Qantas Eyes U.S. Corporate Biz, Fortifies Sales Team

<B>Qantas Eyes U.S. Corporate Biz, Fortifies Sales Team</B>

By David Jonas

Australian carrier Qantas Airways this month restructured its U.S.-based sales team to enable certain reps to focus strictly on the corporate market. Down Under, a string of new e-commerce developments soon will enable Australian corporate customers to book directly via the carrier's Web site. Meanwhile, the carrier last month dove headfirst into industry consolidation within its home market, making a splash that potentially could alter global alliance rosters and affect the competitive balance throughout the region.

The reorganized salesforce, including three account managers dedicated to corporate sales, officially took effect June 1. "The intent is to have the salesforce more focused and dealing with the same kind of business," said Cathie Sych, the carrier's new vice president of corporate sales. "Therefore, we have clearer objectives in terms of market share and selling premium classes."

Currently, the carrier has a few hundred U.S.-based corporate accounts. Sych said most prefer upfront percentage discounts based on market share, though some opt for volume agreements or city-pair-specific agreements.

Christopher Staal, director of corporate travel at Stamford, Conn.-based Thomson Corp., recently has been impressed by Qantas. "They demonstrate an understanding of what it means to be working in a global marketplace. They understand where they fit," he said. "We have a program with Qantas exiting North America and Australia. They are willing to compete on almost any front. We have route deals and market share deals with them. Because the economics are so different in different countries, you need to have all options available."

Sych said Qantas recognizes its role as a niche player in the U.S. market, with strengths, of course, to Australia and New Zealand. On the other hand, as the world's ninth largest passenger carrier measured by sales, according to BTN's latest Business Travel Survey (BTN, May 28), there are plenty of additional opportunities. "We have significant connecting service around the world and, as companies tighten their belts and examine travel, they are looking at combining trips and asking us for service to many other Asian destinations, for example," Sych said. "We want to make sure sales is focused on our primary routes, but also maximizing all of Qantas from a corporate perspective."

To accomplish that, Qantas has increased cooperation with Oneworld partners British Airways, a 25 percent stakeholder, and American Airlines. "We are competing against a pretty big competitor in the Star Alliance and United specifically, and are finding that their attempts to fill up the world leaves us in a vulnerable position," Sych said. "That is why we are working more closely with BA and AA to provide a more global alternative."

That includes joint sales calls with BA, as the two carriers have virtually no network overlap and therefore no antitrust constraints. Cooperation with American generally includes Qantas flights within AA's corporate deals thanks to extensive codesharing. Sych confirmed, however, that larger Oneworld alliance contracts have not yet taken form.

"Qantas has been more globally active than they used to be," said Eric Henderson, director of North American supplier relations at Rosenbluth International. "There are a lot of seats in that market and the corporate customer is the prize bull. We definitely have seen them be more visible."

Meanwhile, Qantas has maintained an 8 percent capless commission structure for U.S. travel agents, with override agreements in place with significant accounts. The carrier, however, confirmed it is reviewing those policies.

Down Under, sources indicated the carrier may follow regional competitor Singapore Airlines and partner British Airways in scrapping altogether domestic commissions.

However, Qantas generally is seen as a price matcher rather than a leader. "U.S. rates offered by Qantas are not usually the most competitive across the Pacific, although they have been forced to match competitors and stay up on tier rates," said Carole Murphy, managing consultant at TravelSearch, a travel management consultancy in Lindfield, New South Wales, Australia. "United and Air New Zealand on the same routes are taking substantial market share." She added, however, that corporations recently have been seeing better deals, including some route-specific ones, following Qantas' introduction of direct service to New York about 18 months ago.

Qantas also is working fervently on new distribution channels for corporate clients. Last fall, it forged a new relationship with Atlanta-based TRX to create an online travel management site for corporate accounts (BTN, Oct. 16, 2000). The system, still in beta testing, will provide direct access into Qantas Business Travel, which contends with American Express for the top spot in Australia's corporate travel management industry.

Murphy said QBT may generate as much as 15 percent of all Qantas revenue and lists several major commercial accounts on its client roster. She added that despite inherent biases and a lack of sophistication on the data front, the firm generally is competitive, particularly for domestic travel.

An agreement with mySAP, similar to the TRX partnership, provides integrated online travel management for customers using SAP, while QBiz, a product for small and medium-size business, was launched in April.

Meanwhile, Qantas last month made a series of moves in and around its home market that significantly alters the competitive balance in the region.

First, it gained approval for its acquisition of low-fare new entrant Impulse Airlines after agreeing to certain concessions, such as surrendering peak slots at Sydney and maintaining service and fare levels on certain domestic routes. Along with Richard Branson's Virgin Blue, Impulse helped to push fares lower throughout the domestic Australian market (BTN, March 26).

"This really limits our ability to keep competition, and therefore competitive fares, in the domestic market," Murphy noted, adding that Virgin Blue will need "buckets of money to fight this war."

Then, after proposing domestic New Zealand service operated by a wholly-owned Qantas subsidiary, Qantas made clear its intention to buy "a significant stake" in its cross-Tasman Sea rival Air New Zealand. Such a transaction could include Qantas taking Singapore Airlines' current 25 percent stake in Air New Zealand, but selling Air New Zealand subsidiary and Qantas competitor Ansett Australia back to Singapore. If completed in that way, Ansett presumably would remain in the Star Alliance with Singapore, but Air New Zealand would be splitting loyalties with its existing Star affiliation and Qantas' Oneworld ties.

Qantas, in trying to sugarcoat the transaction to regulators and a concerned flying public, later called the arrangement a "partnership," in which Air New Zealand retains its independent brand, operations, partial national ownership and management structure. Ansett, meanwhile, would start domestic service in New Zealand.

On the service front, Qantas in April began code sharing with American Airlines on flights from Oakland, marking the 15th U.S. destination it serves.