Cos. Couple Air Spend - 2001-02-26

<B>Cos. Couple Air Spend</B>
<I>Buyers Combine Group, Transient On Major Carriers</I>

By Chris Davis

Several major carriers during the past few months have reported a sharp upswing in the number of corporate travel and meeting buyers negotiating contracts that cover, in one form or another, both group and transient travel. The impetus is corporations' desire to ensure that meeting attendees receive the lowest possible airfare and to further determine the total amount of group air spending.

While the contracts rarely are combined into a single entity, due to the airlines' insistence that group zone fare discounts not be used by transient travelers, the confluence of meeting and transient contracts streamlines the determination of an attendee's best fare option, be it a zone fare, transient fare or other negotiated fare.

"We've absolutely been seeing this trend over the past few months, particularly with our really large corporate accounts," said Gail Bill, Northwest Airlines senior manager of meeting and incentive sales. "We negotiate these on an ad-hoc basis, with a separate discount level for meetings that incorporates the corporate discount into the meeting discount. Whichever discount works out to be the best for a given meeting is the one we use. These are big corporations that approach us. We wouldn't look to do this type of business with midsize or smaller corporations with small volumes."

While negotiating the meetings and transient sides of air travel is certainly not a new concept, it's newfound popularity may stem from a general trend of corporations seeking to consolidate meeting spending data. Doing so for the air piece of the travel budget, decentralized as it may be, is much less cumbersome than consolidating group hotel spending, said Kaye Mulkeen, COO of WorldTravel Meetings and Incentives, making it a frequent first step of consolidation.

"The corporations doing this want the data consolidated so they know the total spend, but they want the group data segregated so they know that volume. It used to be just all rolled into one number and they couldn't identify what was group," Mulkeen said. "They want to compare, because transient fares can be better than meeting or zone fares and it's incumbent on us to compare them and choose the lowest."

"It's not new for us, but there is increased interest in savings opportunities for groups and meetings now and people are looking at zone fares and such," said Harriet Washburn, vice president of travel for Aon Service Corp., Chicago. "As there is increased scrutiny, people are much more sensitized to making sure they're taking advantage of the least expensive rate when they go to meetings. Traditionally, it was convenient to assume that the corporate discounts were the least expensive, but if there's the possibility of getting a zone fare program in there, you have extra protection."

To successfully negotiate a contract of this sort, corporations should have some control over their meetings program: a requirement and/or mechanism to register the meeting with a central point, such as a travel or meeting department. "We negotiate based on a company's ability to direct and control. If there is no ability on the meetings side, we are not eager to get into this type of relationship," said Bob McNally, general manager of meeting, association and incentive sales for Delta Air Lines. "In the past, we saw it pretty splintered up: Corporations didn't have a lot of control over their meeting business and no ability to direct it. Now, many are looking at all of their costs and gaining control of meeting business to use in negotiations."

McNally said corporations have approached Delta with requests to combine the two contracts into one, but they have not done so yet. "Due to the detail of meetings fares, with the minimum of 10 people to a common destination for a program, for example, we can't put in one contract," McNally said. "For the immediate future, we're going to keep it separate. As our ability increases to track and draw contracts and compliance together and drive better reporting, which might be a year or two down the road, there could be one official contract."

McNally said deciding whether to negotiate such a contract with a corporation requires consultation between his department and Delta's national sales department. "We take everything into consideration, especially how much meeting business there is," McNally said. "We look at the city pairs they need, and we'll work with corporate sales to ensure that they get the discount they are entitled to. It depends on the corporation and their volume."

However, not all corporations, nor all airlines, have taken the step toward this kind of contracting.

"We don't at the moment, but it makes sense because every time we have a meeting we're comparing what we can get in a meeting contract to our current negotiated rates and where we can get the best deal," said Betty Moilanen, worldwide office services manager for Denver-based J.D. Edwards & Co. "It makes sense to do it all in one deal, and I'll pursue it when we renegotiate. We end up going out to negotiate as the bigger meetings come up."

"We don't have combined contracts now, but it is something we're working on," said US Airways spokesman David Castleveter. "We will have something of that nature soon, likely by the middle of the year.