Business Travel News - November 23, 2009 - (Page 14)

12TH ANNUAL AIRLINE SURVEY Continental Tops Buyer Survey As Industry Cuts Service BY JAY BOEHMER Continental Airlines for the second consecutive year took top honors in Business Travel News’ Annual Airline Survey, with corporate travel buyers rating it as outperforming its domestic peers in half of the 10 survey categories. Besting competitors in flexibility in negotiating transient pricing, distribution, problem resolution, communications and account management personnel, Continental also for the second year in a row edged out American Airlines for the top spot, this time by seven-hundredths of a point on an ascending scale of one to five. American Airlines placed second on the strength of its flexibility in negotiating meeting pricing and negotiating services and amenities. Rounding out the top three, Southwest Airlines once again led the industry in overall price value and the quality of its customer service. Corporate travel buyers, however, found little cause for praise this year, as less than one-tenth of the respondents said that overall airline customer service has improved in the past 12 months. Buyers pointed to their growing discontent with an airline industry that has continued to find new ways to charge for old things, while trimming services, frequencies and capacity. Each category that corporate travel buyers rated this year and last registered a satisfaction decline. “The airlines have made some efforts, but I don’t know if the industry has regained its trust over the degree of capacity cuts, the level of service and the general passenger indifference,” said Ingersoll Rand director of strategic sourcing Tom Barrett. “I still think Continental has made the best overtures in general. The statistics bear that out, but I keep asking myself, what are we going to have to do to make this experience better?” Airlines could start with being more flexible in negotiating pricing, according to the survey results. Published airfares have been down significantly this year, but respondents reported that carriers have been less flexible in negotiating—be that for transient discounts, group rates or soft-dollar benefits. When it comes to transient deals, the average rating in airline flexibility was 2.82 this year, down from 2.97 last year, while meetings pricing flexibility this year was down to 2.63 from 2.88. “Each carrier has their own approach,” said Advito vice president of business solutions Bob Brindley. “There is definitely a concern from an airline perspective: Yields are growing this year and a travel footprint that includes more international trips, Steven Mandelbaum, managing director of information systems and travel buyer at The Advisory Board Company, agreed that carriers have been as responsive as ever. “I’ve had more interaction with senior officers at carriers than I’ve ever had in the past,” he said. Winning in the category of flexibility in negotiating business transient travel, Continental senior vice president of worldwide sales Dave Hilfman said the carrier has strived not just to preserve corporate clients, but also attract more. TH Airline Survey Annual “When there is a smaller pie, we need to get a larger share of it,” he said. “That is very much a focus: to maintain the business we have today—even if that is getting smaller in volume—then to go out and seek ways to get share from our key competitive markets wherever we can.” Continental this year changed its approach to corporate deal making, shifting from fare bands back to fare buckets. “We tried the fare bands, but the marketplace, our customers, told us they preferred the buckets, and that’s what we’ve done this year,” said Monisa Cline, staff vice president of North American sales. “It was a couple of years where we had the fare bands in place. We just transitioned back to fare buckets this year and restructured all of our agreements.” Regarding the transition, Hilfman added, “We heard loud and clear from a number of corporate clients as well as their consultants and TMCs. It was causing them a challenge in their analysis of corporate deals, since other carriers for the most part hadn’t gone to this type of structure.” down, pricing has been down in 2009, and they’re worried about the new normal, about business traffic not coming back to the pre-fourthquarter-2008 levels. There’s that level of uncertainty, and there’s a couple of reactions: If they feel a program is not performing, they are quick to cut it or lower the discounts. However, in a number of bid situations, if a client can demonstrate that they are providing premium share or if they can prove that, even if their volumes are down, they are reducing the number of carriers in their program to drive more marketshare, then the airlines have been very, very competitive. If there’s a situation where you can’t drive more marketshare and your overall volumes are down, that definitely lowers your leverage with the airlines.” Though overall scores declined, several respondents said they have witnessed increased flexibility, with one respondent applauding a preferred carrier that “continued to be supportive even though our overall air volume has dropped significantly this past year.” With his company’s travel volume Business Travel News Cline said the categories in which Continental excelled—complaint and problem resolution, quality of communications and value of relationships with account managers— are “all tied together,” noting, “It really comes down to the quality of the people and the quality of the relationships we have with our buyers. This is a big focus of the sales force. Our goal is to be the most visible sales force in the industry.” Airlines received the worst marks overall this year from corporate travel buyers in the category of negotiating services and amenities, with an aggregate score of 2.59 out of five, while written responses from some respondents bemoaned what they called “nickel-and-diming.” More troubling to other buyers is the inability of airlines to track spending on ancillary charges like checked-bag fees and their lack of success in negotiating such fees outright. “I haven’t seen an airline actually waive fees, but they do it in a different way,” Brindley said. “They do it by opening up a large number of frequent flyer upgrades, and through that status you don’t have to pay the bag fees. What we find for most corporate travelers is the number of times they actually check a bag is relatively small.” Mandelbaum said, “People grumble about the bag fees, but it doesn’t impact us that much since the elite traveler doesn’t pay it.” Still, Mandelbaum noted airlines have been charging such fees for more than a year, and they have yet to find a way to track them for corporate clients. “They have to find a way to report that back to us,” he said. “In the same way that the hotel gives us a folio—where you see the mini-bar and all that stuff—the airlines have to now give us a folio. The fact they can’t track the bag fees is absurd.” Southwest has continued to maintain its first-place position in the arContinued on page 18 Monday, November 23, 2009 www.BTNonline.com http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - November 23, 2009

Business Travel News - November 23, 2009
Contents
Inside Track: British Airways, Iberia near merger
Profiles In Travel Mgmt.: Deloitte Approval Cuts Trips
Forum: Gillespie: Prove Value or Lose on Price
12th Annual Airline Survey: Continental Tops
EuroBTN: U.K. Buyers in Surcharge Refund Row
Expense/Payment: Euro Payment Regs Change

Business Travel News - November 23, 2009