MARCH/APRIL 2014
Airlines
FIVE TRENDS IN AIRLINE CONTRACTING
handsome discounts. Generally, they are companies that cannot take advantage of cheaper fare classes, because their travellers fly at peak times and/or book at short notice. Such clients remain lucrative business for airlines, which is why Tams rejects suggestions that airlines might be losing interest in the corporate market. “Corporate clients are still extremely important because they buy high volumes,” he says. “I would add, however, that airlines are also looking at opportunities in the SME [small- and medium-sized enterprises] market because of its high yield. It’s a hard market to acquire, but our strategy is to penetrate it more efficiently.”
CAPTURING CORPORATES If proof were required that airlines do value corporate customers, one only need look at the efforts that Easyjet and now even Ryanair are making to win them. Easyjet sales director Toby Joseph, for many years a specialist in corporate travel himself, identifies his low-cost carrier as a former disruptor of managed travel programmes because its fares tempted travellers into maverick buying. Joseph wheels out figures that claim Easyjet is a minimum of 30 per cent cheaper on 80 per cent of its top 20 routes, even when compared with legacy carriers’ discounted corporate fares. In the last three years, Easyjet has changed strategy to develop
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terminal for low-cost carriers. Flagship airline customer Air Asia has been busy developing self-service technology, and passengers will check in using self-service kiosks, tag their own bags, and deposit them at a self-service bag drop – all without the assistance of an airline agent.
AIR ASTANA Air Astana launched a direct link between London and the Kazakhstan capital at the end of last year. Its new app allows users to make bookings and get online assistance.
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Airlines are offering discounts on fewer routes and fewer fare classes.
Airlines are asking corporate clients to jump through more hoops – for example, requesting they provide more data and meet a wider range of volume or market-share targets
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direct relationships with around 250 corporate clients. In certain cases that even means limited discounting on Easyjet fares – and, unlike complicated deals with legacy carriers, where some fare classes are discounted but others are not, Easyjet’s corporate discounts apply to all bookings across all 684 city pairs, although the scale of the rebates is low.
Equally important to corporate customers, says Joseph, is the effort Easyjet has made to distribute content within customary managed channels, such as via global distribution systems. More fundamentally still, he says, “they want account managers who will listen to their needs”.
CHANGING RELATIONSHIPS Paradoxically, buyers complain their relationships with legacy carriers are deteriorating because they are not being listened to. Many believe the reason is a shift of responsibility for pricing from airline sales teams to revenue management departments. “It’s not very good
AIR
FRANCE The airline’s Best Offers by Air France app allows users to save searches
and then receive notifications when new fares or destinations become available.
AIR NEW ZEALAND Last December, the airline rebuilt its mobile app for international and domestic flights. The new version of its M Pass allows customers to check in on smartphones up to 90 minutes before
international flights. Boarding passes on smartphones are also recognised at Air New Zealand kiosks.
AMERICAN AIRLINES Ahead of its rivals, American launched its fully-functioning app in July 2010. As well as providing, among other things, the ability to check in for flights, seat selection and a standby and upgrade list, it has also become known for offering travellers the opportunity to play sudoku – perfect for any unexpected delays.
Although there are fewer discounts on offer, the amount of work clients need to do to get a deal has not changed, so it’s same effort for less reward.
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Airlines are monitoring client performance against targets more stringently and dealing with under-performers more severely.
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Some clients are switching from managing airline contracting globally to regionally.
Source: Areka Consulting
for their relationship with clients,” says Peter Brodbeck, head of global travel management for agri-business Syngenta. “In some cases, sales departments are just the messengers. All revenue management looks at is whether the flight is full and how much money is being made on each seat. Issues like dealing with our VIP travellers are ignored.” Areka’s Bizet sympathises.
“Corporates give their data to their airline reps, who pass it on to revenue management,” he says. “It means corporates are talking to people with less power than in the past, and that frustrates
BRITISH AIRWAYS You may have noticed British Airways advertising its app and mobile boarding benefits recently. As with other major
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