Delta To Introduce Low-Cost Division Later This Year
<H1> Delta To Introduce Low-Cost Division Later This Year</H1>By Jay Campbell
Atlanta - While maintaining that Delta's low-cost operation will not resemble Continental Airlines' failed CALite initiative, Delta executive vice president of marketing Robert Coggin drew on the presence of a Coca-Cola executive to form this analogy: "If you think of the main brand of Delta Air Lines being Coca-Cola, then the new brand will be Diet Coke."
Coggin said the service, which will be unveiled later this year, will focus on leisure flights to Florida using Southwest's aircraft of choice, the Boeing 737.
His comments came earlier this month after a speech delivered to the Atlanta Business Travel Executive Forum, which drew more than 50 corporate buyers and executives-including one of Delta's biggest customers, Coca-Cola vice president of corporate services William Newton.
The event, first in a three-part series of forums, was sponsored by Business Travel News and Air Travel Card. The second forum, scheduled for Sept. 18 in Chicago, will feature United Airlines chief information officer Andy Studdert, and the third will be held in conjunction with the Corporate Travel West conference this November in San Francisco.
In his address, Coggin said the issue of CRS costs has been exacerbated because "most CRS vendors have been unresponsive to concerns over escalating costs," including those voiced by Delta earlier this year.
"We have expressed our concerns to Worldspan and are partnering with them to reengineer the economics of using a CRS to ensure it is a win-win-win situation for all parties," said Coggin, referring to the CRS in which Delta is a part-owner.
Coggin also commented on Delta's net fare program, saying the airline "will continue to aggressively pursue net relationships with corporations, because they provide a means of looking at all associated costs, identifying potential savings and developing a formula for sharing those savings."
Delta's director of field sales, Joe Licitra, said the net fare program "has helped us get a lion's share of our strength markets. I can't say how much, but it has shifted."
Addressing the airline industry's continuing trend toward reduced override payments to travel agents, Coggin said agents have benefited from "rich override payments" for years. Now, as airlines can better identify incremental revenue and share shift, "payments are more focused." Asked whether this means more individual travel agencies will become, say, Delta Air Lines agencies, Coggin said "it's hard to serve a lot of masters, so if travel agents want to earn overrides, they have to look around and choose their partners."
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In the near future, some travel managers will implement a "virtual travel policy with a rules-based automated system that considers business needs and policies," predicted Tom Wilkinson, president of Alexandria, Va.-based Travel Management Group.
In discussing his view of the coming travel management landscape, the consultant noted that such systems would cause major shifts for both agencies and corporate buyers. "Unquestionably, travel agencies need fewer reservationists and more information systems people, and travel managers have to deal with new players such as software and information processing companies," he said.
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Travel agents pass the commission cap's costs on to their corporate customers, agreed members of a panel that included David Scott, director of materiel for Lockheed Martin Aeronautical Systems; Wallace Haislip, vice president of companywide procurement for Scientific Atlanta; Bill Lepley, director of travel for Cox Enterprises Inc.; and Carol Salcito, president of the Stamford, Conn.-based consulting firm based Management Alternatives.
"Our average cost per trip is up," Haislip said. "For the large users that had a fee-based system before the cap, the cap resulted in a price increase. If I were to pass on a cost increase to a large customer, it would be deliberate and probably negotiated."
Salcito maintained that fee-based companies weren't the only ones affected. "Those already on fees were impacted less," she said. "Those using the rebate system are getting lower checks. The issue is what they're not getting back, which is really their fees.