Did you know that the standard 10 percent savings off in-dividual unrestricted business fares for meeting groups was wiped out--and then some--by fare hikes last year?
Just look at the numbers: The average cost of unrestricted business airline tickets during 1997 rose 17 percent over the same period a year earlier, according to American Express. From February 1996 through November 1997, business fares jumped by 39 percent.
The good news: The value of the five percent meeting reduction off the lowest discount fares has remained relatively unscathed. That's because discount fares have not been rising at the rate of unrestricted coach fares and other typical business fares.
The bad news: The best of these five percent meeting discounts require a Saturday night stayover. As a result, a growing number of corporations are tightening the screws on their business travelers and requiring them to meet over weekends.
"We do a decent amount of Saturday-stayover meetings," says Natasha Mihal, event coordinator for Wells Fargo in San Francisco. "Partly for the airfares, but partly to keep people at work during the week." The same with Cynthia Duckworth, director of sales and marketing at Omnitrition, a nutritional products company in Carrollton, Texas, whose groups "do a Thursday-Sunday or Friday-Sunday pattern."
Other companies are reluctant to ask their employees to attend meetings over the weekend. "That's still not the typical trend," reports Stacie Kellogg, manager of air operations for Carlson Wagonlit Travel's Meeting Management division, based in Minneapolis.
Enter: Zone Fares Another alternative is zone fares for midweek meetings, which agents and airlines report are being used by a growing percentage of companies. Zone fares are a collection of flat fares into the meeting city that vary only by region of departure, and do not require a Saturday night stay. They generally require a minimum volume of passengers, which could range from 10 to 25. Since they are not set at a fixed percentage off individual fares, they are a good bet as regular business fares for midweek travel keep rising.
"I don't see the zone fare prices increasing more than a couple of percentage points each year--certainly not in line with the increases in published (individual business) fares," says Kevin Stenerson, transportation planning supervisor at Carlson Meeting Management. "They're getting very popular among meeting planners," reports Helene Estes, general manager of Philadelphia-based Rosenbluth International Meetings. "Every other fare changes with the marketplace, but these are defined fares. You can plan a meeting up to a year in advance and know what your (air travel) costs are going to be with zone fares. So you can get a good handle up front on what your budget will be."
Airlines confirm that they have been growing their zone fares programs dramatically, and finding increasing acceptance of these fare deals from meeting groups. "About a year ago, we modified our zone fare program and made those fares available to all of our North American destinations," says Earl McClendon, Delta's manager-meeting, incentive and group sales. "Previously, they were only available to about 35 or 40 cities. As a result, we've been seeing a rather large shift of our business now going with the zone fares."
United had tried to stay away from zone fares, but recently gave in to competitive pressures and added a zone-type fare product, called Area Fares, to its roster of meeting offerings. American Airlines recently expanded the availability of its zone fares to the Caribbean and Europe, and will roll out "a global meeting product" this year, according to Rick Weber, American's manager of groups, company meetings, and specialty fares.
Zone fare levels are likely to remain fairly stable, at least for the foreseeable future. At Delta, for example, zone fares are showing "no big increases," according to Bob McNally, the airline's new system managermeeting, incentive, and group sales. "We are preparing to roll out our 'Year 2000' zone fares, and if there are any increases, they are only moderate ones, and only in certain markets." American's zone fares also "have stayed fairly constant through the end of 1998," reports Weber. "Now we have (zone) fares out and available through the end of the year 2000, and on average the fares for 1999 and 2000 are about 5 to 10 percent higher than the current levels."
More Flexibility As airlines see more of their corporate meeting business migrating to zone fares, watch for them to keep fine-tuning their zone fare products. "Some airlines have indicated that they're trying to do a better job of managing that zone inventory," says Rosenbluth's Estes. For example, in some instances "they're putting instant-purchase or 24-hour purchase policies in place, which historically had been 7 or 14 days."
"One change in zone fares we've seen is that historically, they've been (available for) a two-night minimum (stay)," adds Carlson's Stenerson, "and we're seeing that change to a one-night minimum, which helps, because a lot of meetings are getting shorter. The zone fares they charge are typically about $50 more for a one-night stay, but still 30 to 35 percent off published (individual) ."
If the airline industry is holding the line (or at least not raising it much) on discount and zone fares, its current favorable economic climate--four straight years of profits and an industry load factor of around 70 percent, higher than it has been since the 1940s--might mean less negotiating room for group business. "They don't bend as much as they used to," notes Omnitrition's Duckworth. Carlson's Stenerson concurs: "I think their (negotiating) flexibility is gone, or certainly eroded somewhat."
