Delta Takes The Floor

By DAVID JONAS, MARY ANN MCNULTY, SARAH WELT AND LYNN WOODS / August 01, 1999

Delta Takes The Floor
NBTA Gets Internet Fare Promise

By David Jonas, Mary Ann McNulty, Sarah Welt and Lynn Woods

Minneapolis - A day after a warm welcome from Gov. Jesse "The Body" Ventura at the annual National Business Travel Association convention held here last month, members who had been wrestling with the problem of Internet sales undermining their corporate airline deals scored a victory as Vince Caminiti, Delta's senior vice president of sales and distribution, announced an e-commerce solution.

"Internet technology is not a simple means to an end, but an opportunity for us to deliver to you what you want and need," Caminiti said, as he announced Delta will provide managed travelers with PIN access to negotiated rates through the Delta SkyLinks Web site and the ability to capture that data. By year-end, he said, corporations with agreements in place will be able to direct their travelers to Delta's site to take advantage of special Internet fares.

Furthermore, Caminiti said, within six months Delta will implement an "enhanced corporate sales strategy" that will include sharing of savings achieved through online technology adoption, as well as strategic alliances with third-party online booking vendors.

"We are developing a matrix of value-added opportunities," Caminiti said. "How your corporation navigates this matrix will determine the amount of incremental value available to you."

The announcement is the next step in the carrier's E-Delta efforts (BTN, May 17), which focus on using newer, more efficient distribution channels. Caminiti said the travel industry spends 20 percent of its sales to distribute tickets and it costs Delta 400 percent more to book a ticket through traditional processes.

Other carriers are working to open the Internet to corporations with negotiated rates. Northwest said it will be ready much sooner than year-end and is ironing out the details with 15 or 20 "high priority accounts in the major hubs." Al Lenza, vice president of distribution planning at Northwest, said the Delta announcement provided more visibility for the booking option. "We should credit you for the discount and the volume irrespective of how it's sold," he said.

While Continental also is developing corporate access through its Web site, American has been taking a more cautious approach.

"We've been neutral and conservative by design to make sure we're not undermining our agreements with corporations," said Frank Morogiello, AA's managing director of national accounts and sales programs. However, he noted that "buyers do not want to miss the paradigm shift" and the channel has much to offer, including increased productivity resulting from fewer people handling a customer's business.

Bob Lichtman, the global travel manager at 3Com and NBTA board member who initiated the pre-conference discussion on the issue of Internet fares, was encouraged by the announcement. "Though there is nothing in writing, this is evidence that airlines are now realizing that corporate travel programs need to be taken into consideration with regard to distressed inventory on the Internet." He added that many travel managers are glad to hear this first step come from Delta, a carrier that "had been pushing the Internet as a means of circumventing travel management."

Several buyers and analysts welcomed the Delta announcement as evidence that the airlines are beginning to listen to customer concerns.* * *

In a new format for NBTA educational sessions, attendees began in a common session led by Holly Hegeman of Plane Business and then proceeded to various aviation-related buzz rooms.

Hegeman began by giving a quick analysis of the financial status of the major airlines. Some highlights: TWA is in dire straits and continues to fall deeper into debt; Alaska is exploiting its niche and may be an acquisition target; Delta "feels good" about its recent alliance with Air France and is ripe for buyers to strike deals; AA suffers from too much "old thinking" and is reporting low unit revenue air seat miles; US Airways stock has been dropping and its head-to-head battle against United at Dulles is "ill-advised." However, it is expected to forge closer ties with AA. United, meanwhile, has too many seats, particularly transatlantic, and Continental continues "to grow like a weed." And the biggest stock market gainer thus far in 1999? Frontier Airlines. She also warned buyers of a potential fare increase in September and advised them not to overlook smaller airlines.

Though some of the breakout sessions that followed were canceled due to low attendance, others offered lively discussions, particularly the Airline Competition & Low-Cost Carriers session. Sam Addoms, CEO of Frontier, revealed that the low-cost carrier has 2,300 corporate accounts.

