Despite their significant
financial woes and irksome service issues, the legacy
hub-and-spoke airlines still have their fans. Not suprisingly, many
meeting planners and bookers of group travel are among this loyal
faction, and why not? The one thing most major airlines still do
well is provide lots of flight frequencies, lots of available seats
and lots of bonus mileage -- all factors that can make meeting
planning much easier.
In recent years, however, low-cost
carriers as large as Southwest and as small as Spirit have become
more aggressive about securing group business. The results have
been quite mixed, but there’s no denying their three key
advantages: lower fares, lower fares and lower fares. For many
meeting planners, it makes sense to consider low-cost carriers, at
least on a case-by-case basis.
Steve Kinsley, owner of Kinsley &
Associates, a full-service meetings management firm in Littleton,
Colo., finds many of his clients are open-minded about alternative
air options. “For the most part,” he says, “our customers are not
beholden to any airline. They just want the lowest fares.” Kinsley
adds, “I think low-fare carrier service is as good, if not better
in some cases.”
New players
For many low-fare airlines, the
emphasis initially was on serving vacation destin-ations and
attracting leisure bookings. There’s no better example than
JetBlue, which launched by connecting the Northeast and sun spots.
Now the airline has added corporate cities such as Chicago and
Richmond, Va., to its route map and is actively seeking meetings
business.
In March, the beleaguered airline was
reeling from nationally publicized flight delays and cancellations
triggered by winter storms but exacerbated by internal miscues.
Even so, the company chose that time to roll out CompanyBlue
Meetings and offered a juicy incentive of 10 free one-way travel
certificates for every centrally booked group of 15 or more
travelers on the same flight by July 1. The program’s highlights
include holding seats for two weeks without a deposit, allowing
final payment 30 days prior to departure, and awarding planners one
free travel certificate for every 40 travelers booked.
“We’ve made a conscious effort to go
after the business community,” says Chad Meyerson, who was hired in
April 2006 as manager of group sales for JetBlue. He spent a year
interviewing hundreds of corporate clients, developing a database
of customers, attending trade shows and organizing fam trips. He
says the feedback from planners was that some cared about
incentives and perks, while others were focused on “just good
service.”
Meyerson says meeting planners told
JetBlue that airline booking policies are “one of their biggest
headaches.” Therefore, he says, his company modified standard fees
and penalties and allows up to 10 percent of seats to be changed,
as well as unlimited name changes.
In some ways, JetBlue is following the
big players, and in some ways it is leading the smaller contenders.
Other domestic low-cost carriers are providing special incentives
for groups. Among them:
* AirTran Airways.
Based in Orlando, this low-fare airline has developed an extensive
package of tools for meeting planners dubbed EventSavers. It
features 10 percent discounts on most fares, priority advance seat
assignments at time of ticketing, one free change per reservation
and discounted meeting rates through car rental partner Hertz. In
addition, travelers can arrive or depart up to three days before or
after the event (with no minimum stay or Saturday-night stay
required), and certain fare classes include confirmed
business-class upgrades. Meeting planners receive one free
roundtrip coach ticket for every 30 passengers traveling.
Frugal flying: AirTran Airways’
EventSavers plan offers
10 percent discounts.
* ATA Airlines. For
groups of 10 or more, the Indianapolis-based carrier offers
discounts of up to 15 percent and the services of group sales
specialists. Passenger names are not due until 45 days prior to
departure, and ATA offers one free tour-conductor ticket to the
group leader for every 25 paid tickets. An optional deposit payment
plan is available.
* Frontier Airlines.
The threshold is a little higher with this Denver-based carrier:
The meetings and conventions program is available only for groups
of 20 or more. However, discounts of 10 percent off the lowest
available fares are offered, and attendees have a three-day window
for pre- and post-travel. Participants can book online or through
the group sales desk.
Spirit Airlines:
Free name changes and more
* Spirit Airlines.
Groups of 10 or more passengers on the same itinerary are eligible
for the Miramar, Fla.-based airline’s group and meeting fares.
