Fare Game 3-1-1998

Meetings & Conventions: Fare Game March 1998 Current Issue
March 1998
Fare Game

Ticket prices are up, but carriers are still cutting creative group deals

BY DAVID GHITELMAN

These are the best of times -- of recent times, at least -- for airlines, and the worst of times for business travelers. For the major carriers, load factors and profits remain strong. For business travelers, fares are reaching new heights even faster than the Dow Jones average in the current bull market.

For those flying to meetings, however, the situation isn't quite so bleak. While they can expect to pay more than in the past for airline tickets, attendees should virtually never pay full fare. Discounted meeting rates are available to all but the smallest of gatherings. In addition, planners can negotiate a variety of perks for meeting-goers, including upgrades to business and first class as well as passes to airline club lounges. Planners can also get perks for their organizations, including free tickets for future use.

The airlines are so eager to fill as many seats as possible that they even added an additional discount last year: 5 percent off the already discounted meeting fare for attendees who purchase their tickets 60 or more days before their flight.

STANDARD PRACTICES
Despite the carriers' unceasing efforts to create distinctive images for themselves through expensive advertising campaigns, they haven't been able to fool the average attendee suffering through a flight in coach: These folks know that any one major carrier is pretty much the same as its competition. Given a choice, they'll book the cheapest flight. The airlines have responded by taking a follow-the-leader approach to pricing. As a result, meeting discounts tend to be nearly identical from one carrier to the next.

To the carriers, a meeting group consists of at least 10 people originating from different places but traveling to a single destination. Planners of these events can arrange for several types of discounts. A 5 percent discount off the lowest published fare typically requires 14-day advance purchase of a non-refundable ticket, which can be changed for a $75 administrative fee. Also, these fares generally require the attendee to stay over Saturday night. The only two major destinations that do not require Saturday stays are Hawaii and Las Vegas.

Attendees who find these restrictions too limiting can opt for the airlines' second meeting fare: 10 percent off full-fare coach. Both these 5 percent restricted and 10 percent unrestricted fares leave attendees at the mercy of the carriers' yield management pricing systems, under which fares vary continually based on fluctuations in supply and demand. Generally, the airlines give attendees a choice between the 5 percent restricted and 10 percent unrestricted discount, and will tell attendees which is cheaper.

Of course, there are exceptions. At TWA, for instance, discounts vary by destination, ranging from 5 to 12 percent, according to Scott Boyd, manager of domestic pricing for the carrier.

Groups that are able to plan ahead can take advantage of an additional discount introduced last August, first by American Airlines and matched within a week by most other major carriers. Attendees who buy tickets at least 60 days in advance can take another 5 percent off either their 5 or 10 percent discount. This additional discount, however, is not available to all the groups that qualify for meeting fares. At American, for example, an organization must use the carrier for at least three meetings of 50 or more attendees to earn the bonus 5 percent.

The carriers have another product: zone fares. In some cases, these are available for meetings of 10 or more; in other cases, carriers require at least 20 attendees. In this system, the United States is divided into several zones, and flights between one zone and another (Zone One to Zone Six, for example) all cost the same.

Surfing for Airline Discounts Web users like to brag about the great airline deals they've found online. But these bargains rarely meet the needs of meeting attendess.

"Internet fares are for perishable seats," says American Airlines spokesperson Glenn Orchutt. "They are mostly only good on weekends, and you don't know until Wednesday what's going to be available on Saturday." * D.G

Zone fares have several advantages over the 5 and 10 percent discounts. Since zone fares do not require a Saturday night stay, they work well for mid-week meetings. Also, they can be great buys. At press time, American's most expensive zone fare within the 48 contiguous United States was $501 -- a lot cheaper than a $2,000 full-fare transcontinental ticket.

Finally, zone fares permit meeting-goers to opt out of lottery-like yield-management pricing; this means that planners and attendees can actually prepare and stick to travel budgets. Some carriers have set zone fares as far as two years out.

"That's the beauty of zone fares," says Carol Salcito, Norwalk, Conn.-based president of Management Alternatives, a travel management consultancy. "The travelers are guaranteed they will never have to pay a higher fare. For budgeting, they are an excellent tool."

Fortunately, the airlines don't require planners to be able to figure out whether 5 percent off a restricted ticket, 10 percent off an unrestricted ticket or a flat zone fare is a better deal for each and every attendee flying to a particular meeting. Instead, the carriers will tell the customer which is the best deal at the moment. (Remember, zone fares are available only if the planner negotiates for them.)

