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Airlines, midmarket cos. tune up ways to do business together.

Article Excerpt
Airlines continue to change their strategies for negotiating with and servicing the corporate midmarket. They not only are employing tactics also in use with larger customers--cutting under-performing accounts, demanding more pronounced marketshare shifts and further limiting fare types eligible for corporate discount--but also are diverting more accounts into branded small business programs and gradually centralizing sales at their headquarters.

Meanwhile, midmarket companies increasingly are fine-tuning travel policies that dictate the carriers and types of tickets a traveler can use. Such policy adjustments, combined with competitive pricing, have reduced the average fares mid-market companies purchase. Despite the pressures facing the airline industry, several midmarket travel managers expressed gratification regarding their preferred carriers' efforts to retain their business and find workable models.

For their part, carrier sales executives said the corporate midmarket remains an important and fertile segment of business travel, even though they are relying on Web-based small-business programs that require fewer sales resources. These programs emphasize soft-dollar perks and rewards systems over traditional negotiated discount agreements, in many cases, smaller companies find value in such programs by developing relationships with additional airlines, albeit on a more informal basis than many travel managers would prefer.

Low-cost airlines also are developing corporate portals and attracting interest from many small and midmarket companies, further challenging legacy network carriers.

"There are 9 million companies in the United States, and getting at the top end is relatively easy, but this huge sector in the middle represents a significant amount of travel for an airline and continues to be highly sought after," said Fay Beauchine, Northwest Airlines vice president of sales and customer service. "We have done a little centralization in our sales action center, but our salespeople are told to go after the midmarket. That is where prospecting time largely is spent."

Delta, meanwhile, is in the midst of reviewing its midmarket strategy and expects to complete analysis later this summer. "We think there is a lot of business out there," said Steve Smith, Delta managing director of corporate sales. "We think we are doing a pretty good job, but there is lots that we still don't know about." Delta, Smith said, is "identifying smaller companies that want more than Sky-Bonus," the airline's small-business program. "It can be simplified lane segments only or...

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