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by Michael J. Shapiro | October 01, 2010

Airlines value group business, and nearly all still have group discount programs in place. Fort Worth, Texas-based American Airlines employs 106 group sales specialists and offers a wide variety of group products, tailored to a variety of event types. "We see the importance of marketing to this segment and continue to do so," says American's Stacie Nerf, manager, group and meeting travel.

American Airlines offers more than most in the way of group discount variety -- but that doesn't necessarily mean the discounts themselves will be significant; that depends on many specific factors. Nerf lists a wide variety of concerns when it comes to determining group fares, including availability, travel distance, what the competition offers, nonstop vs. connections, travel dates, time of day, season and -- significantly -- capacity and demand.

These days, though, demand is high and capacity has dwindled. "Most airlines are seeing all-time record high load factors," says independent airline industry consultant Robert Herbst, founder of Airline
Financials.com. "And due to traffic demand, reconciled with little to no increase in capacity, average airfares have been increasing over the last several months. I expect it is a challenge for meeting planners to negotiate the level of discounts they could just a year ago."

Dwindling discounts Good discounts are scarce, confirms Terry Sloan, director of North American business development for Minneapolis-based Carlson Wagonlit Travel Meetings & Events: "The reality is that it's just as effective to buy directly from the system; corporate [transient] discounts are often better than the block space discounts or the group discounts."

Many meeting and travel managers have been skipping the group fare negotiation process entirely. "We've not engaged in an air contract specifically for meetings in well over four years," admits Cecile Mutch, director of global travel services for Battle Creek, Mich.-based Kellogg Co. Mutch recently had her travel management company analyze group fare opportunities, and confirmed she hasn't been missing anything: "Our corporate discount was so comparable to the meeting discount that it wasn't deemed worth the added effort."

Similarly, Tim Bone, director of union conventions, events and meetings for the Washington, D.C.-based Service Employees International Union, no longer bothers negotiating group fares. "I find it's more trouble than it's worth," says Bone of the 2 to 4 percent discount off the full fare his events typically earn. "I just let travelers shop in the markets that they're in, and the lowest logical airfare works best for our organization."

One possibility for small groups, says CWT's Sloan, is to leverage one's TMC: The agency may have negotiated a multimeeting discount based on total client meeting volume.

Beyond price But as American Airlines' Stacie Nerf points out, reserving group blocks isn't just about price. "You can book up to 11 months out, but ticket closer in," she notes. "That's one of the great flexibility benefits."

For larger groups, negotiating still presents some appeal. "If I've got a group of 2,000 people," says Terry Sloan, "I will absolutely negotiate. That's such a large volume that it captures the attention of the airlines." The negotiation may have little to do with ticket price, he adds. "It can be about waiving change fees or cancellation penalties. There often will be a lot of changes two and three days prior to an event. So that's where those concessions become very, very important -- often more important than saving $10 on an airfare."