Scandinavians Sign Consortium Air Deal

A consortium of six leading Scandinavian travel buyers has struck a single air deal with SN Brussels Airlines. The Belgian carrier is giving the group discounts of up to 50 percent on fully flexible fares on services from Brussels to Stockholm, Gothenburg and Copenhagen. In return, the six clients-AstraZeneca, Electrolux, Ericsson, Sandvik, Scania and Volvo-have promised SN Brussels more than 90 percent of their volume on those three routes.

There have been numerous attempts on both sides of the Atlantic over the years by corporate buyers to pool their travel management. Few have stayed the course; even fewer have managed to leverage extra discounts out of airlines by consolidating their spend.

Jo-Achim Hamburger, the Nuremberg, Germany-based corporate travel manager for Electrolux who led the consortium negotiations, said he also had approached British Airways and SAS but both had rejected the overtures. Hamburger's initial approach was based on presenting the airlines with the management information, but without naming the companies involved. BA and SAS responded that they would only take the idea further if they knew the names in advance.

SN Brussels Airlines chief executive officer Peter Davies officially signed the deal earlier this week, but it has effectively been in place since September. Hamburger said both sides are benefiting. "We are enjoying fares others can only dream of," he said. "They are significantly better than any of us could have negotiated on our own; otherwise we wouldn't have joined forces. I am paying half the price I would pay to SAS. I expect Electrolux to save €250,000 this year on the three routes. Meanwhile, the market share of SN Brussels Airlines on those routes has grown from 40 percent in September to 95 percent today."

It took the consortium eight months to negotiate the net-fare deal. Airlines have long expressed skepticism that corporate buyers can act sufficiently in harmony to move market share across all participants and therefore merit additional discounts. Hamburger said the consortium overcame this cynicism because all the members have a good track record on deal delivery. All of them also secured senior management buy-in to the deal and have committed to an internal communications program to win over travelers.