NWA Joins CO, UAL On Prism Path

Northwest Airlines this month began transitioning to market share-based corporate contracts using The Prism Group of Albuquerque, N.M., to collect, clean and standardize corporate clients' travel data. Northwest is the third carrier—following domestic partner Continental Airlines and more recently United Airlines—to require its clients to send data to Prism and to reject outright volume-based deals highly vulnerable to economic factors and budgetary constraints.

These airlines claim the goal is to rationalize corporate contracting and mitigate oftentimes extravagant discounts using more sophisticated sales support and contract performance measurement tools.

Data privacy concerns from some corporate travel managers, agencies and data service providers remain. Chief among them are traveler privacy and the extent to which corporations can audit the data on which airlines base deals.

Northwest is incorporating Prism into its larger CorpNet program, which also includes more timely and detailed online contract performance reporting and corporate client access to exclusive Web fares. With Continental already contracting with Prism and KLM Royal Dutch Airlines expected to sign up soon, Northwest's system also aims to enhance and streamline alliance contracts.

Northwest's transition will take several months and runs parallel to a communication effort throughout the carrier's base of corporate accounts. "We are not hitting the customers cold," said Fay Beauchine, Northwest vice president of passenger sales and customer relations.

The carrier did not run beta tests prior to the announcement, claiming Prism's system "is a proven product." The first round of clients to make the transition will include Johnson Controls, Qwest, Pilkington and Compuware.

"We already have had share-based agreements, but we used segments which were converted back into share through an antiquated process," Beauchine said. The updated process enables Northwest to base city pair negotiations on summaries provided by Prism after it processes the corporate clients' detailed origin and destination information.

Continental is pleased with the performance of Corporate Insight, its Prism-enabled system. Similarly, United Airlines is optimistic about Corporate Solutions as it continues implementation. "We are not yet at the point where we can say definitively that it is working exactly as planned, but we have no reason to believe it won't exceed expectations,"said Frank Kent, United Airlines vice president of sales. "The intriguing thing about Prism and Corporate Solutions is that it is size indifferent. There was a time last year when airlines were wondering about putting resources we didn't have into a small-end account, under $500,000 in booked air volume. But with Corporate Solutions, it doesn't matter. If an account is $250,000 but lots of high-yield, then the more the merrier."

With a fresh focus on market share-based deals, Continental, Northwest and United each needed new technology to accurately measure client performance. "This is the only way to get 'other airline' data and make sure market share deals are working," said Danny Hood, president of WorldTravel BTI.

"I think this is more of an indication that airlines need to have more granular data than in the past in terms of measuring deals with corporations," added a senior executive at another one of the largest travel management companies, noting that the megas already provide comprehensive and effective data. "The airlines want to have the same level of information they get from the megas for the balance of their client base, so they can get to the other 29,000 agencies supporting non-Fortune 500 companies."

Airlines still hear some of the same concerns first raised two years ago when Continental's Corporate Insight hit the scene (BTN, Aug. 14, 2000).

"The airlines involved seem to demand an unacceptable level of detail, showing what a company spends—not just what was ticketed—on other airlines. Most agreements have confidentiality clauses, so we have some liability concerns for some clients," said Andrew Winterton, American Express vice president of supplier relations. "Despite masking, it is pretty easy to reconstruct different elements of the data. It is a very worrying trend forcing some companies into a corner."

"The airlines are asking us to sign these agreements but there has been no agreement to sign with Prism," added Cindy Shumate, senior director of global travel at Gartner Inc. in Stamford, Conn. "Prism didn't reach out and say, 'Hey, don't worry about it.' We had to reach out to them."

Prism president Michael Whitesage countered, stating all new deals with any of the three carriers include a Prism confidentiality element. "I challenge the industry to meet our standards in meeting corporate data protection," he said.

Honeywell is a client of both Continental and Northwest—separately—and has agreed to data export requirements, albeit grudgingly. "With our legal department and with American Express, we have come up with an acceptable way, but that doesn't mean I am happy about it," said Jim Lee, Honeywell director of global travel. "I wonder whether they really need that much information regarding pricing and city pairs."

