Editorial: In A Moment Of Change, Travel Buyers Should Push

Now is the moment for business travel buyers to make positive fundamental changes in the structuring of their airline deals. Airlines are desperately seeking revenue and the majors are still losing millions of dollars a day. While some flights and personnel have been restored, carriers still are operating at significantly lower capacity. The major airlines are recognizing more than ever that business travel buyers can deliver significant volume, but they are hurting too badly to offer deeper discounts.

It takes a crisis to make fundamental change, even when it has been needed for as long as it has when it comes to the airline pricing structure.

Now more than six months since the worst catastrophe in commercial aviation and at the edge of what is beginning to look like recovery, if not at least a decent spring season, airlines are beginning to make real changes.

These changes have the potential to drive down airline distribution costs, improve the integrity of travel data and airline contracts, and give corporate customers equal access to currently unavailable inventory.

For business travel buyers who can show compliance with preferred vendor arrangements and can shift sizable market share, it's possible to create new relationships with carriers based on attaining goals and sharing information as never before, and through which distribution costs could be reduced further by eliminating intermediaries. For buyers who don't have the same kind of clout, those intermediaries are more important than ever when it comes to negotiating some kind of savings and service levels.

Clearly, the airlines are ready for action and they probably are more receptive than ever to creative ideas. In recent weeks, individual airlines have voiced new intentions to offer business travel buyers access to the inventory they discount on the Internet, bypass charge card fees and adopt other new philosophies and practices regarding corporate contracting. They are ready to do a lot more than eliminate travel agency commissions.

No one should be surprised that airline commissions are going away completely. The end of commissions paid by airlines to travel agents was scrawled across industry walls for a decade. They have been in the active process of being phased out during the past seven years.

There is a certain poetry in Delta Air Lines finishing the process it started in March of 1995, when it targeted lowering distribution costs by capping agency payments, which, in those days, compensated agents with enough left over to provide refund checks to corporate travel clients.

The road to zero clearly was marked then, and movement along it has been at a steady annual clip ever since, driven on by United and American. Singapore Airlines was first to zero out about three years ago, with British Airways following suit about a year later. But zero was hardly the destination, just a stop along the way to a more rational pricing environment and a more automated travel distribution process. Now net fares are becoming the norm and suddenly even long-discussed but little-practiced direct connections between buyers and airlines seem possible again.

Senior corporate executives are more aware than ever of the value of travel management and are seeking ideas for bringing better savings and services to their companies.

Communications and other technical tools, such as the travel page on the corporate intranet and online booking and expense systems, are providing more opportunities to serve and guide travelers.

For creative travel buyers, to channel this buy-in at a time when the landscape is in motion is an opportunity to prove value internally and build relationships with travel suppliers as they struggle to return to profitability.

Necessity drove the airlines down the last mile to zero commissions, but it is paved with developments in online booking, data management and e-ticket interlining that embolden the airlines to move in the direction of a more direct means of selling to their business customers.

The finish line for commissions is only a milepost along the road to a more logically structured relationship.





David Meyer

Editor-in-Chief

Business Travel News