Corporate contracts are changing at American Airlines and United Airlines. What’s going on with the value proposition on each side of the table? Industry veteran David Jaqua, an expert on corporate air travel data and former leader at Prism Group, acquired by Sabre in 2012, advocates for tried-and-true practices filtered through the lens of today’s market realities.
History helps us glimpse the future of managed travel and airline negotiations.
In the decades before the pandemic, airlines offered corporate discounts in exchange for purchasing commitments. Their value to corporations included service, price and reliability while market share or volume targets, quality of revenue and loyalty defined the company’s value to airlines. Travel policies directing individual travelers toward a preferred airline helped companies fulfill their commitments. Covid upended everything, but only temporarily. The same principles are in play now as airlines and buyers work out new deals — with an even greater focus on service and data, and a few twists around the market.
American Airlines recently signaled that it would retreat from traditional corporate selling and client management because it believes the relationships have changed. Southwest Airlines, designed in many ways to appeal to leisure travelers, spent the last several years building a robust corporate sales program.
Who is right and who is wrong? Each airline must answer in the context of its strategies and resources, but it is certain the industry will remain competitive. Buyers still need the support services they have come to expect, and technology is still not in place to do it without humans. If some airlines continue to provide a personal touch, history tells us other competitors will match that service.
On the buyer side, new airline distribution strategies taking effect in recent years prompted companies to revisit the nature of their travel policies. Some had already relaxed their mandated programs pre-pandemic by allowing travelers to do their own shopping beyond preferred airlines. Some were looking for value beyond a simple airline seat, opening the door for service bundling.
Now, as the recovery continues, companies and their travelers are starting to find added value because they can customize purchases to suit each business mission.
Different factors (e.g., time, price, comfort) influence each booking. Airlines use professional client service teams to manage these changing needs and to give value beyond just the discount. For example, they provide such operational assistance as waitlist clearance, special handling for key executives and help during irregular operations. Ask any corporate sales representative if they only work on contracts and the answer is a resounding “no.” That personal touch still goes a long way.
Data sharing and transparency continue to be crucial to these partnerships, helping to assess the value created for both sides. Data has become richer over time and it will become even more accurate and informative, with faster turnaround and more robust integration. While goal management and fulfillment reporting is important, data sharing is about much more. As the industry develops enhanced data sets and simpler, more robust access tools, both sides can identify additional opportunities and take action to grow and deepen their business relationships.
Companies continue to find value in partnering with airlines that provide the network of services that best fit their internal travel networks. As recovery continues and capacity and demand get closer to equilibrium, they will compete for the best offers from those airlines. New tools will continue to make it easier to tailor deals to unique circumstances and enable airlines and customers to find more creative ways to make their partnerships work.
Each airline will define their “best” customers differently (discounts, service bundles or something entirely new), but goals will remain important. Airlines need a way to distinguish their best customers and measure internal performance.
My prediction is that airlines will continue to refine their customer offerings, but buyers and sellers will need a quid pro quo. What each looks like will likely evolve from here. As always, well-managed partnerships on both sides of the table will reward the winners.