Beauchine said Northwest "will be sensitive" to client concerns, including hesitancy to work in a new model with a specific, predetermined and required data consolidator. "We'll have to work through these issues one by one," she said, "but the product has gained lots of acceptance and privacy issues have been addressed thoroughly by Prism."

"There is always the concern of data privacy. However, I believe that with the Prism reports, those concerns have been mitigated," said Michael Hall, corporate travel manager at Milwaukee-based Johnson Controls, a company with a $32 million U.S. booked air spend that expects to shift to the CorpNet system in the coming months. "This was inevitable. What is in it for the airline is accurate data. And what is in it for the client is a relationship built on integrity rather than being unsure what the other person is holding in their cards."

Hall said he still was unsure how Northwest will transition Johnson Controls' contract, though the carrier does not think it necessary to rework all corporate agreements.

"Discount levels will remain the same as people convert," Beauchine said, "but once data is used to give us more accurate share-based reporting, customers can earn a greater discount level and we can see which people are not performing."

Monthly reporting capabilities through Northwest's CorpNet are similar to Continental's—with certain tweaks—and include both a contract term analysis and a customer savings analysis. These reports will detail corporate contract performance versus market share and revenue share targets systemwide, regionally and on specific city pairs. Beauchine added that clients will see break-outs by class of service as well as unused tickets.

"The applications and software, in most respects, is the same, but the deployment is unique in each case," Whitesage said. "Regarding flown data, all the airlines have different revenue accounting boxes, some old and some new, so the solutions are very different."

Flown data currently is not provided regularly by any of the three airlines back to their clients via the Prism-enabled systems, though some travel managers continue to seek that data. Northwest is developing a flown data feed within CorpNet, but said few corporate clients have shown interest.

Meanwhile, Northwest for the first time is allowing clients to book exclusive Web fares and have them count toward corporate agreements, with a caveat. Companies must provide documentation of all their Internet bookings to enable Northwest to accurately measure their share, similar to requirements from US Airways (BTN, March 25).

"We need the numerator and total denominator," Beauchine said. "There are lots of tools from travel agencies that can help produce that tracking."

CorpNet, which has been in development for some time, still is intended as a portal for corporate clients, but functionality beyond booking and tracking Northwest tickets still is in the evaluation stage. However, Beauchine said the site will allow corporations to book online their negotiated fares by August or September.

Meanwhile, Northwest's new Prism arrangement will help it and domestic partner Continental create single-document, share-based joint contracts. "Our salespeople have been reliant on seeing the data through Continental's lead, and now we will be doing that through a lot of our joint accounts," Beauchine said.

Alliance deals further would be enhanced should Northwest's well-entrenched partner KLM opt for the Prism system. Beauchine said KLM "definitely is looking at this."

Prism currently is in active conversations with other major U.S. carriers and, without identifying specific airlines, Whitesage said: "We will be in Europe by the end of the year."

"We have talked to Prism," confirmed Paul Leyh, US Airways global director of corporate programs, "but also a number of other companies that do something like Prism."

Data aggregators Cornerstone Information Systems, Hi-Mark Software and TRX Inc., along with "extremely vocal" buyers from 25 Fortune 100 companies and some mega agency and airline participants, have formed a group called the Data Advisory Board whose goal is to establish data exchange standards that exclude elements they deem superfluous.

DAB next month plans to present a white paper at the National Business Travel Association convention that is expected to propose seven standard data fields: origin, destination, class of service, segments on the specific carrier, total segments for all carriers, spend on the specific carrier and total spend on all carriers.

In addition to limiting data to only those fields required for fair negotiations, Susan Hopley, TRX executive vice president and general manager of the data services division, advocated auditing capabilities for clients. "You can't have the contract verified where only one side gets to report," she said. "Prism has aligned itself with the suppliers, but nobody wants to be in a position to use only the supplier information as the basis on which to negotiate."