Also, airline A will not tell planners that airline B has cheaper seats on the same route. Nor will carrier A contact planners to tell them it has lowered its fares, thereby entitling attendees who have already purchased tickets to a refund. Carriers will grant a refund if contacted by the planner or attendee who has paid a higher price. Travel agents equipped with "seat robotic systems" -- computer programs that seek out low fares and empty seats 24 hours a day -- handle the onerous task of recovering those refunds.

Planners, however, shouldn't just meekly accept the offers of the carriers any more than they would pay rack rates for hotel rooms. The meeting departments of all the major airlines declare they are in the business of negotiating. Most, however, are not particularly eager to haggle over ticket price.

"There's room for some deviation," says Sheila Curtin, director of travel services at McGettigan Partners, a Philadelphia-based meeting management firm, "but that's quite rare."

Some planners say the bargains just aren't what they used to be. "We find it difficult to get deeply discounted fares anymore from any airline," says Al Jackson, CMP, director of travel management, corporate events, for Novato, Calif.-based Fireman's Fund Insurance.

The precise degree of unwillingness varies from airline to airline. At one extreme, United Airlines will "absolutely not" bargain over rates, declares JoAnne Bedrossian Ryan, national manager for association sales. American is a bit less rigid, stating that discounts are "relatively rare," according to spokesperson Glenn Orchutt. TWA is at the opposite extreme: "Fares are always negotiable, depending upon the size of the meeting and the relationship with the airline," says Boyd.

Another concession the airlines are loath to make: waiving the Saturday night stay requirement on restricted fares. "We don't go near that," confesses American's Orchutt. US Airways is willing to open the door a little further on this issue, according to spokesperson David Castelveter. "We will entertain the request," he says. "We look at every group individually."

What's left, if the carriers won't lower their prices or bend their most restrictive rules? "The value-added items are highly negotiable," says McGettigan's Curtin. "Club passes, upgrades, productivity tickets." Consider the latter. The industry standard is one free ticket voucher for each 40 tickets bought by attendees (or by a company for its attendees). A planner who is bringing very desirable business to a carrier can cut that to one voucher for each 35 or 30 meeting tickets.

Virtually as soon as they have finished negotiating a good arrangement with the airlines, planners have to start selling the deal to their attendees -- convincing them to use the preferred carrier, rather than the one that's most convenient for them or the one with which they've got the most frequent flyer miles.

"Unless you produce, the airlines won't do business with you," says David Berenhaus, conventions coordinator for the Arlington, Va.-based National Science Teachers Association. "You have to show productivity."

In many corporations, meeting-goers have little or no choice of carriers. At Towson, Md.-based Black & Decker, travelers must go through a preferred travel agency, says Peter Buchheit, director of travel and meeting services. The few exceptions to the policy are top corporate brass. "Officers of the company can do anything they want," says Buchheit.

Association planners face a tougher sell. This is particularly true of associations whose members are paying their own way and so have an incentive to shop for the lowest fares possible, rather than use a preferred carrier.

"It's hard for the associations," admits travel consultant Salcito, "but can it be done? Yes. The association can set up a central booking number for everyone to use. They can publicize the fares in their brochures." In other words, associations can lead meeting-goers to a fare deal, but they can't make them book it. *

Is This Seat Taken? It's getting more and more difficult for folks paying discounted meeting fares to get the one thing that makes flying coach bearable -- an aisle seat. With full flights, somebody has to squeeze in next to the window or -- ouch -- the despised middle. Often, those people paying the lower fares feel the crunch.

"Everyone wants aisle seats," says Sheila Curtin, director of travel services at McGettigan Corporate Planning Services in Philadelphia. "Seats are a huge problem in the meeting arena, with the airlines pre-blocking more and more for their premium frequent flyers and full-fare passengers."

The airlines make no secret of the fact the travelers who fly 25,000 miles per year with them or buy those high-priced unrestricted tickets can sit wherever they want. United Airlines reserves the front rows of the coach section for frequent flyers, creating a sort of intermediate class between economy and business. The other carriers simply set aside the most popular locations.

Attendees flying to last-minute meetings may well end up combating claustrophobia in the middle seat, but travelers who can buy their tickets far enough in advance should be able to secure a little room to stretch out. "The quicker you can provide us with names and do ticketing," says US Airways spokesperson David Castelveter, "the more choices your attendees will have." * D.G.