One-on-One: Changing US Air Ways

By BTN / August 02, 1998

One-on-One: Changing US Air Ways

Just over a year into his position as vice president of global sales for US Airways, former American Airlines sales director Steven Tracas already has made some dramatic changes to his department (BTN, June 15). But as Tracas told BTN airline editor Jay Campbell last week, the sales department is only one of many areas in flux at US Airways, the nation's fifth-largest airline as measured by 1997 revenues. 

BTN: Describe for us how corporate contracts are different these days compared with a few years ago.

Tracas: They're more open and up front than ever before. There's so much data available now that we're able to hone in exactly on where a corporation flies and where we fly. So there is no dancing around. That allows both sides to negotiate more effectively than in the past and it allows companies to move more significant share because they know up front whether they can do it or not. It's not a guessing game anymore. Also, I think over time the airlines have become much stronger in their relationships with corporate travel managers as most of the sales forces, and US Airways now in particular, are focused on the corporate traveler to understand their needs and to sell based on the premise of knowing the customer better than ever before.

BTN: Which is more important, a high-yield account or a high-volume account?

Tracas: The obvious answer is that it's a mix of both. You can take a lot of high-volume, low-yield and that's not necessarily good, and the opposite isn't necessarily good. It's a microcosm of how we look at yield on the airplanes generally--you want to maximize revenues which means maximizing yield. So, you really do want to find the corporations that provide the highest yield and the most volume. Sometimes we, the airlines, get too hung up on the percent discount out there and it's really not about the percent discount, it's about the resulting yield you get from that ticket. From a corporate perspective, they need to focus on compliance. We get into these situations where we do deal on percent discount, two or three points here or there, but the home runs seem to be hit when you can get the majority of your travelers complying with the travel policy to really take advantage of whatever discount has been negotiated. That's probably where most of the savings have been left on the table.

BTN: Update us on the restructuring of your sales staff (BTN, June 15). Are there still holes to fill?

Tracas: We do have more hiring to do, and I think we always will. There are 12 open positions out in the field, but through normal attrition I think we'll always have 10 or so openings in the field. Most of the holes are here at headquarters and we're trying to beef that up to focus in on some specialty areas like international, meetings and conventions and leisure.

BTN: How have the clients reacted ?

Tracas: Much more positively than I could ever imagine. This call center has allowed corporate and agency accounts to be able to call in and get a direct point of contact immediately. Before, all those calls went into voice mail or to an account manager who was out making sales calls, which required a follow-up telephone call. So it's been a home run. We've really been able to segment the marketplace and meet a lot of needs that haven't been met. That's not to say that some historic relationships that people liked haven't changed, but I think once they've evolved into this new scenario, customers have embraced it quite well.

BTN: Is US Airways working on any programs at the airport to recognize when a traveler is from a corporate account?

Tracas: That is something we're looking at. I can't get into the details now, but it is something we would like to do and it's recognized that it's needed. We're going to work something out where we can recognize these corporations for who they are and say we truly appreciate the business.

BTN: US Airways has hired Mark Schwab as vice president of international. How will his activities relate to your group?

Tracas: When I first came in, we identified that we needed a dedicated focus in Europe. So all of Europe's operations--including human resourses, sales and marketing--historically were under me from the U.S. Now he'll have those responsibilities. We'll have dotted lines between my people and his, particularly in the corporate arena where Paul Leyh, our director of corporate programs here, will interface with whoever Mark brings on in Europe so we can try to get to the global contracts that many of the corporations would like us to have. Also, my director of agency accounts will interface regularly with his people over there so we have consistency when we deal with the mega agencies.

BTN: What can alliances do for relations between corporations and airlines?

Tracas: Negotiating with a number of different airlines brings on a tremendous amount of complexity. Not only are you talking different discount levels, but you're also talking different procedures and passenger processing. So, down the road--and they're certainly not there yet--alliances will allow things to be simplified for corporations because you'll have one rep come in and talk about a pricing structure that is more global than it is today.

BTN: How will the tie-in between American's and US Airways' frequent flyer programs enhance your competitiveness?

Tracas: It's a pretty unique program out there in that it allows the two groups of frequent travelers to pool their miles together and then redeem them on one or the other carrier--it's not just like earning and burning on your existing carrier. Based on what I've read, I don't think the marketplace is grasping how unique this is. There's not another pooling concept out there like this one.

BTN: It appears that revenue from Internet and online sources has grown beyone one percent and is reaching about 3 percent for some carriers--where is it at for US Airways and can you comment generally about the trend?

Tracas: I don't like to quote percentages because there's much play in those numbers, but I'll tell you that it's grown significantly. There are segments of the corporate marketplace that embrace this. In that scenario, the traveler takes command of the booking, the airline provides the transportation and the agency kicks into a more consultative and travel management role behind the scenes. I think these things will proliferate greatly.

BTN: Is the Web going to be a tool for US Airways in terms of communicating and doing business with corporate travel managers and meeting planners?

Tracas: Absolutely. You have the E-Saver fares, miles redemption, e-mail communications between sales reps and corporate travel managers. Also, we have a meeting product on the Internet where an event planner can submit an RFP and our meetings and conventions group will respond within 24 hours electronically, so that transaction is done almost seamlessly. Sometime down the road, that also will be applied to a booking product. A futuristic pie in the sky kind of scenario would be customizing a program for meeting planners where they can go into our inventory directly. I have to get together with the pricing guys and figure out how to do that.

BTN: Is it still the case that travel booked on Metrojet will not contribute to corporate contract goals?

Tracas: Yes, that's still true, but it's like everything else. Our overall policy is we don't discount Metrojet, but if the customer has something somewhere else to which they're interested in moving share, and it's a good business decision for US Airways to relook at that policy on an individual basis, we'll do that.

BTN: What do you think the Pro Air deal with Chrysler and GM in Detroit means for the industry?

Tracas: In general, it means there will always be competition and always new opportunities for people to come in and do things differently. It's a unique situation under unique circumstances that someone's taken an opportunity on. It'll be a while before we see what effect that has, because from our perspective, we offer the Northeast a tremendous amount of schedule and service and there's a tremendous value to that. It's not just about price. Price is very important, but the ability to have that schedule when the traveler needs it is as important as price. Whether two or three flights a day meets the needs of a huge corporate account versus hourly service remains to be seen. Something has to offset the capital cost and facilities that allow airplanes to travel hourly.

BTN: What would you like to add?

Tracas: What US Airways has accomplished in the past year is probably unmatched in the industry. The purchase of the Shuttle, the start of Metrojet, the Envoy business class, the Sabre IT agreement, the American alliance, the aircraft orders, the new terminals in Washington and what we've done in Boston. In a meeting the other day, someone here pointed out that there have been 52 changes just in the past six months. It's all about appealing to the frequent business traveler. From a sales perspective, we haven't gone as far as I would like to have within the corporate marketplace. That comes with negotiations and relationships, and that's what this whole sales force is now focused on.

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