account for 80 percent of LDS' travelers, don't know what airlines they're being booked on until they get their tickets. Another plus is that Smoot has agreements with all the airlines, so moving away from Delta wasn't hard, he said.

But LDS is not immune to the problems that corporate travel managers have. The remaining 20 percent of travelers are LDS employees like Smoot, complete with all the preferences of corporate travelers. "I'm not sure how much more we'll be able to pull off Delta, because people here have been spoiled by non-stops," he said.

"When a carrier is the only non-stop airline in the market," said Continental manager of multinational sales Lou Maripolsky, "there is less incentive to discount origin/destination traffic on the route because the carrier is getting high yield with high load factors."

Because not everyone can pull traffic like LDS, it might not be the best way to go, advised Carol Salcito, president of Management Alternatives in Stamford, Conn. But showing carriers what else you can do for them is probably the second-best way to secure a discount in the hub, she said.

"You have to know what your bargaining chips are," said Salcito. "What are you not giving them that you could? Maybe there are other locations from which travelers could be shifted-weak routes on which the airline has a small presence.