Industry Opening Web Fare Door

US Airways has implemented a system to allow corporate customers and top agency distributors to buy Web-only fares at usairways.com and to track those purchases using a unique promotional code, officials last week told Business Travel News.

The new initiative is one of several that airlines and agencies are exploring to support Internet-only content for managed travel.

The US Airways sales team now is providing codes and talking with customers about how they can use the feature. In order to earn credit for usairways.com bookings, officials said, buyers must provide US Airways with aggregate data on bookings made with other airlines in other channels—functionality that large travel agencies and third-party tech developers are rushing to provide. The US Airways codes will not be applicable to any distribution channel other than the carrier's own site.

Delta Air Lines gives companies credit for bookings made through its corporate portal. US Airways said it now is developing a similar site.

"We're recognizing and reacting to a real issue out there, but it's not the only thing we'll consider," said senior vice president of marketing B. Ben Baldanza. "It's a first step." He said about 2 percent or 3 percent of Web-only fares have become applicable to business travel, making it "a bigger issue emotionally than in reality." Nevertheless, said vice president of sales Steven Tracas, the goal is to help support the "overall value of a corporate program" and to "keep the total spend of a corporation intact." Tracas said the Web fare search bots now in testing at most major agencies could be valuable in terms of providing the total picture.

Baldanza left the door open on a recent Continental Airlines statement alluding to the possibility of putting Web fares in the global distribution systems, plus a markup. He said US Airways' new initiative "is not the be-all and end-all of what we're trying to do."

Continental vice president of multinational sales and revenue programs Dave Hilfman this month said, "For those fares that are exclusive to the Web, we are looking at making them available through other distribution channels at marginally higher levels based on cost." Buyers overwhelmingly welcomed the idea as a solution, but most doubted other airlines would follow suit if Continental went forward. "I think that would satisfy most corporations, as the fare difference would be minimal, the booking data would be captured and count toward our programs and preferred airline programs would regain some lost credibility," said Peter Buchheit, director of travel and meeting services for Black & Decker in Towson, Md.

Buchheit was more enthused by the Continental idea than the US Airways one, partly because the former would be easier on his agency operation. Booking on the US Airways site, he said, "seems cumbersome and adds complexity, but I applaud them for offering us the opportunity to track them. You can call it a band aid, but at least they're listening."

Both the Continental and US Airways statements stemmed from meetings with top clients held this month. According to one participant in the US Airways forum, the topic of Web fares was not on the agenda, but it dominated the Q&A.

While other carriers were reluctant to say they are considering housing Web-only fares, plus a cost-related markup, in the GDSs, several are beginning to budge on the issue of crediting buyers for Internet-only purchases—and they generally are leaning toward US Airways' position of requiring an "other airlines" report. What's different, said sources speaking on the condition of anonymity, is that these carriers are looking at crediting purchases made on other sites in addition to their own.

Asked whether his carrier would match Continental if it followed through, one senior airline official said, "Probably not. But the flip side is, 'Would we make it available in channels that work for us?' In other words, if we offer a corporate ID of some sort, could we say, 'Your bookings on our site and on Orbitz can count.' But we still need to figure out how to track that. If we provide the reporting from our site, and Orbitz also provides a report, we have to be able to see our share as a portion of the total. We need to see what you've done on other airlines with some degree of detail, without violating confidentiality on individual information or by airline."

One buyer said a recent talk with her Delta sales rep indicated that the carrier was moving toward an official policy, even perhaps so far as to add an amendment to agreements. According to the buyer, whose annual U.S. booked air volume totals $8 million, "Delta said that with new contracts, it is now discussing rewarding buyers on the business they bring in through all channels."

A midsize Chicago-area United Airlines client said: "We approached United about undercutting our deal at its Web site. After multiple discussions, United finally agreed to allow Internet bookings to count toward volume we are required to maintain—as long as we had information documented by the agency showing the disparity—but with no extra compensation on Internet bookings." The United client said her company bought just 13 Web-only fares since November, but the savings totaled $7,000. "The policy now is that travelers can use ual.com—or other airline sites, but not the search sites, like Travelocity—if the savings are more than $150, but only after the travel agency confirms they cannot beat the airline's Web fare."

Not only are travel agencies and technology vendors scrambling to help clients with reporting Web-only buys, but some also are seeking to install the capability of simply showing differentials in Internet versus GDS pricing on an ad hoc basis. That way, they said, buyers have the information they need to either get the airline to match the fare or at least to intelligently discuss the discrepancies during negotiations.

