Corps. Divided On Negotiating Airport Club Passes

<B>Corps. Divided On Negotiating Airport Club Passes</B>

By David Jonas

As airlines increasingly reciprocate access to their ever-more technologically advanced airport clubs with partner carriers, the draw of club membership is at an all-time high. However, the enormous popularity of these facilities allows the airlines to charge beefy fees-usually around $300 annually, leaving corporate travel managers with a dilemma. Should club memberships for travelers be negotiated into corporate contracts, exist as a reimbursable expense or be left entirely in the hands of the traveler?

"There is no rhyme or reason as to when club memberships are included in contracts, unless the client has specifically requested," said Carol Salcito, president of Management Alternatives. "But the airlines might arbitrarily decide to offer it up front at any given time, though less often in recent years."

Pete Buchheit, director of travel and meeting services at Black & Decker, agreed that negotiating club membership is a mixed bag. "It depends on how badly an airline wants your business," he said. "I will usually wait until everything else has been negotiated before getting into that area."

While some airlines are more receptive than others in adding that perk to contracts, Buchheit suggested that carriers working through a deal with a new corporate client might be more willing. In either case, Black & Decker will dole out memberships granted by the airline based on traveling frequency and not seniority or organizational level. "I want to put them in the hands of those who will really use them," Buchheit said.

Rolfe Shellenberger, senior consultant at Runzheimer International, said that during negotiations with carriers, "you have to ask for these perks to make the passenger whole and get them on board," noting that it's the same concept as transferring over frequent flyer status.

He concurred that the club membership issue surfaces most often when clients are switching preferred carriers. "After all, the greatest opportunity for a company to get the most value and save on air travel is to approach the carrier it is not currently partnered with," he said.

Club membership isn't as much an issue at the International Monetary Fund, where the majority of travelers either book business class or reach it through various upgrade programs. "I had looked at adding club memberships for my economy class travelers, but the cost was too high and the airlines were reluctant to negotiate because the lounges already are so full," said IMF senior transportation officer Caro Cook. "From a corporate point of view, you ask for it, but be willing to concede it."

Joe Preimesberger, vice president and director of corporate travel at Science Applications International Corp. in San Diego agreed that club membership is a luxury and not a necessity for the company's 7,000 travelers. "I see them as an added cost. I'd rather have the best discount to save the most for the company," he said, adding that SAIC spends about $82 million on air travel annually.

Discussions on club memberships vary as much from the airline perspective as they do from the buyer side. "We found that a corporation's determination on whether it provides an added value for its travelers, and whether or not they want to commit the extra money, varies quite a bit," said Dave Hilfman, Continental's vice president of multinational sales and revenue programs. "We always are willing to talk about it. In some cases, it could mean waiving the fee or negotiating a discount, depending on the volume of purchasing commitment."

Hilfman added that existing accounts also bring up the topic during contract renegotiations, "maybe after the corporate travel manager gets feedback from the travelers."

American Airlines said it also might offer discounts for bulk memberships to its largest corporate accounts. United, on the other hand, said it very rarely includes its airport clubs in contracts. And when it does play in, it involves discounting and never complimentary memberships.

The bottom line for buyers, in many cases, is that it is an added cost for airlines to offer access to their clubs. And if the clubs are plenty filled, the airlines are happy to have the paying members take up the space. Nevertheless, insiders agreed that there is no harm in asking for the value add.

<B>Companies Pay For Access</B>

Regardless of whether club memberships appear in airline contracts, each company must decide if and when the fees are reimbursable for travelers using the lounges. A 1998 Runzheimer study found that 68 percent of all corporations will compensate travelers for airport club access.

Black & Decker is one such company. "Our corporate travel policy says that if you are a frequent enough traveler, whatever that translates to, we will reimburse you for one annual club membership," Buchheit said.

At Philadelphia-based Elf Atochen, frequent travelers can deduct the expense despite its policy that states dues are not reimbursable. "It is applied on a case-by-case basis," said Bill Patient, a travel buyer for the company. "Frequent travelers spend more time in airports and generally can be more productive in the club and out of the fray."

IMF and SAIC, on the other hand, do not remunerate for lounge fees at all, and reimbursing a traveler at any company for more than one airline club membership in a year is quite rare.

Whether a corporation handles the memberships or not, there are plenty of reasons for travelers with extra time in the airport to consider these facilities.

For starters, partnerships have resulted in larger networks. For example, American and US Airways combined their club programs to include 73 facilities in 53 cities. "It has been very difficult to negotiate club memberships into a deal, but it hasn't been a huge loss for some because US Airways clubs are not very prevalent," Patient said. "However, I am going to work harder at it this year because of the relationship with American. A membership now carries a little more bang for the buck."

Continental and Northwest also have linked facilities, resulting in an integrated total of 48 lounges and affiliations with another 50 overseas. Delta and United grant reciprocal access to their clubs in the United States and Puerto Rico, as long as the traveler flies a segment on each during that itinerary. Factor in reciprocity throughout the growing global alliances, and frequent flyers with club memberships can access an airport facility in just about any city they visit.

The primary benefit for business travelers these days is enhanced technological capability. Most lounges offer Internet access and personal computers, to go along with traditional business amenities, allowing visitors to stay productive and connected.

American, for example, is introducing technology kiosks this year to its European Admirals Club locations. Stateside, it will roll out the MobileStar network, which facilitates wireless Internet connectivity via laptops and handheld devices. The carrier operates 51 facilities in 15 countries and also offers three private Flagship Lounges for international first class customers in Chicago, Dallas/Ft. Worth and London Heathrow. The newest Flagship Lounge will open this month in Miami, followed later this year by a new facility in Boston.

Continental also expects to have Internet access in place at all Presidents Clubroom locations by year-end, as well as ATM access in Cleveland, Houston and Newark. The carrier's newest facility will open this spring in Panama City, followed by new openings this year in Ft. Lauderdale, London Gatwick, Newark and a joint project with Northwest in Chicago.

At Delta, a spokesperson said, "Our planes are packed and consequently our Crown Rooms are packed." The airline operates 51 facilities in 41 airports around the globe, including San Diego, which opened in September. Exclusive Business Elite lounges also are available in Atlanta and New York JFK.

United, which charges $400 for an annual membership, is constructing a lounge in Tokyo and exclusive international first class lounges in Boston, Honolulu and Seattle. The carrier, like several others, also eliminated lifetime memberships.

TWA, which offers one of the lowest annual club membership fees at $200, offers 18 domestic and two international Ambassadors Clubs, including the newest in San Juan.