Brent Garback, chairman and CEO of Troy, Mich.-based Total Travel Management warned that exclusivity clauses are like "a noose around your own neck." He also said airlines respond favorably to increased competition by emphasizing customer service and bringing in newer planes, including regional jets.* * *

At the NBTA Buzz Room session on ARC and the latest reports on the implementation of corporate in-house certification, ARC director of agency accreditation services Barry Lemley told the audience that two more companies have received CTD approval, bringing the total number to 20. "There has been growing support from the carriers, corporations, GDSs and agent sectors," he said, including more than 400 direct requests for information and 25 more companies in the application process. * * *

NBTA members ratified unopposed candidates for president and vice president Cynthia Perper, director of corporate travel services for the New York-based Colgate-Palmolive Co. and Kevin Iwamoto, air and car supplier manager for the Palo Alto-based Hewlett-Packard Co. They also elected to the board Mary Savoie-Stephens, manager of travel for the Emeryville, Calif.-based Chiron Corp., and Andrew Menkes, vice president of global travel management for Republic National Bank in New York.* * *

Before turning over the NBTA presidential gavel to Cyndi Perper, Mark Johnson, travel manager for Cessna Aircraft Co., announced the launch of the Travel Vault, revealed results of the Institute of Business Travel Management's study with Deloitte & Touche of how corporations value travel, introduced a master's program for travel management at Wharton School of Business and unveiled NBTA's new logo.

The Travel Vault (BTN, July 5) is a database that includes news, statistics and benchmarking capabilities. While some of the benchmarking will be restricted to members of the Travel Management Exchange Forums, a scaled-down version will be made available to general NBTA members. "Benchmarking can be done by industry, by corporate size and by travel volume," Johnson said. Corporations can "share data with complete confidentiality."

The first part of the two-phase $400,000 IBTM research project began in February, when Deloitte & Touche polled senior executives at 25 companies and interviewed eight travel managers.

The next phase of the research project will be to get a "quantitative formula to measure the value of business travel management and shareholder value," said Robert Dirks, IBTM chair and senior vice president of marketing at Hilton Hotels Corp.

NBTA executive director Norman Sherlock recommended the first class of six for the Wharton School of Business scholarship program that begins Oct. 5: Richard Ballard, vice president of global travel management for Young & Rubicam; Michael Cox, director of travel services for Thomson Corp.; Ian Hall, business travel manager for Unilever plc of London; Joan Lowell, vice president of electronic distribution for Hyatt Hotels Corp.; Michael Mary, director of travel services, Adidas International; and Peter Turso, director of strategic sourcing for Johnson & Johnson.

The qualification process is still being refined. Dirks said there will be two six-person classes a year.

Johnson also presented Judie Shyman with the President's Award. Shyman, former manager of travel, training, employee services and community relations at GEC Marconi (Hazeltine) Aerospace Systems in Greenlawn, N.Y., and Johnson's presidential predecessor, just became a consultant at The Corporate Solutions Group (BTN, July 19) and ended her six-year stint on the NBTA board. Bob Matthei, senior vice president of Citicorp Diners Club was presented with the award for Allied Member of the year.* * *

More than 300 travel decision makers visited 33 vendors who participated in NBTA's first Technology Pavilion on the opening day of the show. Travel managers and consultants offered 30-minute overview sessions in three major technology areas--booking, expense and productivity tools--as well as an overview orientation of travel technology presented by Norm Rose of TravelTech Consulting. * * *

In a session on data warehousing and mining, Chip Mahan, former travel manager for the National Security Agency, now vice president of card services for Bank of America, Washington, D.C., explained how a travel data warehouse can be used for business analysis. Although it took the NSA more than two years to build its data warehouse, Mahan said, it enabled the federal agency to produce quarterly travel spending reports by division and city. At one point, management was given monthly reports detailing the credit card management on which the agency's rebate was based. "Managers just were not aware that their practices were costing the company money," Mahan said. Although one manager with the worst performance was annoyed by the report, his performance improved significantly the following month, he added.* * *

A session on electronic ticket tracking offered buyers several options for keeping tabs on used and partially used e-tickets, which average 4 percent of all tickets and are much easier to forget about. Mark Williams, director of travel for the Americas at PricewaterhouseCoopers, said his company found almost $5 million in unused e-tickets over 12 months.

Maritz Travel Co. project manager Cindy George, said there are at least 10 third-party products on the market that offer various functionalities. Some notify agents on screen about unused portions while others produce reports on a regular basis listing tickets that have not been used or e-mail the traveler directly. Williams also said some companies disallow travelers from expensing an e-ticket until after it has been used.

