Business Travel Contractors Corporation (BTCC) is pursuing its goal of "more rational," less costly business travel airfares through new agreements with two low-fare airlines plus a proposal to promote low-fare airlines' entry into markets dominated by the majors.
BTCC President Kevin Mitchell expected to signin May with Frontier Airlines and Reno Air for airfares that exclude commissions and credit-card costs and are guaranteed for six months. The deals are based on revenue guarantees by members of BTCC, a buying group composed of U.S. corporations purchasing about $1 billion a year in business travel.
BTCC, based in Lafayette Hill, PA, has a fare agreement in place with Southwest Airlines, and has continued to pique the interest of the major carriers. None has yet signed on, though Mitchell says the consortium got "extremely close" to an agreement with Continental Airlines. "When the time is appropriate, we will go out [to the majors] with another proposal," he says.
The Frontier and Reno agreements, he adds, do not represent a change in strategy toward low-cost carriers. Mitchell attributes much of the major carriers' resistance to BTCC's proposals to high load factors, currently at about 70 percent. "Even if the majors are comfortable dealing with a group, they're still thinking, 'We don't have to do this,' " he says. "We are moving toward our endgame by employing other kinds of strategies."
One of those strategies involves BTCC underwriting the low-fare carriers' entry into what Mitchell calls "hostage" markets--those served exclusively by one or two major carriers. "We would identify the market and the corporations it serves, sit down with the carrier and ask, on every 100 seats, how many do you need guaranteed to cover your costs?" Mitchell says.
This spring, BTCC expects to reach agreements with three low-fare carriers to enter the Philadelphia, Cincinnati, and Detroit markets. Agreements of this kind will neutralize the majors' ability to prevent competitors from entering new markets or from being driven out of markets they're in, Mitchell believes. "The frustration is so deep and so wide that just having one of these agreements launched will put everything in motion," he says.
He also has attracted the attention of lawmakers and representatives from the Department of Transportation and the General Accounting Office, many of whom will discuss the issue at a Washington, DC "summit conference," scheduled to get under way around press time.