Delta: Relating To Corporations

By BTN / November 15, 1998

Delta: Relating To Corporations

Following a number of major management changes at Delta Air Lines, former senior vice president of sales and international Vince Caminiti this month has traded responsibility over international strategy for a new role as senior vice president of sales and distribution planning. Caminiti now is one of few airline executives at the senior level to closely manage an airline's distribution strategy. With that in mind, Caminiti took time last week to speak with Business Travel News airline editor Jay Campbell about how Delta is interacting with corporations and trying to improve its relationships with them. Caminiti was joined by Patrice Miles, director of distribution planning.

BTN: What are companies telling you they need from Delta?

Caminiti: We're always listening to what the corporations want, and if we're not we should be, and we try our best to deliver it. Our desire, especially if we get into a downturn, is to give those customers a better value. The principal piece of that is a better price for transportation on Delta, and the degree to which we want to deliver that is commensurate with that corporation's desire, willingness and capacity to deliver additional market share.

We'll announce next week to our employees and key customers the details of our new international business two-class product (BTN, Oct. 5). In view of our ability to add value to corporations' international travel, this is the pinnacle of that. This takes our fundamentals to the next level. We're going to be the leading force in attracting, retaining and delivering on our intercontinental product in optimizing the fact that the majority of corporate America buys business class travel. As we move into the spring and summer of 1999, the fleet will be fully deployed.

BTN: How are corporate accounts performing for Delta?

Caminiti: There is a cycle of relationships with corporations. You begin from day one and do a deal, then you're in a honeymoon period where we provide a discount in return for share. Some corporations have the desire but not the capacity to deliver. If you do not have a good travel policy, then the contract is not worth the paper it's written on. During the past 18 months, because business airfares in certain markets have grown further than leisure fares, the pressure on delivering value has become a pretty hot topic.

We're going to have a different relationship with a corporation in Atlanta than we do in Chicago or New York or Los Angeles. Clearly, we'll discount more for business in markets where it's very competitive than we would in, say, Atlanta-LaGuardia, where we're the only guy flying there [with the exception of AirTran Airlines]. And we have the tools and the sophistication to be responsive to the corporation on the one hand and to not give the store away on the other. We're finding travel managers are beginning to make those tough decisions that say, "We're not going to do deals with everybody, but instead with fewer people," and that's important because we don't do deals with everybody. I'd rather have 10 quality deals than 25 mediocre ones.

BTN: What areas are you working on improving when it comes to relationships with the corporate market?

Caminiti: It is incumbent upon us to be as sophisticated as possible when it comes to origin and destination revenue management systems, and certainly our schedule systems, and we're investing a lot of dollars in just that. That sophistication makes us better able to deal with corporate customers in terms of where the opportunities lie, what we're willing to pay for or discount more of, and whether they are in a competitive market in which we'd be more aggressive than otherwise. We have the tools that help us manage those markets which is manifested in better deals for those companies that want to move market share.

BTN: Is there a point where companies have gone as far as they can with you?

Caminiti: Absolutely. Our philosophy is very simple: If a corporation in a specific market is delivering to us a share of business that is significantly better than our expected share--and we know precisely what that expected share is by origin and destination, by market, by city based on available seat miles and schedules in the market--then our whole philosophy changes. It is now a maintenance thing. We look at how the client feels about the results, how we feel about the results and how we can enhance the agreement above and beyond just a discount.

We have a program called Executive Partner, and I won't give you too many details, but it's a special arrangement for the senior officers of our largest customers that provides them with services we would not give to ordinary customers. That program is about a year old and has been received very nicely. We have a very limited number of people on it, so our challenge is to make sure our 70,000 employees know when these people are traveling. It's CEO to CEO, CFO to CFO relationships.

BTN: In terms of your alliance with Austrian Airlines, Sabena and Swissair, how many accounts are there in the United States that deal with all three? A Swissair exec told us there are 50 in the New York area alone (see Inside Track, page 4).

Caminiti: The whole issue of alliances is dynamic and has proven to be very effective for us in providing a product we couldn't offer otherwise. With antitrust immunity, when we do deals in the United States with corporations that have international travel, we include our partners. It's implicit, every time we talk to a corporation, that we will work with them to bring the Atlantic Excellence value to that negotiation. It's not like there's a number--we just do it all the time.

BTN: Will there be a response to Continental-Northwest if they begin signing joint contracts with companies?

Caminiti: They must have antitrust immunity and they won't.

BTN: They seem to think they'll be able to do it (BTN, Nov. 2).

Caminiti: What they think is one thing. They literally have to be getting antitrust immunity from the Justice Department, and they don't have that now. You cannot be talking to another airline about a corporation's pricing or opportunities to work together for this or that corporate customer in terms of pricing or inventory or schedules without antitrust immunity. That's not Delta's position, that's what the law says.

BTN: Delta was the first major airline to come out and talk publicly about net fares (BTN, March 18, 1996). Please give us an update on that trend.

Caminiti: I'd suggest the value of net fares and the whole net fare strategy is really coming to roost. You have to have the travel agency involved big time. We're very serious about those relationships because what I'm doing is giving a discount for business that in a non-net fare environment I would hope to get by paying overrides and having the travel agency deliver share to me. If he doesn't deliver share, he doesn't get the override. It's a variable I can control. With a net fare, I'm going out on a limb and giving the discount up front. So the level of criticality is higher for net fares, but guess what, for those we have in place we get that commitment more often than not. And other airlines are recognizing this too.

BTN: Is Delta exploring other types of net fare agreements that net out perhaps credit card or CRS costs in addition to overrides and commissions?

Caminiti: CRS fees are clearly a cost that is growing exponentially. We need to do what we have to do to manage those costs. It's in our interests to, if not provide that savings to our corporate customers, then to certainly mitigate those costs.

BTN: What's new in distribution?

Miles: We're really trying to listen to corporations about how they can benefit from the new technologies, whether it's an Internet booking product or an extranet link where you can share information with that corporation. So, I think the technology is ripe. On e-ticketing, we're now conducting a survey to determine whether people are using e-ticketing for business or pleasure. If they aren't, we're asking why not. The total survey results will be tabulated within the next 90 days. One thing we know we have to do for business travelers is to extend its availability, so the Delta Connection carriers will be coming on board after the first of the year. Also, interlining will be coming in 1999.

BTN: We hear and say a lot about globalization in travel management. Is it where you expected it to be?

Caminiti: Everybody wants to have global and multinational deals. There are some out there, and we have some. The problem is that you may be the CFO and you have autonomy for the U.K. branch, so there is a reluctance to tell the London office, "This is what you will do." Or, if you do, the U.K. office says, "I don't care about your U.S. deal. It's going to cost me money." I find there are more of those out there than harmony, and I would say managing travel on a global scale is not as far along as I thought it would have been. We don't think that the preferred vendor strategy has been optimized.

BTN: There's been talk lately on cutting back travel. Have you seen an impact?

Caminiti: We've heard those same things, and it hasn't been reflected in the domestic side yet. Certain international markets seem to be getting a little softer.

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