<B> Inside Track</B>
<B>BA, Competitors Adjust to UK Commission Cuts</B>
The fallout continues from British Airways' commission cuts in the United Kingdom. Two rivals are attempting to lure customers away by actually increasing their agency compensation: British Midland is offering a 2 percent bonus to agents who lift their international volume by 20 percent, while Emirates has raised its base commission a straight 1 percent to 10 percent. KLM and its British subsidiary Air UK also are cooking something: They will announce in February proposals for a complete overhaul of their distribution system in the U.K. Meanwhile, BA has belatedly woken up to the fact that cutting commissions ultimately affects the corporate customer. According to well-placed sources, it is quietly making up the lost income to selected large clients through improved route deals.
<a name="story2"><B>Hotel Leaders Warn of Asian Scare, Overbuilding</B>
Top industry leaders at the 13th annual Hotel Industry Investment Conference, held late last week in Los Angeles, agreed that while 1997 was an outstanding fiscal year, the hotel industry should be careful of some possible pitfalls in 1998. As with most industries, the hotel segment is concerned about the possible impact of the Asian currency crisis on domestic business. Stephen Bollenbach, president and CEO of Hilton Hotels Corp., said the Asian situation may create a false scare which trickles into the U.S. "We could work with the problem, but it raises the risk in the market economy that we're in that we'll overreact." Barry Sternlicht, chairman and CEO of Starwood Hotels and Resorts Worldwide, argued that the currency devaluation could positively impact the U.S. hoteliers in terms of accelerated travel and possibly additional acquisitions. Tackling the issue of overbuilding, Sternlicht said the industry is witnessing "wretched excess" with the construction of numerous properties in different segments. Although that development is primarily occurring in the economy and midpriced segments, it will affect all tiers by pulling demand from the segment above them, Sternlicht said.
<a name="story3"><B>AA Unveils 100,000-Mile FF Tier </B>
American Airlines last week introduced a new top tier to its AAdvantage frequent flyer program for 100,000-plus milers. Called Executive Platinum, it awards travelers access to a special information hotline, upgrades within 100 hours of departure, deferred mileage expiration and other benefits. AAdvantage members earn qualification points to achieve this top level at a rate of 1.5 points per mile in first class, 1.25 in business, 1.0 in full coach and .5 points per mile in discount coach.
In adopting the concept of incentivizing travelers based on how much they pay, AA's program is similar--though not as direct--as one introduced by TWA in August (<i>BTN</i>, Aug. 25, 1997), which awards a mile for every dollar spent. Some corporate travel managers see any incentive to pay more as an assault on corporate travel policies, particularly when it comes to getting travelers to buy discount economy tickets. But others recognize that additional services for those travelers already paying high fares are welcome.
<a name="story4"><B>TWA Talks Alliances, Yield Management</B>
TWA chief executive officer Gerald Gitner was in Europe earlier this month talking alliances, according to executive vice president of marketing Don Casey. "A year ago we were making the calls, now we're getting them," Casey said.
Meanwhile, TWA is looking to place new aircraft orders and is considering yield management systems. Asked whether TWA would be installing an origin and destination system, a la American and United (<i>BTN</i>, Dec. 8, 1997), Casey said "We're looking beyond O&D. Why would we want to copy what someone else already does? We may well get a chance to leap-frog them."
<a name="story5"><B>CO Pilots To Vote on Preliminary Strike Plans</B>
The Independent Association of Continental Pilots, Continental's pilots union, this week is sending strike authorization ballots to its membership. The union and management had characterized their recent negotiations as "cooperative," but new issues surrounding a possible pact with Northwest (see story, this page) have put a strain on the contract talks. The pilots plan to picket during Presidents' Day weekend.
<a name="story6"><B>Corporate Travel World To Feature Six Mega Heads</B>
Maritz Travel Co. president Michael Boland will join Amex's Ed Gilligan, BTI Americas' Ralph Manaker, Carlson Wagonlit's Travis Tanner, Rosenbluth's Hal Rosenbluth and USOP's Ed Adams from 9:00 to 10:30 on the second morning of Corporate Travel World, March 2 and 3 at the New York Hilton. The educational program has tracks for beginner, advanced and senior management levels and tracks for companies with less than or more than $15 million in air volume. For more, call Jennifer Benowitz at (212) 615-2274.