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Airlines
AIRLINE NEGOTIATIONS used to be so easy. If old-timers are to be believed, the airline sales rep arrived at the customer’s office for morning coffee, a few headline figures would be glanced over, the customer would be lightly admonished if they hadn’t booked quite as many seats as they promised 12 months earlier, the same level of discount would be shaken hands upon anyway, and then the ecstatic rep and client would link arms and disappear to the nearest watering- hole for a long and refreshing celebratory lunch. It’s not quite like that any more. As the box on p64 (Five trends in airline contracting) shows, airlines are demanding more of their corporate clients while at the same time giving less. “Air sourcing is becoming more complex and airlines are becoming more restrictive in their negotiations,” says Toni Goth, until late last year head of global travel, meetings, incentives, conferences and exhibitions (MICE), and mobility for Allianz, and now director at group aviation specialist Pro Sky.
Several interlocking reasons
explain why negotiating is, in the words of Areka Consulting partner Guillaume Bizet, becoming “more challenging”. On the demand side, buyers are increasingly unwilling or unable to direct travellers towards preferred carriers when both buyer and traveller know a cheaper fare can be found online with another airline. “The internet has changed the way travellers look for deals, allowing them to comparison shop quickly online,” says Egencia Europe director of consulting services Johann Sparfel. “Because passengers are notoriously price-sensitive, a few euros can make a difference, presenting a challenge for companies in meeting their market share commitment.”
Goth believes this is the main
reason for deterioration in airline relationships. “A lot of customers have lost control of what they are buying,” he asserts. “They are not really steering their volumes to specific carriers, and airlines are aware many travel managers don’t have the ability to do that.” Goth blames travel management companies and corporate booking tool providers in
UPWARD MOBILITY
Matthew Parsons looks at some of the innovations and investments in booking technologies made by airlines
OVER THE PAST TWO-TO- THREE YEARS, airlines have been busy launching, or updating, their apps. A wave of new releases hit our screens last year, hot on the heels of the launch of Apple’s iOS7 operating system in September, which brought with it a new user interface. By December 2013, iOS7 had been installed on 78 per cent of supported devices. Around 45 airlines also work with Apple’s Passbook, too, which lets passengers store boarding passes, among other types of tickets, coupons and loyalty cards.
Most carriers now offer iPhone
and Android apps, and to a lesser extent Blackberry apps, as well as mobile websites. However, a survey last year by research company Fore See found that 33 per cent of airline passenger mobile-users preferred using an app over use of a mobile site – 21 per cent said the app was faster than the mobile site, and 14 per cent indicated they did not like to use a mobile site if an app was available. Most airlines’ apps
today offer schedule and pre-flight information, seating plans, loyalty points management, mobile boarding,
and live notifications. Oddly, not all of the major airlines offer the chance to search and book tickets. Airline websites are also advancing. A report commissioned by the International Air Transport Association predicted that airline websites will produce 59 per cent of booking volume by 2017, up from 35 per cent in 2012. It is difficult to determine if airlines are constantly releasing new apps and making online enhancements to get a bigger slice of the business traveller market, but apps certainly
allow them to scrutinise their customers’ habits and needs in more detail. As a result they’re able to offer them greater control, more personalised offers and enhanced travelling experiences – at all stages of the journey. There’s no doubt e-commerce and mobile will be stealing an increasingly significant share of the airlines’ marketing budgets.
AIR ASIA In May this year, Malaysia’s Kuala Lumpur International Airport 2 (KLIA2) is due to open. It is claimed to be the world’s largest purpose-built airport
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part for the problem. “They aren’t as good as the web, where travellers are using excellent search engines and finding themselves deals,” he says.
SHIFTING LOYALTIES Since preferred airlines do not always offer the best price, even with a corporate discount thrown in, many companies have shifted their policies in recent years from mandating preferred carriers to buying the best fare on the day. However, a lowest logical fare policy does not necessarily preclude clients from obtaining airline deals. British Airways’ head of UK and Ireland sales and marketing Richard Tams says his airline has increased, not cut, the number of corporate agreements it maintains, “but there is more realism about what the deal looks like. For example, if a corporate has a cheapest-on-day policy, we may only offer discounting on off-peak flights. It’s a very rational response to corporates showing no loyalty but shopping around for cheapest fares.” Conversely, says Tams, companies that continue to direct business towards BA also continue to win
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