Maritz Advisors Draft Model For Global Air Deals

<B> Maritz Advisors Draft Model For Global Air Deals</B>

By Mary Ann McNulty

<I>San Antonio</I> - Global airline deals remain one of the most elusive success stories for Corporate America, despite the desire of airlines and corporations to negotiate. At a recent meeting of Maritz Travel Co.'s Advisory Council, participants on both sides pulled together a list of factors necessary to make such deal works--and the reasons so many fail.

"Few companies do it at all, and those that attempt to struggle with cultural differences between different operating units, regional autonomy or lack of centralized purchasing," said Linda Lipscomb, managing director of alliance sales for American Airlines, summarizing a discussion she led with S.H. Jake Warren, British Airways vice president of sales for the Western U.S., and Scott Guerrero, Maritz corporate vice president of international business development.

To purchase globally, Lipscomb said, a company must have "real support" from top executives. In the success stories participants related, a committee of travel managers or decision makers from each region of the world ensured that their management bought into the concept. Participants also emphasized the need for companies to develop and execute an implementation plan."Take it slowly and implement a few countries before implementing across 205 countries. Remember, this is not going to happen overnight," Lipscomb advised.

Before getting to the bargaining table, companies must gain as much information as they can about their city pairs, volume and frequency. "Match that data with the partners that most meet your needs," Warren said. "You don't want to go out with an RFP to every airline, but only those that serve most of your city pairs. Be open and trusting. Trust the supplier to keep it confidential and they've got to trust you, because there is going to be a lot of information going back and forth during the process."

Travel Manager Talk

Besides global airline deals, the 37 advisory council participants, from companies with air volumes ranging from $3 million to $60 million, also discussed the evolving role of travel manager, managing in a commissionless environment and technology.

Discussing the changing responsibilities of travel managers, particularly after they have consolidated travel, consultant Carol Salcito, president of Management Alternatives in Stamford, Conn., noted that, "No longer is a travel manager needed to operate a CRS. But the travel manager needs to know about it and take a macro view, to be the channel between the corporation and suppliers."

In communicating with senior management, travel managers should use the terms "cost avoidance and measurable value" instead of "savings," the group concluded. "We have a tendency to tell everyone how much we've saved, when we've actually avoided spending money," Salcito said. On reports, the group advised peers to keep communications with management frequent, but simple. Rather than reporting everything, report savings from one airline agreement or city pair, benchmarking the negotiated cost against a mid-level coach fare.

To deal with the commission cuts, the travel managers said they have reconfigured their onsites, stopped printing hotel directories and found other ways to cut costs. Only a few are actually charging fees for travel services back to travelers or departments, but almost everyone has considered the option. They debated whether it's better to sell the concept of service fees to all travelers by showing fees on each ticket, or just to sell managers by assessing a departmental charge. But travel managers were adamant that service levels must increase when fees begin showing up.

The group also expressed a desire to have their airline partners eliminate frequent flyer costs, lower back-end administrative costs and identify other ways to lower the price of travel.

In the technology session, led by Sabre BTS senior vice president Sam Gilliland, travel managers expressed an interest not only in booking and expense reporting systems, but also in such systems as electronic ticketing, to drive down costs.