Planners Shun Low-Cost Carriers

<H1> Planners Shun Low-Cost Carriers</H1>By Lauren Bielski

<B>A</B>lthough low-cost carriers like Southwest and Kiwi have made inroads into the corporate market, fewer companies are using them specifically to transport meeting groups.

Some planners perceive low-cost airlines as unsafe or inappropriate for serving the group market, preferring to contract with major carriers, which they believe offer a predictable level of service and more simplified billing procedures.

Even in cases where planners would like to use such carriers in their group program, the airlines often do not have the route structure to support the meetings market, or they lack the advantage of brand recognition that major carriers enjoy. And when planners do use these airlines, it usually is on an experimental basis or because the carrier happens to be a dominant presence in the region.

Of the close to 400 planners polled in the Meetings Monitor survey, 26 percent said they had used low-cost air carriers for a meeting. When <I>Meetings Today</I> first asked this question in 1994, nearly 29 percent said they had used such carriers.

"Low-cost carriers don't specialize in the business market, and I don't think it would be appropriate to put my travelers in that environment," said Bill Severson, manager of commercial services, distribution system, with Allen Bradley in Milwaukee. Rather than work with group ticketing, Severson works with American Express and relies on the negotiated corporate rate.

"Last year we tried to use ValuJet for an Orlando meeting, and several executives refused to fly with the carrier," said Kris Erickson-Kastner, manager of meetings and functions at The Trane Co.'s commercial systems group. "This was well before the accident that grounded them; at that time, the press reported that it had some problems with maintenance."

Because of safety concerns and because ValuJet wouldn't take the company's Diners Club card, Erickson-Kastner wouldn't consider booking a national meeting contract with a low-cost carrier.

Many planners can use carriers in their region, but have trouble when flying executives in from all over the country. "We attempted to use Southwest for a partner meeting last year, but many of our travelers weren't in the carrier city," said B.J. Ackerman, Southwest regional meeting coordinator with Ernst and Young in Irving, Texas. "We were going to use them for part of the group, but it turned out that Delta and America were matching fares."

The word from planners seems to be: Expand routes and schedules to attract the group business-although this approach risks giving low-cost carriers the operating economies of their major counterparts. Rob Koulat, a spokesman for Newark, N.J.-based Kiwi Airlines, said that while many corporate travelers (about 60 percent of the carrier's total business) filled Kiwi's seats-mostly on flights to Chicago, Atlanta, New York and Orlando-very few corporate groups purchased blocks or chartered flights, an option becoming increasingly popular for associations based in the New York area. "We intend to go after the corporate group market over the next few months," Koulat said. "We see that as our next area of growth."

Southwest Airlines also has expressed interest in expanding its corporate group business. Michelle Redford, manager of group and meeting product marketing at Southwest, recently met with Mona Kestler, director of sales for Dallas-based Bauer Audio Visual, to discuss a team marketing effort to attract more corporate accounts. Kestler already partners with the Kerville Bus Co. and Inn on the River, a bed and breakfast facility in Glenrose, Texas, to host gatherings with corporate planners to "build rapport and trust before attempting to close any deals." She had invited a representative from Southwest to attend one of her functions last year, and Kestler's soft sell so impressed the organization that it decided to join her team. So far, Kestler has attracted the lion's share of A/V work from Frito-Lay, State Farm, the southern regions of Xerox Corp. and Northern Telecom. Southwest will be listed as a sponsor on Kestler's future invitations to meeting planners, which Redford hopes will extend the airline's reach into the corporate group market.

But in order to do so, Southwest, Kiwi and others will have to fight the perception that cheaper seats translate into too much of a value trade-off. "Our flyers are very particular-we had somewhat of a backlash when the several carriers at the local airport went to flying commuter shuttle planes instead of jets a few years ago," said Cherise Baker, a meeting planner with Koch Industries, a diversified oil and by-products production company in Wichita, Kan.

Baker explained that although a good percentage of the 300 or so sales and training meetings require some personnel to fly, the groups are either too small or too "last minute" to make negotiation for group packaging possible.

Although she would consider using Vanguard, the low-cost carrier that flies out of Wichita, as well as using Southwest for the sales meetings in the company's southern region, she just as often gets the lowest fare using the company's negotiated rate.

Of the Monitor respondents who used low-cost carriers, 35 percent reported savings of 11 to 20 percent off the major carriers' pricing, while 23 percent reported savings of 21 to 33 percent.

Sherry McVay, president of Winter Park, Fla.-based Current Events, an independent planner that also offers travel booking, has used Southwest, ValuJet and local carrier Air Train, saving anywhere from 11 to 20 percent off the major airlines' fares. The catch-22, she said, is that good fares came at a cost, either because she couldn't book through the CRS or because the airline had an unusual commission structure. Then, after the ValuJet crash, many of her clients were fearful of flying with the carrier. Still, McVay said, what she liked about working with low-cost airlines was their attitude toward the business. "They didn't take it for granted," she said. "I find that unless my group is very large, the airlines don't really care about my business that much."

To some, however, the distinctions between major and low-cost carriers are blurring. Lauren Miralia, president of the Adviso Group Ltd., an incentive management company based in White Plains, N.Y., uses all of the low-cost carriers, primarily due to a directive from his clients that if a large group of senior-level executives are flying to the same destination, the group should be broken up and placed on several carriers. On trips overseas, he is just as likely to use a low-cost airline as he is America or United.

"Of course, we want to find out the age and maintenance schedules of the planes, and we will not use charter operations because of safety concerns," Miralia said. "But, with respect to fares and service, I don't see much difference in Continental, TWA and the low-cost carriers.