Carriers Cook Up Zone Deals

<B> Carriers Cook Up Zone Deals</B>

By Chris Davis

Changes are afoot in the zone fare programs of major airlines this summer: Continental Airlines reduced the minimum advance purchase time, and both it and American Airlines recently expanded their programs to new destinations.

Continental on July 1 reduced the minimum advance purchase time for group and meeting tickets using zone fares to five days from seven, becoming the first airline to allow such purchases less than a week in advance, and expanded its zone program to every destination it and subsidiary Continental Express serve. In June, AA expanded its zone fare package to every destination it serves.

The change in advance purchase length at Continental is designed to respond to the most frequent request of meeting planners, according to Brenda Davis, manager of North American group and incentive sales development. "We actually considered reducing it to a three-day minimum, but that wouldn't have worked from a revenue management standpoint," she said. "Planners are doing so many more short-term meetings that they're looking for any way to conserve that time."

For the time being, Continental's move does not affect new alliance partner Northwest Airlines, which began offering zone fares to every destination it flies in February. US Airways did the same earlier this year.

But Northwest's senior manager of meeting and incentive sales Gail Bill said such a change "is something we're looking at with our pricing department. It may be that we will create an alliance product that's agreeable to both carriers and maintain non-alliance products as well. But we haven't decided yet."

CO's competitors, all of which require a seven-day advance purchase for zone fares, did not immediately match the shift to five days, though "Delta is reviewing our zone fare structure to ensure we are competitive in the marketplace," said Bob McNally, system manager of meeting, incentive and group sales.

Continental's move to cover its flight map, and that of Continental Express, and reduce the advance-purchase time, is a testament to the enduring popularity of zone fares among meeting buyers, analysts said. All major airlines likely will cover their flight maps with zone fares in due time, they predicted.

Opinions vary, though, concerning just how deeply zone fares have penetrated the corporate travel consciousness. George Coyle, product manager for group and meeting sales for AA, said most companies he deals with are aware and take advantage of the offerings. But Bill said she frequently encounters corporate planners who do not.

"It's amazing the number of corporate planners that don't know zone fares are available and can help with travel costs," Bill said. "Many planners still rely on travel agents to get them the best deal, and the agent may or may not use zone fares. Sometimes they just drive everything into the negotiated corporate program without looking at other products. It's just a matter of getting the word out."

Like many meeting buyers, Jessica McGee, director of travel and meeting services for Kingsport, Tenn.-based Eastman Chemical Co., said she doubted her travelers use zone fare programs. "I don't think they are having a tremendous impact on us," she said.

But Carol Ann Salcito, president of Stamford, Conn.-based Management Alternatives, said the convergence of corporate meeting and travel procurement is increasing the use of zone fares to a certain extent. "There's much better utilization of zone fares in unified travel departments because the awareness has increased," she said. "In corporations that truly manage their travel, they are used. But there's a caveat--it depends on the instructions the company gives to the agency. When a policy on zone fares is created and managed, they're used."

What there isn't, for now, is a way to book zone fares directly via any of the airlines' Web sites. "We're still working on that, and it is a priority with me," Bill said.

Indeed, since most carriers have their zone fare pricing set through 2000 or 2001, some sources speculated that carriers are not offering the functionality to avoid further antagonizing the travel agent community.

Whether or not that's true, Salcito said, the ability of corporate travelers to book zone fare tickets or those at negotiated group rates online, while desired by travel and meeting managers, may not be their best option. That functionality would remove data on meetings volume from the agency, hampering the corporation's ability to negotiate, she said.

US Airways spokesman David Castleveter said his airline doesn't have the technological capability to book group fares online yet. Indeed, he added that group and meeting bookings require a different mindset that doesn't lend itself to the Web.

"Group and meeting travel booking takes a little more tender loving care and special attention," Castleveter said. "It's important that they come through our representatives. Planners may want to keep the group together on a flight, for example, or change the names of the people attending the meeting. There needs to be personal attention."

Fully streamlining its zone fare offering for easier online booking would be of particular benefit to Continental, which is pushing electronic commerce. But Davis denied this was a driving factor in the program's expansion. "We were really looking at making it easier and more user-friendly for us and our customers," Davis said. The benefit for the carrier, she said, is that any new destinations Continental begins to serve in the coming years can be easily plugged into the zone fare program, instead of creating new zones as new destinations debut.

There are vagaries in aspects of the zone fare programs of the different carriers. Continental alone offers five-day minimum purchase. Continental, Delta and US Airways allow zone fares for groups of 10 arriving at a single destination from multiple departure points, while American and Northwest have a minimum of 20 travelers. But American will waive the 20-traveler minimum for corporations with a multiple-meeting deal, Coyle said, noting that the number is in place to deter corporations from attempting to use zone fare discounts for its transient travelers.

Discounts offered by standard zone fares on specific routes sometimes exceed corporate volume-based transient travel agreements, depending on the amount of business a company directs to a carrier and specific routes involved. It's not unheard of for companies to take advantage by attempting to book zone fares for transient travelers who aren't attending a meeting, predictably vexing the airlines.

"We do not want to turn these into a corporate travel discount," Coyle said. "It's not strictly enforced if a corporation has a multi-meeting agreement and they tell us they have a meeting of less than 20. But zone fares are designed for groups."

Davis said Continental audits its corporate meeting agreements to ensure companies are adhering to the 10-traveler minimum. "We do care, and it is a concern," she said. Violators run the risk of losing their travel agreements, Davis said--a step not without precedents. "It happens very rarely, but there have been a few occasions," she said. "Corporations want to protect their ability to use zone fares, so it's very rare."

Bill, however, said the likelihood of a company being in the position to send several transient travelers to the same destination for a meeting is rather rare and not something Northwest is particularly worried about. "In that situation, you're only talking about one or two people," she said. Still, Northwest does not make exceptions to the 20-passenger minimum.

Castleveter agreed that the number of corporate travelers improperly using zone fares is "a rare exception," not large enough to be considered a serious problem. "Any violation of our policy is a concern, but you have to prioritize," he said, and added that US Airways takes a flexible approach. "We will tailor the package, including the advance purchase requirement, to meet the needs of our customers," Castleveter said.