Most corporate meeting buyers favor airline meeting programs with several pricing options and back-end rewards, according to Business Travel News' 10th Annual Airline Survey, but nearly every carrier received lower marks in meeting negotiating flexibility than they did in 2006.
American Airlines and Continental Airlines, which scored first and second in the overall survey, respectively
(BTN, Nov. 19), repeated the feat when scored on flexibility in meeting pricing negotiations, which was rated on the demonstrated ability of the airline to customize meeting travel discounts and negotiate pricing elements for a preferred business traveler. Airlines were scored on a scale of one to five, one being lowest. American scored 2.94 and Continental followed with 2.92.
Southwest Airlines, which got rid of its public meetings program in 2003
(Meetings Today, Dec. 8, 2003)—the carrier still offers a discount on group travel on the same itinerary—and United Airlines, tied for third, with a score of 2.78, more than one-tenth of a point behind Continental. The survey, carried out by Equation Research, polled 358 corporate travel buyers. Only carriers that were used by at least 45 percent of respondents were included.
The category average of the seven carriers included—the others were Northwest Airlines, Delta Air Lines and US Airways—dropped to 2.76 from 2.82, and, with the exception of Northwest, every carrier's score in the category dropped. Northwest's meetings-category score rose from 2.71 to 2.75, enough only for a fifth-place ranking.
The figures mirror the overall survey results, in which every carrier posted lower average scores than in 2006.
"There's a lot of changes going on in the industry," said Mark Nickells, director of global accounts and group and meeting travel for American Airlines. "We've been very consistent. We've maintained our full line of products. We still have a discount product, a zone product and a negotiated block space product, and we have a full-service group that is there to help all of our customers. One of the reasons we've been rated on top is our flexibility."
Like American, Continental retained meetings products, offering zone and percentage discount fares. "We've always felt it's a strong sector," said Chris Clarke, regional sales director of specialty sales programs at Continental. "We hear a lot of feedback that they're happy we have this because there's so much meeting travel."
Clarke and Nickells said percentage discounts are more popular for meetings, but zone fares are more flexible. "The zone is not your lowest price, but it's the most flexible at a great discount," Nickells said, adding that American's zone prices are set for two years at discounts of 40 to 75 percent and are refundable. Continental's does not require a Saturday-night stay.
"The only time there really is risk on the group side is when you're blocking space. Then we're asking buyers to commit to a level of utilization," Nickells said.
Flexibility in an airline's pricing can depend on a multitude of factors, including competition on routes and capacity. "At the end of the day, are they full? Because if you approach an airline and they've already got a high load factor, they're going to be less flexible than if the flight was completely empty," said Yvonne Long, senior vice president of third-party group air provider Air Fulfillment Services. "The less capacity you've got on one route, the higher the fares are going to be."
George Odom, senior director of business development for Advito, said that while there is some flexibility in pricing, "based on relationships or volume or how often you do it," rising costs for the airlines have meant less room for negotiation. "There not as much they can give you without losing more than they can give," he said.
Price is a top consideration for buyers, but value-adds still are taken into consideration. Long and Odom said that airline incentives have mostly gone away, but American and Continental offer earned tickets. American also negotiates on advanced purchase and minimum stays.
"Price is always at the top when it comes to group pricing. Inherent in the product itself is that the price-value relationship is key. It's not just about the price," Nickells said
However, companies need to look at incentives such as free tickets and compare them to price differences among airlines. "If an airline is going to offer you a slightly lesser fare but no end ticket, that may mean more to the client," Long said.
While companies are embracing combining group and transient spending for hotel negotiations
(see story), air spending is still segregated, although it could help with volume requirements.
"The best practice in the marketplace is to combine the group air with your transient air and to use that total volume to negotiate the best rates for both transient and group, and have your group go through the same process as the transient," Advito's Odom said. "In essence, you're utilizing both the discounts for group and transient and the volume to meet whatever commitments you have."
"Among the larger corporations we still see a distinct separation between transient travel and groups and meetings. They seem to want to be able to manage and measure them separately," Continental's Clarke said.
Both airlines will work to combine spending if that is what the customer wants. "We have no problem blending the two," American's Nickells said.
After Southwest and Delta eliminated public meetings programs, Clarke and Nickells said they saw upticks in business.
"We have had customers who hadn't used American previously. We did pick up quite a few customers as a result of changes in the industry," Nickells said.
Southwest's third-place finish, despite eliminating its meeting program, could reflect its overall pricing.
"Southwest typically has lower costs than the major carrier with a discount," said Kathy Van Gundy, manager of air purchasing for AFS. "Where there's a market where Southwest is, they're going to use it, because they're a nonstop flight and they're low-cost."
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