Northwest, Continental Airlines Expand Programs Aimed At Small, Midsize Cos.

<B>Northwest, Continental Airlines Expand Programs Aimed At Small, Midsize Cos.</B>

By David Jonas

In dealing with airlines, travel buyers from smaller companies often must settle for whatever they can get. Despite not offering the kind of volume that would warrant a negotiated discount, thousands of companies are chomping on conciliatory bones--programs tailored for small and medium-size businesses--that now are available from several carriers.

Northwest's E-Biz Perks is one such program that has proven to be immensely popular. After just eight months, the program has enrolled 4,000 corporations, and is adding new ones at a rate of about 20 per day. More than $1 million in bookings already has been funneled through the system, which also includes bookings for certain hotel and car rental companies.

"The sales numbers, although still modest, are growing steadily," said Al Lenza, Northwest's vice president of distribution planning. "We have kept our marketing efforts fairly low-key as we are cognizant that some agents find the program threatening."

Indeed, travel agents stand to lose business as more and more companies bypass them in favor of incentive-based direct bookings. From Northwest, those incentives include free travel, upgrades and a slew of other inflight perks, and are based on revenues from bookings. However, the carrier is tinkering with customized promotions for members that would be integrated into the system.

Business Strategy, a company in Grand Rapids, Mich., with 75 travelers and an annual air spend of roughly $350,000, was one of the first companies to sign on with E-Biz Perks. Travel coordinator Judy Smalley has been happy with the program, especially after failing to negotiate a discount with several of the major carriers that were asking for a minimum of $500,000.

"Since we signed up in November, we have gotten at least five free roundtrip domestic tickets that would normally have cost $1,000 each," Smalley said. However, the one complaint she had about the system was its ease of use. "The booking process is kind of lengthy and gets even more cumbersome if you are making arrangements for more than one person," she said. "But they are hoping to streamline the process."

However, even the smallest companies have found the hands-on booking process a benefit for both travelers and travel arrangers. Minneapolis-based Athletica, for example, has only 25 travelers, but finds utility in E-Biz Perks. "Once I introduced the program, travelers began making arrangements on their own, which helps me a lot," said Jaime Meidlinger, executive assistant and office manager for the company, adding that buy-in from travelers is not an issue because they still earn their individual frequent flyer mileage.

Though E-Biz Perks incentives do not come very quickly--7,500 points are necessary for a free roundtrip flight--it still gives a little something extra for corporations, particularly those in Northwest's hubs, that give business to the carrier anyway.

Northwest is using its E-Biz Perks customer base for the initial phases of its Internet checkin rollout. Currently, travelers at enrolled companies in Cincinnati, Des Moines and Indianapolis can print out boarding passes directly through www.nwa.com. The functionality, which now allows a 24-hour window to check in, will become available systemwide next month. "We are going systemwide because we really want to increase usage," Lenza said. "And upping the window to 24 hours makes it more appealing for travelers who have an early morning flight. Now they can print out their boarding passes the night before."

By September, all Northwest travelers who book online will be able to obtain their boarding passes ahead of time. However, Lenza acknowledged that larger managed travel accounts may run into agency-related issues.

Meanwhile, Northwest also is considering an expansion of E-Biz Perks to include flights with codeshare partners.

Continental's RewardOne program also has seen tremendous growth with more than 4,300 companies currently enrolled. In April, the carrier expanded the program to include its hubs in Cleveland, Houston and Newark. "Initially, we positioned the program for spoke markets in order to get more incremental revenue," said Heather Carroll, manager of RewardOne. "But since the program has been such a success, we wanted to make it available to all companies nationwide."

For that reason, the carrier recently upped the qualifying limits for interested corporations to 1,000 employees, up from 500, and to $500,000 in air spend, up from $100,000. Those with air expenditures in excess of $500,000 have an opportunity to negotiate corporate discounts.

Continental also altered the points accrual scheme to reflect its focus on flow traffic. Now, companies earn one point for every $1,000 spent on travel to and from its hubs, and two points for all other traffic. Redemption options range from free drinks, upgrades and airport club memberships to free roundtrip domestic travel at the 14-point level.

RewardOne also is available in Canada and Latin America and includes a membership kit chock full of offers from Continental partners, including Alamo, Avis and Ashford.com, a retailer of high-end corporate gifts.


<B>Competing For Smaller Biz</B>

Some smaller carriers also have small business programs, including Frontier Airlines' Business Travel Program, which offers participating companies a 5 percent rebate off all flown revenue booked on the airline. Though the program is open to businesses of all sizes, the typical participant has anywhere from one to 50 employees. About 4,200 corporations have signed up with the program and receive the 5 percent rebate--credited toward future travel--on a quarterly basis.

Smalley, meanwhile, said her company set up a program with AirTran, whereby last minute changes do not incur those pesky change fees and most tickets are fully refundable.

Alaska and Delta, like Northwest, also have Web-based small business programs. Alaska rewards companies with mileage incentives to be redeemed for future travel, while Delta has yet to divulge its accrual and redemption formula. Most other major carriers also have more traditional small business programs in place. American's BusinessExtrAA, for example, grants corporations with quarterly revenue between $10,000 and $100,000 a free roundtrip ticket after spending at least $25,000.

Rolfe Shellenberger, senior consultant at Runzheimer International, suggested that smaller and midsize companies take a closer look at these airline programs because a corporate discount can only come with a larger volume increase. "All airlines should offer barter equity--one free ticket for 10 to 20 segments--to small businesses because free tickets are much cheaper than discounts and can be restricted on use," he said. "Furthermore, the client can't use the savings to spend on a competitor.