Low-Fare Deals

How smaller carriers are courting the meetings market

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.

AirTran plane flying


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 in air
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.

Southwest plane in air


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 plane


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.”