Chris Frawley, Continental's director of electronic commerce, said that while airlines could "take on the accounting role to help keep track of tickets if that is something the marketplace really demands," the Pay As You Fly scheme could be the best solution.* * *

In a car rental session, consultant Neil Abrams said the recent public ownership of most major firms has resulted in "the strongest industry performance in history. The companies have done a better job in managing their fleets and pricing fairly. They're no longer embarrassed to say to their customers, 'we need an increase.' "

Abrams predicted that over the next five years that there will be more travel service alliances, airport infrastructure projects will continue to impact the movement of car rental facilities away from the terminal, local market growth will offer corporate travel and fleet managers new opportunities, automated booking will become more common with the advent of Internet services and direct links, and vehicles will become safer and more efficient as new technologies are built into rental cars. In the near term, however, travel managers seeking global car rental programs will experience frustration.

Panelist E.J. Hewitt, global travel supplier at Pilkington plc and former NBTA president, is overseeing car rentals in 32 countries on four continents, but said automation isn't there yet to allow different countries to speak to each other. Also, varying insurance costs, which in some European countries can be as high as the rate, create confusion. Plus, "getting travelers used to using one supplier is a challenge." In addition, Hewitt said her corporation was at loggerheads with the car rental companies' attempts to increase rates. "I'm required to report savings on a quarterly basis," she said. "If I can't report savings I need solid figures as to why there are increases. If the corporate directive can't justify the increase, we must change suppliers."

Brian Kennedy, senior vice president of marketing at Hertz, replied that "a lot of car rental companies are not making satisfactory returns," even as the industry is experiencing "tremendous pressure" to make those returns, due to its public ownership. "Our costs have been going up faster than consumer increases, partly because the auto manufacturer incentives have dried up."

A third panelist, Bob Briggs, president of National Car Rental, suggested that companies could control the cost of car rental through better compliance. Kudos came from fourth panelist Bill Amaral, travel manager at Level One Communications, who said, "my best bang for my buck is our car rental program." Hewitt concurred. * * *

American Express One is off to a great start, according to its business unit leader and former Travel One COO Scott Tarte. Tarte told reporters that when American Express One began it had $3 billion worth of business, and in the past six months it has added 200 accounts worth another $1 billion.

Meanwhile, at a luncheon hosted by American Express, Corporate Services president Edward Gilligan told the audience that his vision is for suppliers to have a clearer servicing standard. Over the next few months, he said, Amex will work to "define the parameters of a core transaction and give it a price."* * *

SatoTravel has created an alliance with the former Internet Travel Network, now known as GetThere.com. "We've completed discussions and agreed on an alliance structure," said Sato CEO Lawrence Hough, whose early objective is to achieve 50 percent usage by clients. "To drive adoption up we need to have seamless and very user-friendly delivery of both self booking and live operation support. With that partnership, we'll respond to those corporations' objectives to achieve high levels of adoption." GetThere.com is being linked with Sato's call center technology so that an agent in a call center can pull up a traveler's profile and see booked information. Hough made it clear that there has been no financial investment either way. * * *

In the session "Creating Value for Senior Management," Betty Lucero, manager of corporate travel for The Capital Group Companies Inc., told participants that when it comes to presenting to executives, it helps to have a "buddy in every single department," in order to ensure that everyone is on the same page.

Added consultant and moderator Robert Langsfeld, "You are the travel department. If there is a finance department out there, you'd better know what their numbers are" in order to ensure credibility. "And if there is a difference, highlight that."

Lucero said comparing her information with finance made the whole process much simpler. To prepare senior management for the travel department's message, Lucero said a good planning process is important and that includes clearly defining the expectations of service providers. While at Times Mirror, Lucero put together goals on an annual basis and assigned a "task owner" to each specific task with a measurable outcome that was reviewed quarterly to make sure that everything was on track.

"Make sure you understand your data. It gives you a voice of authority so if a question is asked that requires a bit more detail you feel confident," she said. "Data can be your best friend or your worst enemy."

Andrew Menkes, vice president of global travel management for Republic National Bank (see story), meets monthly with an executive group in the company. "Value is like thunder or lightning," he said. "You can't create it and if they don't hear it or see it there is no value. The trick is to somehow draw it to their attention and take credit for doing it.

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