<B> Small Biz Is Hot!</B>
<I>BA Joins Pursuit By American, Continental, Delta, United</I>
By Jay Campbell
British Airways announced this month that it will offer an incentive program for small companies, following in the footsteps of American, Continental, Delta and United, which have reported wild successes from similar programs.
United Airlines' Perks Plus (<I>BTN,</I> Dec. 16, 1996), for example, enjoyed a 400 percent revenue increase in 1998 over 1997, and the airline recently made enrollment and booking for the program available on its Website.
Continental Airlines is aiming to go one step further to become the first U.S. carrier to offer an international program for small companies, with an expansion this year to Latin America.
Meanwhile, the British Airways program is exclusive to companies that have at least one office located in the United States, and only U.S.-based travelers can earn points. But BA said it could be expanded if successful.
Like its competition, BA's Venture Club program offers free tickets, upgrades and discounts from other travel-related companies in exchange for usage. But BA's program also features a variety of non travel-related rewards, from cordless telephones to computer and stereo equipment.
Enrolled companies earn these rewards by accumulating Venture Points. For example, each roundtrip business class ticket between the East Coast and the United Kingdom earns the company 2,400 points. Fifteen thousand points (or 6.25 such tickets) can be redeemed for one roundtrip in business class, a $5,439 value based on fares in January from New York JFK to London Heathrow and effectively a 16 percent discount. However, enrollees can earn no more than 100,000 points--or six free business class tickets and a smaller reward--in a single year.
According to BA's vice president of business travel marketing Woody Harford, there is no target travel volume for potential enrollees. "We don't want to limit it, but we think companies that can benefit would generally have sales of no more than $100 million a year," he said. "But, there are some huge companies with little international travel, as well as companies that do not manage travel on a corporate level but might have divisions that are interested. The only companies that are excluded are those that already have a deal with us."
While Continental and United continue to enhance their programs, American and Delta did not release any new details about theirs. American, in particular, did not confirm a rumor that it is relaunching its small company program, earlier called Business ExtrAA.
United's Perks Plus program is now available in "the bulk of the United States," said manager of corporate development Paul Frakes, indicating that Perks Plus now is a full-fledged offering for the corporate travel market.
In United's program, the airline tracks participants' volume and provides rewards at given thresholds. For example, $10,000 spent in a single quarter earns a one-way domestic upgrade and a nomination to elite status in its frequent flyer program. The top hurdle is $100,000 in a quarter, for which the company earns eight upgrades, four travel certificates (free coach tickets that can be combined for higher-value tickets, up to international first class) and six elite nominations. Companies that eclipse $100,000 in one quarter are placed under consideration by field sales personnel to be treated as large buyers.
"We are looking to add additional partners as well as additional 'perks,' " said Frakes. Already, BostonCoach has joined GTE Airfone and Alamo in offering benefits to Perks Plus customers. Avis, however, is no longer in the program.
Frakes hoped to answer buyers' past concerns about not getting full credit for their purchases (<I>BTN,</I> Oct. 13, 1997) by saying that "if the customer doesn't feel he or she is getting full credit, we'll audit that. Sometimes, it's an issue of whether or not they entered their tour code in all the bookings."
Meanwhile, Perks Plus has reached the airline's Website, at www.ual.com. Travelers or agents at participating companies can go to the site, enter their unique tour code in their personal profile once, and receive account credit each time they book and ticket.
In addition, any company interested in enrolling in Perks Plus can fill out an online lead sheet, which is then sent via e-mail to the airline's corporate programs desk for follow up and possible enrollment.
Continental also soon will make enrollment in RewardOne (<I>BTN,</I> March 16, 1998) available on its Website, and will add booking options this year. In 1999 it will extend its program to all of its non-hub cities in the United States, as well as Latin America, starting with Mexico and San Juan, this quarter.
"We're particularly pleased with RewardOne's effectiveness," said Tracy Sweeney, senior director of specialty sales. "It's meeting all the objectives we care about from a yield management perspective. The business we're generating is beating our system yield and on par with corporate deal yield, and the new frequent flyer members we're getting are high quality."
BA also has set up a dedicated enrollment Website for Venture Club at www.baventureclub.com. "Our intention is that this whole program needs to be wired at some point," said Harford. "But we're not looking to attach a booking engine right now."
He said BA's research found small and midsized companies are "not always interested in what the best fare is," which is why the airline is offering rewards like office supplies.
But according to the November edition of the Small Business Attitudes Survey, run by Cicco and Associates of Murrysville, Pa., price value was called "very" or "extremely important" by 75 percent of the 400 respondents. Airline loyalty programs were rated the same by just 25 percent.
"This program says that we truly value your business, even though we don't have the sales force to have contractual relationships with everybody," said Harford, who added that there's nothing stopping British Airways from eventually negotiating a large buyer-style discount with a company that performs well in Venture Club.
Points are tracked when travel bookers provide the enrolled company's unique Venture Club identification number to British Airways. Individual travelers working for Venture Club participants continue to earn miles in the British Airways frequent flyer program, except when traveling on reward tickets.
Enrollees must have at least three traveling employees. Travel agents and consolidators are excluded, and points cannot be earned on travel agent discount or consolidator fares.
Venture Club is the second recent attempt by BA's marketing department to get closer to the small-business market. The airline in November irked some corporate travel managers by sending a promotion to travelers offering a $500 American Express debit card for booking roundtrip business class tickets (<I>BTN,</I> Jan. 11).
"It undermines our corporate programs and I'd have to question the ethics of a traveler getting money based on tickets his company bought," said Phil Dunphy, manager of corporate travel for Pfizer in New York. "Certainly BA has a right to go after these markets, but they should be careful in their presentation."
BA later apologized, saying it was trying to reach the middle market and failed to segment its database, accidentally contacting travelers at large companies as well.
In a similar promotion, Air France last year drew criticism from travel managers and agents by offering a hefty 38 percent discount off its business class for individuals and small companies when tickets were purchased directly through the airline.
Additional Venture Club rewards include a freedom pass (3,000 points) that waives some restrictions on advance purchase fares, limo rides (1,750), Marriott room nights and vacation packages (2,500-65,000), a paper shredder (2,100), a microwave oven (3,300) and even an Apple iMac PowerPC computer (28,000). The iMac is just 3,000 more points than a ticket on the Concorde.