How long carriers will offer Web-only fares that compare favorably with those sold through traditional channels is a big unknown. "Web fares go away if too many people get them," reminded one airline exec. Nonetheless, a sizeable portion of the business travel community doubts airlines can reverse the trend of putting attractive inventory online and a slew of agencies and corporate buyers is placing the relatively safe bet that access to these fares will offer some value to managed travel programs.

Opinions about Web fares among large travel management companies vary widely, but all are at least seeking to address the perception that there are savings to be had. No travel management company honestly can say it is fulfilling the role of offering the lowest possible fares without accessing the Web. Fortunately, it is not expensive to test the Web-based search technologies that now are trying to establish a permanent place in the travel technology field.

Among the megas, Navigant International, Rosenbluth International and TQ3 Maritz Travel Solutions said major Web-fare initiatives will be announced in the coming weeks. Rosenbluth promises something "radically different." Maritz said it will announce a solution during a client forum in early April. American Express, Carlson Wagonlit and WorldTravel BTI all are testing multiple solutions.

Many agencies are Web-fare skeptics, but still are reluctantly seeking options. "There is a disproportionate degree of passion around these fares, relative to their availability," said Kimberly Harrington-Martinez, Rosenbluth senior vice president of global marketing. "But you need to assure clients you're offering the lowest fare."

"Whenever we compare apples to apples, we're competitive," said Patrick Fragale, president of VTS Travel Direct in Mahwah, N.J. "But it seems that travelers are more flexible when they go to the Web themselves, so we are looking anyway. When the client requests it, you have no option but to look, and you have to feed the perception."

Boeing Travel Management, Northwestern and Sea Gate, among others, also are reluctantly checking out the technology. But such other large agencies as Advanced Travel Management, Omega World Travel, Tzell Travel and World Wide Travel Service are much more enthusiastic about the possibility of technology solving the problem.

Omega and World Wide even are developing their own systems. "We've made this our number-one priority," said Dan Bohan, COO at Fairfax, Va.-based Omega, though he said only about a quarter of clients will take advantage. "We had already developed a back-end connection to Orbitz because I don't think there's much out there that they don't have, but they torpedoed that by introducing a $5 fee. So now, we've assigned developers and we think we'll have a complete solution in 90 to 120 days."

Vice president of marketing Steve Davidson said Little Rock, Ark.-based World Wide Travel is on the verge of displaying Web-only fares in the company's QualityAgent booking tool. "We've got the looking and data part down, but booking is more difficult."

Advanced in New York is "close to implementing" the Atlanta-based AgentWare search product after some less formal usage of the SideStep site. New York's Tzell is the largest agency to formally announce a relationship with a Web fare search tool, also AgentWare. "We're telling customers that if they want to search and can handle the restrictions, we'll do the shopping and compare the rules," said Paul Hoffman, Tzell vice president of business development, though he admitted few bookings are going that route. "There will be a fee for it," he said, adding that Tzell still is working with AgentWare to capture booking data via Wheaton, Ill.-based Richard Law's Crossfire reporting product—work Hoffman expects to be complete within two months. AgentWare already feeds to Trams and Travcom.

Because the data feeds still are unproven and such systems could drag on agent productivity, many agencies are hesitating on a more formal relationship with AgentWare or its competitors, of which agencies last week most often mentioned FareQuest and FareWeasel, though some also are considering products from Excambria and FareChase. Sources said the data feeds—which airlines call essential to the possibility of crediting buyers for these bookings—have some way to go.

"Eventually, we want to see how far we can go toward getting real digital data," Bohan said. "Now, we'll take from the invoice into an electronic file, parse it and put it into our back-office system, but that's a temporary fix. We'd really like the XML stream feed to be able to ask questions of the site as well." Bohan said his top tech expert is opposed to what's known as screen-scraping, a technique employed by most of the Web fare search bots. Others agreed. "Screen-scraping is not good enough," said Art Dahl, COO of Northwestern in Minneapolis. "We need something more robust."

While the tech vendors work on that, some agencies said they also should accelerate searches. Slow systems suggest that a special Internet rate desk is warranted, not unlike the commonly used international rate desk.

"Some of our clients are requiring an Internet rate desk," said Danny Hood, president of WorldTravel BTI. "It's less than a handful, and we have not proven it to be cost-efficient. As required by contract, we were sending a $30,000 Web fare agent to use these tools and the savings were $3,700 per quarter. Before Sept. 11, less than 1 percent of Web-only fares were lower. Now, it's in the 10 to 15 percent range, so it does have a ROI right now, but will it going forward?"

~Additional reporting by Ben Chapman and David Jonas