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Buyers contend with lower airline discounts.

Article Excerpt
An extremely challenging two years for the airline industry has translated into redefined and less personal relationships and strategies in the corporate midmarket. A year ago, airline sales execs spoke of the seemingly inexhaustible opportunity in an untapped market segment comprised of hundreds of thousands of companies. Today, while they still see prospects for incremental business and share shifts, airlines must adapt to new market realities that, in turn, disenchant many of their accounts accustomed to a higher level of attention, deeper discounts and special perks, such as waivers and favors.

"There is lots of churning. Old regimes go and new regimes come in," said Ron DiLeo, Rosenbluth International COO for strategic solutions. "The corporate salesforces are smaller today than a year ago."

Airlines must reconcile those changes with a need to hang on to as many customers as they can while signing up new ones as they attempt to weather the industry downturn. That means opportunity for many midmarket companies previously undiscovered by carriers, particularly those that can demonstrably move share and deliver on commitments.

"In some ways, there is more flexibility in the middle market because some are newer at corporate travel management," said Fay Beauchine, Northwest Airlines vice president of sales and customer relations. "The battleground still is there. Due to the size of that market, it is an extremely legitimate revenue opportunity."

At the same time, airlines aggressively are pushing their small- and midsize-branded programs, which rely on automation over face-to-face interaction and present both benefits and difficulties for the midmarket travel buyer.

Such buyers, defined as those annually spending between $2 million and $12 million on U.S. booked airline tickets, have seen average discount levels drop, primarily a result of airlines eliminating all corporate discounts from lower-bucket fares, regardless of account size.

"Among our customers, there definitely is more than a disgruntled minority," said John Smith, president of Tower Travel Management in Chicago. "The exclusion of low-end buckets has had more of an impact on the midmarket than anything else." Smith pointed to one $3 million account that books 90 percent of all tickets from lower-fare buckets. "Their effective average discount went from 16 percent to 3 percent," he said.

"Our discounts have gone down for that reason alone," added...

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