Citing the increasing popularity of the Swabiz corporate portal, Southwest Airlines last month at the Corporate Travel World/Travel Technology World Conference and Exhibition in New York announced the formation of a corporate sales team, the first such formal initiative in the prototypical low-fare carrier's 30-year history.
Meanwhile, Southwest continues litigation to prevent what it describes as unauthorized access to its Web site by third parties. Nevertheless, Galileo and Expedia have developed methods to access Southwest fares and flight information as part of their service offerings for corporate clients. The goal is to overcome what many corporate travel buyers at large companies view as the intensifying challenges of channel segmentation
(see story). Detractors point to Southwest's new sales force as another example of the carrier straying farther from its famously simple business model. The carrier, however, said it simply is responding to requests in the corporate marketplace.
"We have been involved in corporate sales all along through our field marketing team," said corporate sales director Rob Brown, "but with the growth of the Swabiz product, it warranted a deep concentration on corporate sales. We are not moving away from our philosophy of not discounting, or anything like that, but decided to take advantage of the opportunity."
Brown indicated the number of accounts enrolled in Swabiz is several hundred or more, but would not give specific numbers or revenue figures. Total bookings through the portal have been growing rapidly, according to Southwest, with year-over-year growth in March exceeding 100 percent.
Swabiz originally was intended for small and midmarket companies but in recent months has drawn interest from universities, professional associations, state organizations and other entities. Southwest said some larger companies also have signed up, now that Swabiz has integrated various capabilities deemed necessary by corporate travel managers
(BTN, Aug. 11, 2003)."There are benefits there," said Bill Davidson, manager of corporate travel and meeting services at International Sematech in Austin, Texas. The company allows travelers to use Swabiz for intra-Texas travel. "Since Southwest will be as competitive as anybody, there is no need to go through the global distribution system and use the bargain finders. Southwest always will be a viable solution on those routes."
Davidson added that he welcomes a formalized corporate sales team at Southwest. "There are people who want to use Southwest," he said. "It would be great if we can fill that niche and have corporate support."
Chicago-based Teng & Associates uses Southwest for 40 percent of its travel needs and has been accessing Swabiz for three years, according to corporate travel manager Christel Peterson. "We are an ARC-accredited Corporate Travel Department, and sometimes we can get the lower Internet fares through Swabiz, but the benefit of the double points is for the traveler," she said, referring to a Southwest frequent flyer promotion connected to Swabiz bookings. Teng, which spends roughly $1 million on air travel annually, uses the travel arranger and ghost card functions of the Swabiz site. "We are project-driven, and Southwest flies to where we have projects," Peterson said.
Meanwhile, Brown said enrolled companies increasingly are taking advantage of Swabiz connections to their preferred hotel and car rental suppliers. The portal, which can preference preferred suppliers for a given corporate account, now links directly with Alamo, Avis, Budget, Dollar, Enterprise, Hertz and National Car Rental. Hotel connections are facilitated by the Galileo GDS.
Another potential buyer benefit to Swabiz bookings—which occur outside traditional travel management channels—is that they may not be included in data reporting sent to major airlines for negotiations and contract performance measurement. Opinions from travel management professionals regarding such practices run the gamut from "disingenuous" to "just plain smart."
"It may be happening, it may not be happening," said Scott Anderson, Southwest manager of national accounts, "but it doesn't really come up on sales calls."
Though they may not see client bookings directed to Swabiz, other airlines, in many cases, are aware of the situation and adjust levels accordingly.
Bob Lichtman, a principal of the Corporate Solutions Group, said companies can and do take advantage of "blind" bookings through Swabiz, but said the portal is "a double-edge sword because travel managers want one source of information."
Indeed, Swabiz may not be a sufficient tool for larger, more complex corporate air programs, given the hurdles of aggregating all flight options at the point of sale, the potential for confusing travelers with multiple reservations channels and the extra steps required to integrate Southwest booking information with traditional travel management reports.
"We hear the argument that it is a challenge to use Swabiz in conjunction with another booking tool," Brown acknowledged. Yet, in citing Southwest's low-fares and no-cost Swabiz product, he said: "Cost savings usually wins out." Anderson added, "There are top companies that worked around that question."