Benefits include free name changes for up to 30 days before
scheduled departure, a dedicated group desk, and discounts for
rental cars and hotels.
Soaring Southwest: The biggest
of the low-cost carriers offers
a variety of meetings perks.
The Southwest
factor
Then, of course, there is the largest
low-cost carrier of them all, Southwest Airlines. The Dallas-based
carrier may not provide premium class or lounges or an
international frequent-flyer program, but it does deliver low fares
and lots and lots of service -- in fact, Southwest is famous for
inundating a market with flight frequencies from morning to
night.
Currently the airline offers a group
rate program, but plans are under way to unveil a new integrated
meetings program by the first quarter of 2008. “It’s a big project
for us,” says Jeremy Tompkins, operations specialist for online
projects, who is overseeing this initiative. “It’s all hands on
deck.”
Tompkins explains that group fares
currently are not available for online ticketless check-in, but the
new program will allow individual travelers to book and make
changes themselves.
For larger groups, Southwest provides
special rates that vary from 5 percent to 10 percent off published
fares; one free ticket is issued for every 40 travelers, and
changes can be made up to 45 days before departure. Southwest has
been providing group rates for 12 years now, and while Tompkins
says the airline has enjoyed a “steady growth” in meetings business
for the past three years, he won’t give the specifics.
Several meeting professionals told
M&C that they are, in fact, interested in doing more
business with Southwest. Others, however, are put off by the
Southwest experience, which is no-frills -- and no assigned seats.
When asked if the low-fare airline has lost meetings business due
to a lack of amenities, Tompkins says, “I would almost like to say
that it’s a non-issue. With our open-seating policy, it’s easy for
groups to sit together or even take over the back of the
airplane.”
Making it work
The advantage some smaller and low-cost
airlines have is that many meeting professionals are frequent
flyers themselves. “Actually, I only use low-fare carriers,” says
Kevin Marsh, rental manager for CMI Communications in Rochester,
N.Y., and president of the Western New York chapter of Meeting
Professionals International. While he predominantly books JetBlue,
he also uses AirTran and says, “I’ve never heard a complaint about
them.”
Even so, it would be unrealistic not to
acknowledge that many large companies use meetings, incentives and
group travel as lucrative bargaining chips to secure corporate
discounts with major airlines. If the corporation has a signed
contract with a legacy carrier, the planner might be locked into
using that airline, if feasible.
For more flexible corporations,
however, there are clear benefits. “I think the smaller companies
can use the low-cost carriers, and it can be advantageous for their
business model,” says Pamela Wynne, vice president of client
relations for EMC Meeting Solutions in Yardley, Pa., and vice
president of communications for MPI’s New Jersey chapter.
Wynne, who uses Southwest more than any
other low-cost carrier, says she doesn’t always advocate low-fare
carriers for larger meeting programs that have strict preferred
supplier partnerships. But, she adds, “Companies that operate using
the lowest-cost business model can take advantage of lower fares. I
use them quite frequently to contain costs.”
On the negative side, Wynne cites
several cons for smaller and low-fare airlines: “Usually the
low-cost carriers have less customer service staff, less
flexibility in offering alternative flights if there are delays or
cancellations, less meal service and less reliable schedules.”
Another concern for business travelers, she says, is the “family
factor.” Asks Wynne, “Ever try to fly Southwest in and out of
Orlando and have a quiet, nondisruptive flight?”
JetBlue: Learning lessons
from last winter’s meltdown
Key drawbacks
For many meeting planners, concerns
over using smaller or low-fare airlines often center on three
issues: reliability, frequency of flights and support. Each of
these issues needs to be addressed before committing to a low-cost
carrier.
* Reliability. How do
low-cost carriers retain that cost advantage? One big factor is
lower overhead, which often means a smaller fleet, fewer crews, and
more limited resources such as check-in counters and gates. When
things run smoothly, these factors go virtually unnoticed. When
complications arise, however, many low-fare airlines don’t have the
resources to consolidate passenger loads or operate additional
flights. JetBlue’s well-publicized service meltdown after the
February ice storm hit its New York gateway is a classic
example.
