Volume discounts end, complaints fly

BUSINESS TRAVEL

June 22, 1992|By Tom Belden | Tom Belden,Knight-Ridder News Service

Like many people these days, corporate travel managers and professional meeting planners who work for organizations and companies are confused and frustrated by the new "simplified" airfares.

For years, these high-volume users of airline service have gotten VTC used to the same thing that any big customer in an industry expects: The more you buy, the more of a discount you get.

Although most airlines were hesitant to admit that they ever offered big companies volume discounts, they all did it. More open has been the practice of offering discounts as high as 50 percent off full-coach airfares to anyone going to meetings or conventions. Some airlines even offered discounts of 20 percent to 40 percent off full coach to groups as small as 10 or 15 people if they were all flying to the same meeting.

When American Airlines overhauled its fare structure in April, and most other carriers matched the move, such volume discounts were supposed to be thrown out. American reasoned that the 38 percent cut it instituted in full-coach prices would satisfy most of the travelers who had been using special meeting fares or corporate discounts.

Many of the volume-discount deals for corporations were set to expire at the end of 1992. Others were good for only 30 days at a time. This means that companies and organizations have faced some abrupt changes in recent weeks.

Corporate travel managers and meeting planners immediately began complaining that the airlines had unfairly scrapped an orderly, sensible system that usually provided the carriers with a steady flow of relatively high-fare traffic.

The negative reaction has been so strong that some airlines sent executives to talk to travel managers.

"The whole issue of corporate deals seems to be one that all the airlines are treading on very carefully," said Karen Betterman, publisher of Runzheimer Reports on Travel Management, a newsletter for travel managers. "I'm not so sure that this is going over well with their customers."

Ms. Betterman and other industry observers said Continental Airlines and Trans World Airlines had moved quickly to set themselves apart from the herd by continuing to offer group discount fares. But those two carriers, both of which are operating under Chapter 11 of the federal bankruptcy code, don't offer as much service as the Big Three of the industry (American, United and Delta) and are fighting desperately for market share.

The three big airlines have proved tough to deal with on discounting, several consultants said. They have held numerous sessions with meeting planners, travel managers and their agencies but have given little ground, the consultants said.

"There are going to be some opportunities out there, but they're going to be much more difficult to find," said Wade Nichols, a Boston travel-industry marketing consultant.

Meeting Planners International, a trade group representing more than 10,000 professional planners, was among the organizations that were outspoken in protesting the new fare structure. In a paper it issued on the subject, it predicted that if volume discounts were no longer offered, travel would actually go down, not up as American hoped.

"The effects on airline travel, meetings attendance, hotel occupancy, ancillary ground services and the economic well-being of many communities will be far-reaching," the meeting planners said.

At the same time, some observers say there is less to worry about than there appears to be. They expect volume discounts to creep back into the airfare system, provided that the number of airlines does not shrink substantially in coming years.

"If the price of airline seats became non-negotiable, this would be the first industry in which volume purchasers paid the same price as individuals," John H. Caldwell, a travel management consultant, said last week in an opinion column in Business Travel News, a leading industry publication. "Business seats will be negotiated unless most competition disappears."

*

Hilton Hotels Corp., trying to generate business for the summer, has cut its rates and put only one restriction on the sale prices: You have to stay in one of its hotels at least three nights. You don't have to reserve in advance, send in a deposit or stay on a Saturday night.

At many Hiltons, rates will be 50 percent off the full "rack rate," but that is a price few travelers pay anyway. Most business travelers already get discounts of 10 percent to 30 percent off those rates. Hilton said the leisure travelers coming to its hotels on weekends would get discounts averaging about 20 percent off regular weekend rates.

Hilton's cuts follow rate discounting by Hyatt, Marriott and Sheraton earlier this summer, but those chains imposed more restrictions. Sheraton requires reservations two weeks in advance. Marriott and Hyatt require guests to pay 21 days in advance.

*

Icelandair, an airline once famous only for low fares that appealed to backpackers en route to Europe, has changed some of its stripes.

Icelandair still offers fares that usually are lower than those of other trans-Atlantic carriers, but now it has a highly praised business-class service, Saga Class, to Iceland and Luxembourg, with connections in Iceland to Scandinavia, Britain and other places in Europe. The airline flies new narrow-body Boeing 757 jets on its trans-Atlantic routes. It has daily flights from New York's Kennedy Airport and six flights a week from Baltimore-Washington International Airport.

The most recent enhancement for Saga Class passengers is free limousine service to and from Kennedy for passengers in the New York metropolitan area. Passengers from beyond the immediate area may be able to get the limo service for small extra fees.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.