How Will Airline Mergers Affect Meetings?

Speculation Varies as to What Changes Mergers Will Bring

United and Continental Airlines legally closed their merger at the beginning of October, several days after Southwest Airlines announced it planned to acquire AirTran Airways. Now, airline and meetings industry observers are trying to figure out how the changes in the flying landscape will affect meetings.

While spokespeople from both United and Continental called questions about meetings programs "premature" at this point, noting that such plans were relatively far down on the carriers' list of priorities, the more significant question might be whether new policies will give meeting professionals a reason to pay attention to group fares at all.

For most planners, "current meeting programs aren't lucrative enough to warrant all the specialized agreements," said Kevin Iwamoto, vice president of enterprise strategy for meetings management technology supplier StarCite. Unless a planner is working with a group of several thousand people, the meager discounts offered often aren't as strong as the corporate fares already negotiated for transient travel. However, added Iwamoto, the mergers offer the opportunity for carriers to rethink their business model with respect to groups.

"It's exactly the kind of marketplace that they should really be focusing on," added Iwamoto. "It's a higher revenue yield that requires a little more flexibility. You would think that they would come up with a meeting fare that has built-in flexibility and is priced slightly higher than the nonrefundable fare, which maybe allows one change."

The other looming question is what effect the reduced competition will have on general fares. "Joint ventures usually push prices up," said Christa Degnan Manning, director of "eXpert insights" and research for American Express. "That's why airlines make them." Iwamoto expects higher prices to be especially noticeable among city pairs where the combined carriers are responsible for more than 65 percent of the traffic.

But not everyone thinks fares will rise. "We haven't observed the Delta/Northwest merger causing increased fares in the marketplace," noted Kari Kesler, senior director, M&E program measurement and consulting, for Carlson Wagonlit Travel. "So we don't expect to see that with other larger mergers, either."

As for Southwest's possible acquisition of AirTran, "Southwest is known for bringing downward pricing pressure to the new markets it enters," said Kesler. "So pricing in those locations could even go down."