Only The Savvy Get Greater Air Discounts

<B>Only The Savvy Get Greater Air Discounts</B>

By Chris Davis

Meeting buyers who explore advanced methods of air negotiations, including net-net meeting and zone fares, combined group and transient contracts and expanded use of the carriers' popular zone fare products, reported they're receiving greater discounts than at this time last year. Yet only one-sixth of 169 corporate meeting buyers who responded to a Meetings Monitor survey said their discounts have gotten greater, while a majority--more than 57 percent--reported their discounts are about the same as last year, and more than a quarter said they're seeing fewer reductions in airfares.

Some buyers said an increase in the level of sophistication of negotiations has led to more dollars in the corporate pocketbook. As the concept of companywide meetings management matures, more buyers are making strategic decisions about the effect of differences in carriers' airfares on the locations of their corporate meetings.

"We have ongoing meeting fares for specific meetings, and our department does all of the air negotiating for every single meeting," said Diane Calvert, director of travel administration of Santa Barbara, Calif.-based Tenet Healthcare Corp. "This is a new era for us in making sure that we set up our groups in compatible cities before booking in, say, resort areas."

The most popular discounts continue to be the carriers' standard meeting and group travel packages, which offer 5 percent to 10 percent off the lowest published fares for groups, typically of at least 10 members. About 53 percent polled have received this specific discount in the past year.

"We generally discount 5 to 10 percent and there's no great move to raise that," said George Coyle, product manager for group and meeting sales at American Airlines.

Any discounts above 10 percent--which 30 percent of respondents reported to have received in the past year--have less to do with the volume of group and meetings business a corporation books with American, Coyle said, than the share of such business the airline receives. Transient volume is considered as well, he said.

"If a large corporate account is working to move business to American, we would consider doing something like that as a reward on the back end," Coyle said. "It's not something we plug into volume, and it's not something we would consider for ad hoc meetings."

Showing the popularity of the carriers' zone fare products, 37 percent of respondents reported using such fares, which are comprised of set prices for groups depending on the geographic areas of departure and arrival and don't require a Saturday night stay. Yet, the majority of corporate meetings still involve a weekend day and use more traditional meeting fares, said Marilyn Philbert, manager of Delta Air Lines Meeting Network services and support.

"Most meetings are held over the weekend, which allows attendees to take advantage of the lower advance purchase rates," Philbert said. "But zone fares continue to be a very successful program for corporations that are scheduling midweek meetings."

Coyle, explaining the 37 percent of meeting buyers who have used zone fares, said, "There has been phenomenal growth with zone fares since their inception, but it seems to be flattening out a bit now."

"Zone fares offer 40 to 70 percent discounts over full-day coach, and they don't include Saturday night fares, so there is a large market there we have reached," Coyle said. "But if the meeting includes a Saturday night, there are savings that are better than zone fares available."

The market for zones, Coyle said, has become not only corporate meetings without Saturday night stays but also incentive travel buyers, who typically plan events at least two years out and can cement air budgets with zone fares, which many airlines have set until at least the end of 2001. Some buyers have worked zone fares into overall contracts with airlines, which necessitates candor on both sides of the table, said Craig Anderson, director of travel for New York City-based Universal Music Group.

"We do have some meetings contracts and zone fare contracts and we're very careful to use the contracts under the appropriate terms and conditions," Anderson said. "It's quite possible that you and I could be on the same plane and I'll pay less because I'm going to a meeting. That's okay, because I'm fulfilling my obligation to the carrier and overall we save a significant amount. The key is knowing the carrier's needs and your own, then finding a match and honoring the terms of the commitment. We have some fare matching for specific needs with our preferred carriers, but we're careful not to over-demand."

Other companies have taken their negotiations for air contracts to even higher levels, developing meeting and zone fares net of all commissions and overrides. One company that has found savings by using net fares for meeting travel is CUNA Mutual Group of Madison, Wis. "Because the commission structure has changed, we've changed the scope of our in-house meeting travel management in the past year," said assistant vice president of conference and travel services Steve Clark. "I've changed our contracts with our two primary carriers to net-net agreements, for both meetings and corporate travel, through one agency. We're saving quite a bit of money."

Clark issued one caveat: "I'm not sure if I would have gone in this direction if we were strictly speaking of meeting fares, because I can't control where those fares are booked. But all of our corporate travelers must use our in-house agency."

While the airlines traditionally have not embraced net-net meeting and zone fares (Meetings Today, May 17), Clark said his carriers "were fine with it. I'm not sure if they would have been so if it were strictly meeting fares. But with corporate travel involved, they were fine."

The airlines acknowledged there have been such contracts developed, but also said they are few and far between. "Net pricing for zone fares isn't something that's unheard of, but it's also not something that's a real trend, either," AA's Coyle said. Added Delta's Philbert, "The Delta Meeting Network has seen an increase in the use of net fares. However, the majority of these types of agreements are net of our standard 5 or 10 percent and zone fare discounts."

But not all corporations embrace the carriers' meeting and group offerings if transient contracts cover the need. "We're lucky enough that our corporate travel airline discounts beat the airlines' meeting and zone fares," said Suzanne Loeb, director of travel and meetings at Tacoma, Wash.-based Weyerhaeuser Co.

Loeb said the nature of her company's business--forestry and paper production--doesn't lend itself to spur-of-the-moment meeting travel, so her group travelers are able to take advantage of the lower fares that longer advance purchase time allows. "We have an incredible amount of advance booking, with an average of 14.6 days per ticket," Loeb said. "What's the average for an investment bank, two days? We've been pretty lucky."

Other buyers, like CUNA Mutual's Clark, have combined meetings and group volume to negotiate better meetings contracts. It's a sophisticated plan that requires the buyer to know the total amount of corporate meeting volume booked, and the amount of volume directed toward each carrier.

It can be complex, but worth it. "Delta, like any corporation, takes into consideration our customers' total value," Philbert said. "Delta's meetings and corporate sales departments communicate on an ongoing basis regarding our mutual top volume customers.