Execs Examine Air Legislation At The Masters Program

<B>Execs Examine Air Legislation At The Masters Program</B>

<I>Washington</I> - Conceding that airline CEOs "were silent for far too long" about the need to drastically improve air traffic control infrastructure, United Airlines CEO James Goodwin told veteran business travel managers and senior travel services company executives last month that he was committed to fighting for federal funding.

"The industry has to talk about it and say it's broke," Goodwin told the group, which gathered here for the eighth annual Masters Program. While praising the advances made regarding Open Skies agreements, he said the current state of aviation infrastructure holds the potential for "global gridlock." Goodwin and the other major airline CEOs now are working with key congressmen, pilots unions, aircraft manufacturers and others to build support for passing the Federal Aviation Administration authorization bill and to spend money locked up in the Aviation Trust Fund.

Goodwin was the keynote speaker for the day-and-a-half-long Masters Program, chaired by Delta Air Lines senior vice president of sales and marketing Vince Caminiti. As in the past, the program provided industry movers and shakers an opportunity to learn and share their views about current legislative issues, changing market conditions and e-commerce advances. For the first time, invitees included members of the Association of Corporate Travel Executives, about 30 of whom attended.

Scott Yohe, Delta's senior vice president of government affairs, told participants that for the U.S. airline industry, the current environment in Congress is the most "dangerous period since 1978," with lawmakers showing a propensity to regulate new areas in the airline-passenger relationship. Yohe, who moderated a panel on re-regulation and airline competition that reviewed the aviation issues now heatedly being debated in Congress, emphasized that "the environment here has gotten difficult for the airline industry."

David Schaffer, majority counsel for the House aviation subcommittee, reported little progress toward resolving contentious issues in the still-pending Federal Aviation Administration reauthorization legislation. "Congressional interest in airline competition has waxed and waned over the years," said Schaffer. He noted that in the early 1990s the industry was in a recession and Congress was concerned about the survival of individual airline companies. But, he said, "airlines are making profits now and Congress again is concerned about competition and consumer protection."

Referring to a study last year by the General Accounting Office that found "pockets of pain" in upstate New York and the Midwest over air service and high ticket prices, Schaffer said Congress incorporated market-based solutions to many of these problems in the reauthorization bill. Many of these solutions--such as abolishing slots at airports in Chicago and New York to permit new competition, and requiring medium and large hub airports to file competition plans in order to get resources--are in the House version of the bill.

Whether voluntary airline efforts to improve customer service will be successful remains to be seen, Schaffer said, adding that travelers appear to be "most bugged" about the lack of airline employee empathy for flight delays and other inconveniences. "You couldn't legislate empathy," he said. "The airlines saw they had a problem and came up with a plan."

Panel member Kerry Ates, general counsel to Sen. John Rockefeller (D-W.Va.), the ranking member on the Senate aviation subcommittee, takes "umbrage" with the airlines' use of the term re-regulation to describe lawmakers' efforts to enhance competition. "My boss would love to re-regulate if possible, because West Virginia across the board has seen declines in service and increases in fares," she said. "But Rockefeller recognizes you can't put that genie back in the bottle." She said Rockefeller has reviewed market mechanisms that could be used instead. Further, she agreed that it is too early to know whether airline customer service plans will eliminate complaints. "We need to give the airlines an opportunity to clean up their own act first," she said.

Panel member Elliott Seiden, vice president of law and government affairs for Northwest Airlines, said it is "highly unlikely" that DOT's proposed competition guidelines ever will be implemented. He pointed to a Transportation Research Board report issued last year that faulted the proposed guidelines as being an ineffective way to protect start-up airlines from unfair competition. The guidelines are "a huge mistake" that distracted from the real problem, "which is infrastructure inadequacy," Seiden said.

Seiden noted that Congress last year ordered the DOT Inspector General to investigate airline overbooking practices, as well as their methods of providing consumers access to the lowest airfares, including fares published solely on the Internet. Depending on the outcome of the studies, this could spell the end of Internet fares, Seiden predicted. "Why shouldn't the airlines be able to market on the Internet?" he asked. Seiden said 6 percent of all Northwest tickets now are sold on the Web, and that using the Internet is one of the most "dramatic" ways companies now are conducting business: "Government must stay out of our way."

Referring to the overbooking study, Seiden defended the airlines as actually bumping only a very small number of passengers.

So far, the DOT IG has issued a call for passengers to report their experiences with overbooking and access to lowest fares. Electronic forms to collect this information were published in January on the OIG Web site (oig.dot.gov). Congress ordered both studies to be finished this fiscal year, which ends Sept. 30. A related study ordered by Congress--for the IG to evaluate the airline customer service plans--is to be completed by Dec. 31. An interim report on the airline customer service plans is due June 15.

Three out of the five sessions that made up this year's program focused on e-commerce. The session focused on managed travel was moderated by Art Dahl, CEO and president of Northwestern Travel, who will chair the 2001 Masters Program. Joining Dahl on the dais were the soon-to-depart Maritz Travel CEO Mike Boland, WorldTravel Partners president Danny Hood, Travel and Transport CEO Bill Tech, Delta agency and corporate programs head Steve Scheper and E-Travel's new senior director of business development Steven Schoen.

Boland said companies still are sorting out how e-commerce applies to their individual needs, and that employees need to be motivated to use it. One application that Maritz has found to be a growth area is Web-enabled meetings, which are being used by Microsoft, Ford, Compaq and Dell.

Tech said that making things cheaper is only one component. Travel and Transport's corporate customers, such as General Mills, are looking for e-commerce to transact business faster, and better as well.

Hood said his goal was to provide Internet access to every agent this year and that WTP was working on building an extranet designed to facilitate interaction with corporate intranets. He said about 30 percent of all records are changed at the airport and predicted that the technology needed to make dual band and triband phones, which could help expedite these changes, is about a year and a half away, and that significant adoption is about three years away.

Schoen noted that the human resources database is the starting point for e-commerce within the corporation.

In a session about the general lift-off of e-commerce, Xtra On-Line CEO Bill Diffenderffer said, "This is the year that you buy, get bought or you're dead." His assessment that this will be a year of quantum leaps was echoed by Trip Davis, CEO of TRX (see story, page 16), who predicted that there will be two or three major deals this year involving pure Internet companies and traditional travel players. Davis said the industry now is "at an inflection point for intranet and Internet usage for corporate travel, where implementation and adoption would increase dramatically."

In a session on market reorganization and consolidation, moderator Tom Wilkinson, president of Travel Management Group, noted that senior management has become even more involved in travel than ever, "now that they are writing six-figure checks." Bruce Black, CEO and president of McCord Travel Management, said that changing market conditions have made "corporations more capable of dictating the price/value point.