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Article Excerpt
This year's list of the 25 executives whose efforts made the most significant impact on the business travel industry in the previous year has a remarkably high number of airline executives on it.
Perhaps that's due in part to the relative dearth of acquisition and merger activity among travel services suppliers last year. Yet, in a year in which United Airlines filed for bankruptcy protection and most other major airlines performed poorly, it reflects on dire circumstances in 2002 that made bold if not desperate moves necessary.
Business Travel News editors recognized airline and aviation executives for actions aimed at restructuring air pricing and air insurance, slashing agency commissions and waivers and favors, forming new airline alliances, growing European low-cost carriers, transforming airline data reporting, curtailing U.S.-European aviation bilateral agreements and granting or not granting U.S. loan guarantees. BTN recognized other industry leaders for their efforts to consolidate players in the expense management, meetings management, meetings software, conference center and car rental segments; restructure GDS costs; set standards for reverse hotel auctions; enter the corporate arena with Internet distribution engines; improve security data and infrastructure; and align industry associations.
Returning to the list for the second consecutive time for all new reasons are American's Don Carty. Continental's Dave Hilfman, the European Commission's Loyola de Palacio and Secretary of Transportation Norman Mineta. This is Mineta's fourth overall appearance on our list. He premiered on BTN's first top 25 list in 1984, when as House aviation subcommittee chairman he wrote the bill transferring the Civil Aviation Board's passenger protection regulatory responsibility to the Department of Transportation. This is the sixth appearance for Prism Group's Michael Whitesage, the fourth for Orbitz's Jeff Katz, third for Don Carty and second time for Delta's Leo Mullin and Concur's Steve Singh.
Industry input into the selection of these leading industry lights was higher than ever this year, but that didn't make the editorial decision-making process any easier. As in previous years, nominations came from readers, sources, editorial board members and reporters. Nominations, detailing the accomplishments of candidates during the past year, were accepted in November. BTN staff considered the nominations and, in many cases, did additional research to inform the decision-making process, which we concluded in December.
We remain mindful of the influence of many other executives who continue to show industry leadership and of the influence wielded behind the scenes. We also continue to appreciate the time and thought of the executives named here and other sources who contributed to this effort to identify the major movers and shakers of 2002.
Richard Anderson
CEO
Northwest Airlines
In keeping Northwest Airlines' reasonably healthy relative to its peers amid the unprecedented challenges of 2002, CEO Richard Anderson guided the carrier through various initiatives affecting competitors, corporate clients and frequent flyers nationwide.
Back in November 2001, Northwest embarked on a fare restructure that, among other things, removed corporate discounts from leisure-oriented fares. Though certain carriers already had been doing so in some cases, all majors since formally have followed Northwest's strategy. "Because we never went along with a systemwide fare increase, it appeared to us that deeply discounted leisure fares already were attracting business travelers and the application of corporate discounts just did not make sense," Anderson said. "But we were careful to make sure we applied corporate discounts to all ConnectFirst and BizFlex fares."
The restructure, which emphasized more flexible alternate business fares, was the first broad business fare initiative following Sept. 11, 2001. Northwest, however, continued to play spoiler to attempted fare hikes throughout 2002, viewing all pricing as elastic. "I always kid Continental Airlines CEO Gordon Bethune that I am sorry his partner is an idiot," Anderson joked, referring to Northwest's refusal to go along with any Continental-led fare increases. "But we and Continental are different in some respects."
On the distribution front, Northwest launched WorldAgent Direct, an Internet site enabling agencies to book directly the carrier's full range of fares, including exclusive Internet fares. The site currently has more than 3,300 agency subscribers, but Northwest would not share booking or revenue figures.
The carrier also continued to lead various e-commerce initiatives, including online and airport kiosk checkin, electronic ticketing and other Web functionalities, such as online reservation changes and exchanges. It also was the first major U.S. carrier to eliminate blackout dates in its frequent flyer program, a customer-friendly move matched by several other Big Six carriers. "At an airline, sometimes it takes enough momentum from your customers for you to know you have to make a change," Anderson said.
With an eye on providing a more comprehensive network to those customers, as well as responding to the United-US Airways tie-up, Northwest joined partner Continental and traditional rival Delta Air Lines in a trilateral alliance agreement. The partnership at press time still was under review by the U.S. Department of Transportation.
Northwest's bilateral alliance with Continental continued to develop in 2002 as the carriers further aligned various customer service features and added more accounts to the joint corporate client roster. Other Northwest developments last year included the introduction of CorpNet--a Prism-enabled, share-based corporate contracting program--expansion of the BizPerks corporate rewards and incentive program for small and medium-size businesses and the opening of the $1.2 billion Edward H. McNamara Terminal/Northwest WorldGateway in Detroit.
Meanwhile, after Sept. 11, 2001, Anderson was named to the rapid response airport security team along with Southwest Airlines chairman Herb Kelleher, Raymond Kelly, former commissioner of the U.S. Customs Service and current New York City Police Department commissioner, and the American Association of Airport Executives president Charles Barclay. The team submitted a long list of recommendations to DOT Secretary Norman Mineta, many of which were included in the legislation that created the Transportation Security Administration.
Anderson also has served since December 2001 as chairman of the executive committee of the Air Transport Association. "The most important item for ATA was getting the industry to coalesce around major policy positions with respect to the creation of TSA," Anderson said. "Solving the war risk problem we face as an industry was second and regular interaction with regulatory bodies, such as TSA, in the post-9/11 environment was third."
Steve Armitage
Sr. VP Sales
Hilton Hotels Corp.