Ford Motor Co., for example, uses Sabre's GetThere multi-source technology to access Swabiz and the Worldspan GDS simultaneously. "It does not work completely," said Ford travel department technical specialist Doug Thiele. "Cancellations and changes in Swabiz are not reflected."
Other third parties also are trying to overcome the access hurdle, including some travel management companies and booking systems not connected to the Sabre GDS—the only one in which Southwest is available.
Galileo, for example, is making available to its agency subscribers a new Web-based tool called Flight Integrator. It connects agents to either southwest.com or Swabiz, allows subscribers to view fares and book flights on behalf of clients, pulls data from the Southwest booking and automatically creates a passive segment in the passenger name record.
"As a non-participant carrier, Southwest bookings require extra labor to search and book flights, and even more effort to create passive PNR segments manually," Galileo said. "With only a couple of clicks, you can now make Southwest bookings and create all necessary accounting and reporting data."
"We have automated a lot of the manual things to operate with Southwest's procedures," added Mitch Gross, Galileo senior vice president and chief marketing officer. "While we don't have the GDS relationship we would want, we're not strangers to each other."
Travel & Transport has been using Flight Integrator for a few months in a limited beta test and is preparing a full rollout, said Mike Kubasik, the travel management company's vice president of information technology services. "It is just a quicker access point integrated into the GDS," he said. "The tool also adds the pricing record to the segment, and we capture all the data from a reporting perspective in the passive segment."
Kubasik noted that Flight Integrator can run reports to find unused credits, void out canceled tickets within 24 hours and allow agents to make changes on Southwest tickets, all of which reduces the number of phone calls necessary between agents and the airline.
Meanwhile, despite Southwest's efforts to keep its information out of the hands of online travel agencies
(BTN, July 16, 2001), Expedia Corporate Travel also displays Southwest inventory as part of a pilot program for a few clients, including Akamai Technologies, and on request can integrate Southwest bookings into traveler itineraries. Such bookings, however, are charged a full-service fee, as Expedia agents must call Southwest. "The ideal would be to integrate their content into our search engines," said ECT president Matt Hulett. "As we get more interest from corporate clients, more folks will want to play in our marketplace."
"Corporations of size will drive Southwest into the online tools," said David Cerino, general manager of Orbitz For Business. "It's not going to be us. It'll be the buyers who say, 'This is where you need to be to stay in my program.' "
Such ultimatums already have been lodged, according to Travelocity Business president Ellen Keszler. "We have one Fortune 500 company that has told Southwest they need access, or they will move the business elsewhere," she said.
"My sense is it will result in increased sales for Southwest down the road," said Galileo's Gross, regarding automated access into the Southwest site by such tools as Flight Integrator. "Everyone ought to be happy."
Yet, given Southwest's legendary control over distribution, it is not happy with any access it has not explicitly authorized. "As far as we know, neither of them are screen scraping our site," Brown said of Galileo and Expedia, "but we will do everything we can to defend our rights and our property. We want to make sure that nothing we do lends itself to someone charging us fees down the road." He reiterated Southwest's insistence that no outside entity secure automated access to the carrier's fares and inventory.
The airline continues a legal battle to prevent travel technology provider Outtask from accomplishing that objective. The parties are in the process of mediation, according to a Southwest spokesperson, and "dialogue has not been amicable." An Outtask motion to dismiss half of Southwest's claims was denied last month by the Texas judge overseeing the case. However, according to court documents, Outtask last month stopped scraping fares and inventory from southwest.com.
Meanwhile, Southwest expects "a very peaceful agreement" with FareChase, which also was named in the Outtask lawsuit. "FareChase ceased screen scraping some time ago, so the ins and outs of mediation may not be necessary," said the Southwest spokesperson.
"This is a problem that we are attacking one entity at a time," the spokesperson added. "We want to keep customer data private, and when third parties get involved, we cannot be 100 percent certain that customers are shown our lowest fares."
Some sources suggested Southwest's effort to control distribution is hastened by increasingly competitive rivals that may offer lower fares in certain markets at certain times. "The bloom is off that Texas rose," said airfare expert Terry Trippler of Trippler & Associates. "They are not the only game in town. It is slipping away from them, and they know it."
Southwest's Brown responded by saying, "Our track record speaks for itself."
~Jay Campbell contributed to this article.