Carriers Bartering For Small Biz

<B> Carriers Bartering For Small Biz</B>

By David Jonas

In an effort to hook the smaller fish in a large corporate sea, a few airlines are ready to dangle new incentive programs in front of those without enough volume to substantiate a negotiated discount. Northwest, TWA and a few European carriers in the coming months will begin promoting these small business programs to corporations that are searching for more value for their travel dollars.

Leveraging the enormous potential of e-commerce and pushing the philosophy that volume through low-cost channels equals shared savings, Northwest at the end of October will unveil E-Biz Perks, a new small business program residing and focusing entirely on the Internet. Al Lenza, Northwest's vice president of distribution planning, said the system can offer companies in major markets a home with Northwest on the Internet.

"These companies will receive hard and soft benefits based on volume produced through online transactions," Lenza said. Those benefits could include data and information consolidation, upgrades, tracking, bonus mileage and integration with existing frequent flyer accounts. The system, which employs a customized version of Worldspan's Trip Manager, has been in testing with a few dozen corporations that already use the Internet to do business with Northwest.

While the carrier continues to mull a competitive response to the broader small business programs now offered by other carriers, Lenza said the new E-Biz Perks can be managed at a much lower cost for that segment of clientele. "It benefits us with lower distribution costs and benefits those accounts by providing higher value," he added.

TWA also is in the final stages of developing a small business program, which vice president of sales Scott Bush said will facilitate relationships with small- and medium-size corporations that "can mature into more dynamic ones." Dubbed the Aviators Entrepreneur program, the offering also will reward agencies that "help isolate certain corporate accounts."

Testing of the program in certain markets has begun and a wider release will follow in the weeks ahead. "We have come to the realization that the best way to target opportunities is in places where our competitors are too expensive," Bush said. "Corporations will receive benefits--free travel, club memberships, premium cards--based on the performance of their travelers." Those travelers still will earn individual frequent flyer programs

Phase two of the program, expected sometime next year, may include an Internet-based tracking vehicle, but Bush said the program is still too young to invest in such systems.

Many other majors have similar programs in place. With American, small businesses can sign up for BusinessExtrAA and earn upgrade certificates, free domestic tickets and AAdvantage gold status for its travelers based on quarterly flown revenue.

United's Perks Plus now is in its fourth year and Paul Frakes, manager of corporate development, said, "we have rolled out to every market in the U.S. after first getting our feet wet in select markets," he said. "Now, there are thousands of companies enrolled, and it keeps growing."

Delta and Continental also established programs. Continental's RewardOne recently passed its one-year anniversary, added Latin American markets and will pursue further expansion into Europe. Heather Carroll, manager of the small business program said that the revenue-based program now is used by about 3,000 companies.

Meanwhile, after months of testing, British Airways finally unveiled its Venture Club (<I>BTN</I>, Jan. 25) in the United States. The revenue-based program already has enrolled more than 5,000 U.K. companies. Robert Brunner, BA's manager of business travel development and financial services, said the points formula includes class of service and destination. "The small- and medium-size customer wants to be treated like the bigger customers," he said.

BA isn't the only European carrier looking to incentivize small U.S. businesses. Virgin Atlantic, one of BA's chief transatlantic rivals, will introduce Flyinco to qualified companies in a month or two. The program, already available in the United Kingdom (BTN, July 19), likely will follow the relaunch of Virgin's loyalty program.

"Small businesses have been asking for this type of program and now we are answering back," said Ralph Bershefsky, Virgin's loyalty marketing manager. "Our sales reps have heard it a lot from those corporations that just don't have enough volume to justify a corporate deal."

Air France this summer also rolled out its incentive program for small businesses, dubbed Voyageur Rewards.

"So many companies do not have the volume to warrant a point of sale discount," said Carol Salcito, president of Management Alternatives Inc. of Stamford, Conn. "It's nice to see the airlines offer alternatives.