DUring a year in which reverse online auctions of hotel rooms received considerable attention, Hilton Hotels Corp. stood out for its stand regarding the negotiating technique. Early in the bid season, senior vice president of sales Steve Armitage issued a series of guidelines to Hilton's owned and managed properties that crystallized the lodging industry's concerns about participating in this new form of negotiation.
Armitage set four stipulations that had to be met before Hilton properties would agree to participate in an auction. A Hilton hotel would not be a player unless the duration of the agreement was specified and the client provided the room night volumes that were going to be met. Armitage also stipulated that the hotel had to know from the onset the competitive set with which it was in the running. "We didn't expect to know exactly what our competition was quoting, but we definitely wanted to know, for example, that a full-service product was competing against other full-service products." Armitage also said the hotel had to have a clear idea of the criteria the account was using in reaching a final decision.
With the negotiations for 2003 rates now concluded in most cases, Armitage said Hilton had been involved in only 22 such auctions. Consequently, he said that much of the attention the technology received from industry associations and on Wall Street was premature-at least this year. In one way, however, all the buzz was positive because it caused third-parry providers of auction technology to reevaluate the models they were promoting. "We established guidelines that worked for us as a company, but then we were pleased at the constructive interaction that resulted with our top accounts," Armitage said. "As a result, a number of the auction models out there evolved to the point where we felt we could support them."
Where in 2001 much of the auction technology was a "one-way street," Armitage said it had progressed to the point where it was a "win-win for buyers and hoteliers alike." He especially was heartened that the third-party vendors had reached out to companies with midsize programs and adapted the technology to suit their needs.
"Midmarket accounts aren't large enough to have direct relationships with hotel companies. They either don't have the volume or the distribution needs," he said. "We were absolutely delighted to see the auction models focus on that niche. By empowering the midmarket, it makes it much easier for both parties to conduct business and, hopefully, develop some long-term relationships."
B. Ben Baldanza
Sr. VP Mktg. and Planning
US Airways
Call it irony or merely par for the course in the airline industry of 2002: The most significant new pricing policy, embraced by all Big Six carriers, surfaced at one of the more financially troubled airlines.
Shortly after its Chapter 11 filing in August, US Airways fundamentally altered the value proposition of nonrefundable fares, declaring them void and valueless once the ticketed flight departs. It then forged new global distribution agreements in October with Sabre and Galileo to provide travel agencies with access to US Airways' previously Web-only fares, while cutting by roughly 10 percent and freezing for three years the per-segment fee paid to those two GDSs by the airline.
B. Ben Baldanza, US Airways senior vice president of marketing and planning, the primary decision maker for both developments, said the nonrefundable ticket policies represent "a more economically stable platform" for the airline.
"Over the past couple of years, we have seen traditional pricing restrictions become less effective in properly segmenting business and leisure traffic," he explained. "This structure better reflects what someone is buying."
US Airways' bigger competitors, afforded the opportunity to agree, promptly matched. The ramifications, aside from an expected protest from the travel management community, included changed purchasing habits and behaviors among business travelers, new examinations of corporate travel policies and adjusted ticketing and traveler notification systems at travel management companies.
"I know that everything we have done may not be popular," Baldanza said, "but it was necessary in order to keep a viable US Airways and a viable airline industry."
Meanwhile, in a move that was applauded by many throughout the industry, US Airways took a crack at stemming the tide of reservations channel fragmentation while lowering its distribution costs by making available through Sabre and Galileo nearly all of its fares, including Internet specials previously inaccessible to traditional travel agencies. Those GDS agreements prompted competing GDS Worldspan to threaten US Airways with expulsion if it did not similarly provide all fares and inventory, without an accompanying price break.
Though Worldspan backed off the threat and negotiations between it and US Airways were continuing at press time, the spat spotlighted conflicting loyalties between airlines, traditional GDSs, such online booking channels as Orbitz, travel management companies and the end users: travelers and corporate clients.
"The gap between the cheapest distribution vehicle--an airline Web site--and the most expensive has diminished in the past few years," Baldanza said. "So, if we feel a price is economically fair, we offer it to everyone and let them buy it the way they want to buy it. We realized that would add value to the GDS, so we asked them for a cut in the rate.
Last month, Baldanza said US Airways overall had been selling more Web-type fares than before the GDS agreements. "We are seeing Sabre and Galileo selling quite a few of them, so there has been a shift."
Baldanza's responsibilities also include route planning and scheduling, which have been and will continue to be areas subject to intense scrutiny during US Airways' bankruptcy restructuring. "We pulled down Baltimore Washington International, restructured the schedule in Charlotte and Pittsburgh and changed our view on how we generally think of hubs," he said.
Richard Barton
Expedia Inc.
President and CEO
Expedia president and CEO Richard Barton and his team exude a level of pride about their plans for the corporate market worthy of their Microsoft heritage, but with a humility that shows they do their homework too.
The company's July acquisition of a travel management company brought with it a message that Expedia is serious both in its intentions and its need for infrastructure and education. Barton called Metropolitan Travel "a great plant and lab" for the shaping of Expedia's corporate product. That product was released in November, and Expedia said a more robust version for heavily managed accounts is due this summer.
Though there are helpful geographic aspects of the acquired regional agency, based right in Expedia's Seattle-area backyard, one tenet of Barton's vision throughout Expedia's history is that the "bricks-and-mortar, geography-based segmentations we've seen in the past, are slowly going away. There are a few truths of the Web and the connected PC, and whatever it evolves into, and...
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