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Airlines push standard programs, soft dollars over corp. discounts.

Article Excerpt
Midmarket corporate travel accounts present an interesting dilemma for legacy network carriers. They still represent abundant opportunity for airline suppliers to capture higher-yielding corporate travelers, especially as business travel demand strengthens. Yet, cost-conscious carriers generally are offering this segment fewer traditional corporate discount agreements in favor of standardized small business programs and soft-dollar benefits.

Considering one outcome of airfare reform--fewer discountable fares booked by Corporate America-carriers simply cannot be as attentive to all buyers. With small business programs and online booking portals, they can address more smaller companies' needs more efficiently and shift business to cheaper, direct channels.

"Since fare simplification, contracts for smaller and many medium-size companies pretty much were pulled," said Dan Beschloss, executive director at New York-based Valerie Wilson Travel, an agency serving primarily smaller corporate travel accounts. "Those that still did warrant contracts were given only token discounts."

Pointing to various cost-savings and incentive opportunities, some suppliers claimed small business program enrollee rosters in the tens of thousands. "There is a lot of noise in the small business marketplace," said Chris Phillips, Delta Air Lines director of business development and strategic planning. "Airlines, credit cards and travel agencies all are coming out with their own programs. Some companies are just not sure which direction to go and some have chosen to try them all."

Medium-size businesses seeking to negotiate discounts and other hard-dollar financial benefits from one or more carriers must either project ongoing travel increases or prove they can shift share to preferred suppliers through travel policies and guidelines. "Smaller companies that do not do a lot of international flying and have simple point-to-point travel patterns will be able to take advantage of low-cost carriers that are providing upwards of 35 percent of that type of travel in the domestic United States," said Laurence Smith, a corporate travel management advisor and partner with Wolff & Samson in West Orange, N.J. "Midmarket companies will likely get squeezed by the airlines. Those that do not do a lot of international travel and do not have that carrot to offer airlines, yet need the networks of legacy carriers, will be at an extreme disadvantage in negotiating contracts...

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