NW Gives Dose Of Sat. Night Fever

<B>NW Gives Dose Of Sat. Night Fever</B>

By David Jonas

Northwest Airlines this month announced the availability of BizFlex fares targeted at business travelers normally forced to select a Saturday night stay to attain the lowest price point. The new roundtrip nonrefundable fares are 40 percent lower than regular unrestricted full coach and require a 10-day purchase with a one-night minimum.

American Airlines responded by testing the new fares without a 10-day advanced purchase in select markets. America West, Continental, Delta, United and US Airways loaded similar fares mainly where they compete with Northwest, but kept the advanced purchase requirement. TWA matched systemwide.

As competing carriers began matching the move, Northwest retreated significantly and removed the fares from many of its less dominant markets "as a response to competitive reaction." Northwest said the fares still are available in roughly 85 percent of its domestic and Canadian markets, including all nonstop routes and those served "uniquely by Northwest," but the fares are not available in connecting markets that originate or terminate in competing hub airports.

While Wall Street reacted skittishly to Northwest's initial announcement, due to revenue dilution concerns, one by one, most major carriers jumped on the bandwagon. As expected, carriers also began following the Northwest withdrawal. At press time, the exact availability of the flexible business fares from all major airlines was unclear and more adjustments are expected in the week ahead.

Meanwhile, Tim Griffin, Northwest's executive vice president of marketing and distribution, acknowledged that 14-day advanced purchase fares including a Saturday night stay still offer a deeper discount, but travelers "won't incur additional travel costs associated with a Saturday night stay, including lodging, food, car rental and incidentals." However, Griffin noted that BizFlex fares only will apply to negotiated corporate discounts on "more modest non-full fares." So do not expect a 40 percent discount off an already deeply discounted negotiated fare.

Using sample nonstop city pairs given by Northwest during the announcement, 14-day advanced purchase fares found on the Northwest Web site last week and recent per diems from BTN's 2000 Corporate Travel Index (<I>BTN</I>, Feb. 7), overall travel costs in many cases still were found to be more expensive when using BizFlex fares. For example, the roundtrip BizFlex fare for a journey between Detroit and Boston is $628, compared with the lowest published fare of $209. After subtracting an extra room night, a rental car for a day and estimated food expenses, the BizFlex fare still is $256 more.

Since corporate discounts of roughly 5 percent to 10 percent still can apply to BizFlex fares, the cost differentials may be a bit smaller. Nevertheless, travel managers must evaluate each market where the fares are available to determine which itineraries would benefit most. In some instances, the BizFlex fares will offer an overall savings without even considering the added convenience. On a late-week Minneapolis-Omaha itinerary, for example, the flexible fare coupled with lower overall travel expenses would save roughly $220.

However, Charles Braswell, director of global travel management and business services at DaimlerChrysler, said, "The key for us will be to see how many of our people currently are booking or are capable of booking that far in advance. Whether it be out of practice or the nature of their travels, our travelers usually book only three or four days out."

Northwest denied that the timing of the announcement was related to developments at competing carriers. But it's interesting to note that Sun Country Airlines, a low-fare carrier based in Northwest's Minneapolis hub, recently launched its own corporate pricing strategy.