JetBlue’s Chad Meyerson claims the
lessons from that experience were not lost upon the airline’s
employees. “Everyone in the company needed to learn from this,” he
says. “When it comes to a group, we need to say, ‘OK, how are we
going to handle this?’ We can’t predict the weather, but what we
can do is make sure someone is there.” But he acknowledges that
mistakes were made: “We certainly have had hiccups.”
Still, one Long Island-based meeting
planner, who flies JetBlue for leisure trips, says he’s very
skeptical about recommending the carrier to his company after
February’s service woes: “Every night for a week all you heard
about was JetBlue stranding passengers. There’s no way I would want
to go through that. I can’t afford the headaches.” Would he
reconsider after next winter if JetBlue improves on its reliability
record? “Maybe,” he says.
* Frequency of
flights. “I think clients use low-cost carriers when the
schedules allow it,” says one third-party meeting planner. She
adds, however, that these airlines aren’t always an option. As
planner Steve Kinsley points out, it’s not just about price, but
also about schedule. “Most of the customers will have flight and
time parameters,” he says. “It might knock them out if they don’t
have the frequencies.”
For example, Spirit operates one flight
a day from Boston to Detroit, while Northwest has as many as eight
flights daily. From Atlanta to Orlando, Spirit flies either once or
twice a day; Delta operates 13 flights daily on that route.
On the other hand, even the smallest
carriers often saturate certain routes with flight frequencies.
Spirit operates as many as five flights a day between Detroit and
Fort Lauderdale, a schedule that would make many meeting planners
comfortable. And of course Southwest -- considered a major airline
by the U.S. Department of Transportation -- is known for its
generous flight frequency.
“We’re not naive enough to think we can
serve all meeting planners,” says one employee of a low-cost
carrier. Clearly, the issue of flight frequency needs to be
examined on a case-by-case basis.
* Support. Another key
factor is support. AirTran, ATA, Frontier, JetBlue and Spirit all
provide round-the-clock reservations centers, but none offers 24/7
assistance specifically for meeting planners and/or group bookers.
These help desks are staffed Monday through Friday, and the times
range from 8.5 hours daily (JetBlue) to 9.5 hours (Spirit) to 11
hours (ATA) to 13 hours (AirTran and Frontier). In fact, Frontier
is the only one among the five that provides assistance on Saturday
(from 6 a.m. to 12 p.m., Mountain time), while none offers such
help on Sunday.
Even so, some airlines provide
after-hours voice mail and have the ability to schedule additional
staffing if needed. But even Southwest only has 10.5 hours of
coverage on Monday through Friday for its group reservations
agents; plans are being considered for seven-day coverage when the
ticketless program rolls out next year.
Other caveats
There are other negatives as well.
Although travelers still can earn frequent-flyer mileage (and even
bonuses) on some low-fare airlines, there’s no denying the cachet
of the legacy airlines’ programs. The big guys simply offer more
destinations, more flight frequencies, more travel partners and
more ways to earn mileage. Resistance to flying low-cost carriers
remains high among many travelers for this reason alone.
Yet another factor to consider is that
low-fare airlines offer only one-class service. Some flyers are
firm believers in “class segregation,” says Terri Utecht, president
of Utecht Diversified Event Resource, headquartered in Arvada,
Colo. She refers to the diehard road warriors who’ve grown
accustomed to enjoying their hard-earned upgrades. “First class is
a hard benefit to give up,” she notes.
That said, Utecht claims to be “a huge
Frontier fan” and says, “I try to encourage my clients to use them
as well.” She also says she would consider using JetBlue and has
“not heard one negative” about Southwest.
Corporate business has long been the
legacy airlines’ bread-and-butter, however. So it’s unlikely the
largest airlines will be passive about losing meetings bookings to
start-ups such as JetBlue. For meeting planners, this competition
could produce some benefits. That’s why Meyerson says he has no
illusions about the challenges his company will face in this sector
of the market: “I’d really like to see the meetings desk grow and
deal with the same numbers as our leisure desk. With meeting
planners, we’re dealing with some very savvy people. It’s up to
them to decide.”