Contact: Tanya Andreadis ( [email protected]
)
Op-Ed
Written by Tom Barrett, ACTE Board Member and Purchaser of Corporate
Travel
The Association
of Corporate Travel Executives (ACTE) welcomes the vigorous debate
facing the challenges and changes of the travel industry that
are directly impacting all of our members and most particularly
our members in the airline business. ACTE believes that healthy
debate and exchange will result in change --change that creates
action -- action that results in the sustainability of the airline
industry.
Several weeks
ago, an ad-hoc group (Airfare Focus Group) of ACTE corporate members
joined by teleconference to address the issues of airfares and
the impact on the corporate community. Seeking a constructive
and broad based approach, the Association has sought out industry
experts on pricing to suggest a comprehensive evaluation of the
traditional pricing demand management models and system wide distribution
systems. While this group will continue to work towards a responsible
airfare proposal based on simplification and volume recognition,
it is evident that pricing is but one factor of the dilemma facing
the travel industry today.
ACTE members
recognize the delicate balance between all segments of the travel
industry (i.e. airline, agency, and corporate), the demands of
the corporate and leisure travelers, the goals of the investor
community and the impact on all related industries when one of
these segments is not in balance.
Due to many
factors, the airline industry is out of balance.
In addition
to an inefficient fare structure, many ACTE members believe the
distribution system is in a state of chaos. Revenue sales for
the airlines are generated in several channels or markets, including
leisure, corporate, group and meetings, international. The airline
distribution channels and the level of importance have shifted
many times -- from large airline owned reservation systems and
centers to traditional travel agency to the Internet. While the
current situation may meet the needs of other channel purchasers,
distribution of airline tickets is no longer rational to the corporate
buyer. Internet fares and airline Web sites have muddied the field
of distribution -- and have created a growing conflict between
airlines, agencies, corporate buyers and corporate travelers.
Buying pressure within the corporate environment has altered strategies
and travelers are seeking fares where the airlines have posted
the lowest cost - the definition of business fares is no longer
valid . While the cost of distribution and system capacity seem
to be the primary focus of the airlines' finance officers, the
buyers of corporate travel are wrestling with an inefficient purchasing
structure and dealing daily with confused and even angry corporate
travelers.
The terrorist
attacks on September 11th became a behavior-altering event for
traditional business travelers. Even prior to September 11th,
the delays and service issues were the focus of many debates.
Crowded airplanes and airports, flight delays and cancellations
had left the business traveler weary. Immediately following these
tragic events, business and personal travel plummeted and has
yet to rebound fully. The safety, confidence and efficiencies
of business travel must be restored in a fair, honest and equitable
manner to all constituencies.
Before proposing
any solution, a broader understanding of both historic revenue
and distribution models is needed. Recommended change must take
the best of the past and incorporate new innovative components
to solve today's critical issues. The world has changed - what
was assumed before 2001 may no longer be valid.
Going forward,
we must also consider a much-needed rationalization of airline
fares and marketing programs. The airline industry was facing
changes prior to September 11th when reactionary marketing changes
occurred without consideration to the impact on all buyers. Those
issues have now manifested in the current purchasing confusion.
Granted, some of the confusion is based upon the current economic
turbulence and market intransigence, but some is directly related
to confusing marketing plans from the airlines.
A singular
focus on airfares will not fix the structural issues of the airline
industry and the travel industry as a whole. While ACTE backs
the governmental support of the airlines, many members believe
that a long-term solution can only be found in buyers and sellers
working together to identify and implement solutions to all issues
- fare structures, distribution systems, airline marketing strategies
and security.
ACTE can
be the catalyst for the return to solid, trusting relationships
between corporate buyers, sellers and distributors.
Let's get
balanced together.