American's Weber reports that his airline is targeting its negotiations for meeting deals much more than in the past. "Our pricing for groups that require blocked space is flight-specific, in order to provide more attractive pricing to our meeting planners, but also to move the traffic to those flights where we are most interested in carrying groups in large numbers."
Delta is following a similar pattern in its dealings with meeting groups. For companies that want to negotiate something extra, "often the best days for travel are not the peak travel days of the week," says McNally. "We rely on our yield management folks to control the inventories, and the opportunities (for meeting deals) are still there on certain key flights. But they may not be the 5 p.m. flights out of New York or Washington--they might be earlier or later in the day."
He adds that with most airlines now becoming so route-specific, date-specific, and even flight-specific in their offers to groups, it's tough to make generalizations. "We've recently seen a lot of airlines promoting certain city-pairs on a case-by- case basis, providing additional discounts. These obviously depend on travel dates and number of passengers. It's really becoming like a chess game--watching who's making what moves, and deciding how to react to those moves."
The chess analogy couldn't be more fitting than when it comes to United Airlines. The airline is phasing in a new generation of yield-management technology based on IBM's SP2 parallel processing system best known as "Deep Blue," which defeated world chess champion Garry Kasparov last year in a series of demonstration matches.
"United's Deep Blue parallel processing system is aimed at developing a detailed forecast of how people fly and buy and then making seats and fares available in the most efficient way to gain the maximum amount of revenue," says a United spokesperson. "It's the most sophisticated yield-management application in the entire airline industry, and is expected to raise United's revenue by $50 to $100 million annually."
How to Get the Best Deal Of course, the bottom line is how to negotiate now that Deep Blue and zone fares are the new reality. Meeting experts like Kellogg and Estes both agree that companies can benefit from talking to their travel agencies before they select the meeting site, not afterwards. Carlson offers its clients a service called Destination Analysis, with which it can give them a pretty good idea of the relative cost of selecting one city over others. "If they've picked the destination already, we'll ask them if that is set in stone," Kellogg said, "or if they might be willing to try another destination due to special fares that may be out there."
Experts also suggest that companies look for ways to consolidate their meeting business and their transient (i.e., individual) business travel volume--or at least be aware of each other's objectives. The bottom line is that it's difficult--if not impossible--for a company to track and manage total travel volume if its meeting department uses one travel agency and its travel department uses another.
Rosenbluth helps companies manage both sides, says Estes, "by making sure that when it's time to utilize the transient rates, we use the transient rates; and when it's best to use the group rates, we manage their use of the group rates."
She sees more companies understanding that they need to set up a group department separate from, but in conjunction with, their transient travel department. She cites the example of a company, which negotiates corporate discount airfares in specific markets, having trouble meeting its volume commitment to its preferred airline in one critical market. In that case, the company's group department might find it convenient to schedule a meeting that will bring in enough company travelers in that market to put the firm over the top, protecting its deal for individual fares with the airline. "That shows good faith in partnering with that supplier,"says Estes.
Another tip: Giving travel agencies more advance notice if at all possible. "We're lucky if we get three or four weeks (advance notice)," Kellogg remarks. "That's still one of the keys to getting the best airfares."
Most airlines' online meeting sites provide e-mail areas; links to other parts of the airline's Web pages; and basic terms of the airline's meetingand policies. Here's a look at what some of the better sites offer:
* American Airlines' "First Call" group and meeting area includes a promotion of special monthly group discounts that are available in specific markets.
* Continental and Northwest both offer online meetingrequest forms that can be e-mailed to the airline's group department, and both promise to send a contract out within 24 hours of receipt.
* Southwest Airlines' site features a meeting program questionnaire designed to be printed out, filled in, and faxed or mailed in.
Here's where you can find the major airlines on the Web: American: www.americanair.com
America West: www.americawest.com
US Airways: www.usair.com
Or Just Call: Airline contact numbers for meeting groups:
American Airlines: (800)221-2255
America West: (800) 548-7575
Continental Airlines: (800) 468-7022
Delta: (800) 241-6108
Northwest Airlines: (800) 328-2216
Southwest Airlines: (800) 433-5368
TWA: (800) 325-4933
United Airlines: (800) 521-4041
US Airways: (800) 334-8644