Continental Scrutinizes Corp. Deals
<I>Houston</I> - The success of corporate deals are a mixed bag for Continental Airlines, which this month told travel managers on its corporate advisory board that although negotiated travel still represents only a small portion of the its high yield business, the number of successful corporate deals have doubled over the past year.
Continental's staff vice president of revenue development Ron Aizer defined a successful deal as one that increases share, though it may not meet all set goals. He noted that about half of all the carrier's agreements fit that description and that about two-thirds of deals with Fortune 500 companies do.
Over the last year, Continental has negotiated over 100 new corporate deals but has canceled almost as many, said Aizer. Continental measures corporate arrangements by calculating "performance above fair market share," fair being the amount of business the airline should get in a given market based on its presence there.
Aizer also discussed Continental's newly revised codesharing arrangement with Alitalia. The partners have begun actually purchasing each other's seats for resell--known as a "hard block" deal--which gives the carriers the power to independently price, discount and manage the seats. "We can do corporate discounts on these seats," said Aizer. "But the number of seats we have will be limited, as might be our interest in discounting them."
Speaking further about codesharing and alliances, Continental's vice president of alliance operations Tom Barber said he is hoping for government approval of the Continental-Virgin and Continental-Air France codesharing deals by the fourth quarter, though he warned that it was only a guess. Continental also is working on signing a new partner in Northeast Asia.
On the technology front, Continental is developing a customer information system to track patterns and preferences of frequent flyers and other customers. A year from now, said vice president of marketing programs Richard Metzner, "We'll be able to track all of our interactions with a particular traveler, and once we figure out how to ID it, we can link this information to your companies. We can tell you everything your travelers actually did, allowing us to ensure that they're getting what they're supposed to under the corporate deal, whether that means upgrades, discounts, club access, whatever. What we'll do with this information I don't know, but you all can help us with that," he added.
Also, the carrier said it hopes to be testing electronic ticket interlining by early next year, followed by international testing to possibly Mexico or the United Kingdom. So far, the most popular functions of the airline's e-ticket machines are checkins without bags (54 percent), checkins with bags (27 percent) and seat selection (10 percent).
Continental execs said the carrier's slip in the DOT on-time performance rankings during the second quarter was a function of bad weather in Houston and a new focus placed on timely arrivals by other carriers. Continental's average year-over-year was no worse, they said.