<B> Inside Track</B>
<B>Co-NW Signs First Major Corporate Contract</B>
Continental Airlines and new alliance partner Northwest Airlines have made good on their promise to ink joint corporate contracts, despite claims by competitors that the practice is illegal without an antitrust waiver. "We just won our first major joint account, Xerox," said Continental president and COO Greg Brenneman late last week. "From the buyer's perspective, when we're doing a joint deal, all of a sudden we're the same size as the other carriers." United and Delta previously have serviced the Xerox account, but it remained unclear whether the incumbent carriers kept any piece of Xerox's business. One source suspected the incumbents have kept some business since Xerox's travel patterns are an "unusual" fit for CO-NW.
<a name="2"><B>CO To Block United's Bid For America West?</B>
United Airlines confirmed late last week it "has expressed to America West Airlines an interest in a possible acquisition." America West said it "has been contacted by a number of airlines expressing interest in possible transactions ranging from a strategic alliance to a merger or similar business combination." The move would bolster United's position in the West, where American Airlines recently grew by buying Reno Air. Continental Airlines, which owns 8.3 percent of America West and has the right of first refusal on the 49 percent owned by the Texas Pacific Group, said it may exercise its rights to prevent a competitor from acquiring America West.
<a name="3"><B>Amex Forecasts Modest Cost Hikes</B>
Corporate America will see a 4 to 5 percent increase in business travel prices this year, according to the American Express annual study, Trends and Forecasts for the Business Travel Industry, released last week. Airfares available to business travelers will increase 3 to 4 percent during the year. That targeted increase should jack up the average price of a domestic roundtrip ticket to $944, compared with $901 last year. The 1999 forecasted rise is not as dramatic as increases predicted over the past three years, when fares went up a total of 36 percent. Analysts attribute this finding to continued low jet fuel prices as well as a 3 to 5 percent increase in the number of new seats on U.S. airlines operating here and overseas. Hotel prices for top 25 U.S. business destinations, meanwhile, will climb as much as 8 percent this year, to an average room rate of $188. Car rental prices remain steady with last year's prediction, at a 4 to 5 percent jump. Based on an estimate of the average daily cost paid by Amex corporate customers in 1998, this year's average price could reach $60. Business meals are estimated to increase 2 to 3 percent this year, the same amount as in 1998.
<a name="4"><B>ACTE Aids Commission Cap Recovery</B>
Insiders are indicating that large corporate buyers with international leverage are being "made whole" by their airline suppliers from the impact of the November international commission cap. Meanwhile, the Association of Corporate Travel Executives has constructed on its Website at www.acte.org a how-to entitled "The International Commission Cap: A Comprehensive Guide to Managing the Change." The site includes a downloadable spreadsheet enabling buyers to calculate the bottom-line impact.
<a name="5"><B>DaimlerChrysler To Start Own Air Shuttle </B>
A spokesperson for DaimlerChrysler confirmed reports that the company's aviation department next month will set up a minimum thrice-weekly shuttle between the dual headquarters of the merged company in Stuttgart, Germany, and Auburn Hills, Mich. A leased Airbus 320 jet will be equipped with between 52 and 56 first class seats.
<a name="6"><B>Worldspan Negotiates For More Control</B>
Worldspan is negotiating with Dallas-based Travel Technologies Group to buy the source code for the latter's ResAssist automated booking product, which Worldspan has private labeled as Trip Manager and sold to more than 200 corporations. Since signing the private-label pact more than two years ago, Worldspan has pressed TTG, the WorldTravel Partners technology arm, for changes that its customers were demanding.
<a name="7"><B>Analysts See Hotel Activity Ahead</B>
Patriot American, Promus and Meristar were singled out as possible acquisition and merger targets during last week's panel discussion sponsored by the New York City chapter of the Cornell Hotel Society. Meanwhile, panelist Mark Mutkoski, senior lodging analyst of New York-based BT Alex. Brown, said Hilton Hotels Corp. is poised to make a move. "If Hilton and Ladbroke get together it would result in the greatest value creation that could happen out there," he said.