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CO simplifies discounts: airline aligns negotiated corporate terms to published fares.

Article Excerpt
Continental Airlines is taking the next step in ongoing corporate pricing reform in the airline industry by aligning negotiated discounts with actual published domestic and international prices rather than basing contract terms on airfare classifications.

The carrier's strategy eliminates much of the complexity associated with varying corporate discount eligibility and affects all Continental contracts. Meanwhile, Northwest Airlines also is in the process of amending corporate contracts with lower discount levels but at press time, many still were waiting for news from American Airlines. Though the world's largest carrier was first to broadly match Delta Air Lines' fare reform last month, American has been vague regarding potential adjustments to corporate contracts.

Indeed, buyers expect there will be a period of fluidity until preferred suppliers decide specifically where and how to match competitors' pricing and settle on definable strategies. "No one carrier will decide the fare structure in the U.S. market," said American CEO Gerard Arpey.

The impact of fare reform on an individual company's air program is dependent not only on which preferred carriers it uses most, but also on the types of fares it normally buys. Some sources, for example, suggested corporate clients that use a higher mix of lower-fare buckets actually could see average fares paid marginally increase. Many early analyses also have shown either corporate savings of negligible net changes.

Continental's corporate clients will receive three types of discounts. Existing domestic discounts apply to fares over $599 one-way, while 2-percent net-net rate discounts remain valid on...

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