by Barbara Peterson | November 01, 2015

Judging from the news, airlines stand out these days for what they don't offer: hot meals in coach, generous leg room, fees that make sense. The good news, however, is this: Carriers are still offering meeting fares, especially for larger groups, although the offers have changed along with everything else. Groups as small as 10 to 20 passengers can qualify for a deal, and the process of snagging a discount can take as little as 10 minutes.  

Shrinking competition
Today, fewer airlines are left fighting for a piece of the meetings market, but the market itself is thriving. Nearly $20 billion annually is spent on air travel in connection with meetings in the U.S. alone, according to studies conducted by PricewaterhouseCoopers for the Convention Industry Council. That's a significant share of the roughly $170 billion in revenues the domestic airline industry reported last year. "We see it as an important sector for us, which is why we are committed to being in this space," says Barbara Laken, director of specialty sales for United Airlines.

United, of course, is a very different company than it was even three years ago, thanks to its mega-merger with Continental. As it aligned its programs with its partner's, United revamped its convention program, offering not only reduced fares for groups of at least 20 traveling to an event from two or more cities, but also bonus credits for organizers that can be redeemed for future travel. (For a broader list of program details by carrier, see sidebar, "Cheat Sheet: Airline Meeting Fares at a Glance".)

In fact, most U.S. airlines' meeting fare programs have undergone changes in the past few years, as a quartet of mega-carriers emerge from the merger wave. Sharing the bulk of the market with United are Delta Air Lines, which absorbed Northwest in 2010; American, now cementing its union with US Airways; and Southwest, which bought AirTran (although it still retains its brand as a budget maverick). Mergers inevitably mean mashing together companies with differing policies on everything from drink prices to labor rules. That includes blending group sales departments, which might have conflicting rules on handling meetings.  

American at press time was going through the final stages of its merger with US Airways, positioning it to be the world's largest carrier. But one of the many decisions American made in the process was to scale back its meeting fare program, which had offered percentage-based discounts for travelers from multiple locations. This move reportedly was to bring American in line with US Airways' policies. American does, however, continue to offer group travel discounts for those traveling together on the same flight, and also offers a refundable zone-fare program that can be used for conventions. American says its program is still evolving. According to a spokesperson, the carrier views meetings business as "very important" and "will continue to look at how we offer fares to access the full network."

American's move has stoked concerns that as the industry consolidates, carriers might be less willing to negotiate favorable rates for meeting delegates. "It's obviously a sellers' market, and demand is really strong," said an executive at a major airline, who requested anonymity. "That's putting pressure on the pricing team, who might be asking why they need to discount at all" for what is, in reality, a business trip.

As anyone who's been on a domestic flight has noticed, planes are fuller than ever, with an average load factor, or percentage of seats occupied, of well over 80 percent. Airlines are making a profit, and while airfares aren't rising as fast as some observers had feared, carriers are tightening rules on other programs like awards plans and youth and senior fares.

M&C spoke to airline sales officials and meeting planners about this new landscape and what it means for the meetings business. The upshot: The news isn't all bad.

Is bigger better?
When it comes to moving large groups of people, there are obvious advantages to size. More than 80 percent of the total air traffic in the United States is handled by the four biggest airlines. Midsize and niche lines -- like Alaska, JetBlue and Virgin America -- are doing well financially, but their share of the business pales in comparison. Still, these smaller players do work with meeting planners, especially for events in their hub cities. Alaska, for example, will arrange a discount code for groups of 20 or more. However, a source at JetBlue conceded that its meeting program doesn't generate much business.

Size also is a distinct advantage for the trio of global airline alliances -- Oneworld, Skyteam and Star Alliance -- which have gone through their own growth spurts in recent years and now represent about three-quarters of the world's airline business. Each of these loose-knit fraternities includes dozens of carriers and can rightfully claim to cover the globe. (For a breakdown of alliances and member carriers, see "Allied Forces".) And each is tapping convention business, rolling out new or revamped meetings programs over the past few years.   

"We can really offer a one-stop shopping service for a meeting of any size," says Olav Glorvigen, director of sales and market development for Star Alliance, which has 28 member carriers serving 192 countries. Its sheer girth, significantly larger than the others, is a major selling point in its pitches. "You could have a conference in Vienna and get someone there even from the smallest village in Indonesia, and it could all be handled by the same airline network," Glorvigen notes.


José Maria Alvarado

Each alliance is anchored by a couple of major players. At Star Alliance, United, Lufthansa and Singapore are founding members; Skyteam is helmed by Delta and Air France-KLM. Oneworld's lead players are American and British Airways-Iberia, and while it's late to the meetings game -- having just launched its events program two years ago -- Oneworld is catching up fast, according to director of sales José Maria Alvarado. Since introducing the program in May 2013, the alliance has signed up more than 100 large international events that attracted more than 200,000 attendees. One recent example was the 2015 Rotary International Convention, in Sao Paulo, Brazil, attended by roughly 14,000 delegates from some 150 countries.

To avoid competing with the meetings programs of their own member airlines, alliances typically require that any meeting they handle must have a significant international component, with delegates coming from at least two countries outside the host nation. Ed Hollo, Amsterdam-based sales manager for Skyteam, says some meetings might seem a good fit for one of its airline members, rather than being handled by the alliance, based on where attendees are coming from. One recent case involved a large conference in Atlanta that went to Skyteam for its air-travel arrangements. "Delta, of course, has its hub there and has a very good meeting program," notes Hollo. "But what it came down to was scope, and even Delta wasn't in a position to meet all the needs of this event," which drew some 40,000 attendees from 20 countries.

It's one thing to have a robust program; it's another to make sure travelers use it. In fact, one source of frustration for both airlines and meetings organizers is the number of travelers who "go rogue" and book their flights outside the official channels.

"That's the nature of this business," says Alvarado. "If the booking is left to the individual traveler, they may have other alternatives, or their corporate travel agency may have other arrangements," including negotiated fares.

Lack of program compliance is a hot topic among airline meetings teams these days, says Jimmy Romo, Delta's general manager for specialty sales. "That's a question we continue to try to solve," he notes. "Most airlines believe that their programs are underutilized, because the carriers track a fraction of the total activity reported by convention and visitor bureaus. We must continue to work on building awareness of our meeting programs," adds Romo.