BTN's annual answer book for business travel managers.
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For the fifth consecutive year, corporate travel managers have named Delta Air Lines their favorite airline. The carrier once again earned the top score in all 10 categories in BTN’s Annual Airline Survey, and it continued to gain ground on its competition. Its total score presided 0.9
points higher, on a five-point scale, than all its competitors. Last year, Delta’s premium over the nearest competitor was 0.7 points.
The carrier also raised its total score slightly year over year, improving in seven of 10 categories. United Airlines also improved its score year over year and moved from fourth to second place. Southwest Airlines and American Airlines—rated second and third, respectively, last year—saw
scores decline this year, but each trailed United by only a few hundredths of a point.
As most lingering aspects of the American/US Airways merger wrapped up this year, including a single operating certificate from the U.S. Federal Aviation Administration and the merger of reservations systems, BTNno longer lists US Airways as a separate carrier. It ranked fifth in 2014.
U.S. airlines have been raking in record profits this year, and that has translated into the capability to invest in network expansion, fleets and amenities. As such, 47.3 percent of the respondent base saw airline customer service improve, an increase of 10 percentage points over last year.
Only 10.5 percent said airline customer service has gotten worse.
Paccar global travel manager Kristinn Jackson outlined the significance of that rising tide across the industry. “It’s really important, when you consider your program, to look for those carriers that can deliver. I’m all for airlines making money, as long as they reinvest it in the product.”
Delta Ups Its Operations Ante
Delta’s sales efforts of late have emphasized its operational success, and buyers in BTN’s survey gave Delta’s quality of customer service, which includes operational performance, the highest score of any airline and any category. Last year, Delta registered 95 days with a 100
percent completion factor, while United and American combined for 10 days.
“In the September quarter, we delivered a record 99.9 percent completion factor, including 40 days with zero cancellations, and our on-time rate improved,” Delta CEO Richard Anderson said during the carrier’s third-quarter earnings call. “In the month of September alone, we canceled only
13 flights out of more than 83,000. Our competitors can’t match it.”
This summer, Delta banked on that reputation by introducing the Operational Performance Commitment, which compensates customers flying under corporate sales agreements should Delta’s controllable on-time and cancellation performance fall below both United’s and American’s. The strategy
outlined how “Delta’s operations reliability in and of itself provides cost savings to a corporation above and beyond the contract savings,” senior vice president of global sales Steve Sear said.
According to one buyer: “The Delta SLA for performance was a breakthrough for our industry. It takes the commodity mindset out and applies the service value.” Another said, “While the level of compensation could be improved, it is still an impressive commitment to their business partners.”
Buyers also praised Delta’s sales team, and the carrier improved its score in all three categories that gauge airlines’ flexibility in negotiations. One buyer noted that Delta was the only carrier to offer a substantial discount even for a nonmandated program that had little Prism data
to back up spending reports. Another noted a “communication channel open for anything” related to requests for amenities. Delta’s reporting portal, part of the Delta Edge suite of services introduced last year, garnered bravos, as well.
“Delta has worked very hard at demonstrating they are willing to work with their corporate customers to achieve a win-win, and they correspondingly exercise flexibility and deliver innovation both within their contract space and in delivering beyond contract value,” a buyer said. “Unlike
some other U.S. carriers, their approach exceeds simply getting bums in seats at the highest possible price.”
Additionally, Delta’s joint ventures with Air France/KLM and Virgin Australia earned top scores.
Buyers did criticize Delta’s Basic Economy fares, however. The carrier introduced the no-frills fares, which preclude both advance seat selection and changes, last year to compete with ultra-low-cost carriers like Spirit Airlines. A buyer said the fares were “not a competitive stance,” as
they compete in certain markets with Southwest, which still allows ticket exchanges.
Looking forward, Delta plans to further develop its Corporate Priority program, in which travelers of corporate clients receive elevated priority in cases of delays, cancellations or oversold situations, vice president of commercial operations Kristen Shovlin said. “We’re putting an
emphasis and protection around prioritizing corporate travelers. We’ve listened to customers and are building on what they want.”
United Gains Ground
Despite internal challenges, United Airlines was the only carrier other than Delta to improve its overall score from 2014, by 0.06 points. It also improved in eight of the 10 categories, declining only in meetings pricing flexibility and customer service quality.
One buyer said, “United continues to provide excellent service and alliance flexibility.” Another noted, “They have certainly shown improvements in their airport services and quality.” Another buyer, however, said the carrier still needs to focus on in-flight challenges, including its
on-time rate and services. “We are looking for more consistency from them.”
Since its merger with Continental in 2010, United has faced operational difficulties, including brief fleet groundings owing to computer glitches, and those continued this year. Additionally, CEO Jeff Smisek resigned this year amid a federal investigation of alleged deals with public officials.
His successor, Oscar Munoz, was sidelined with a heart attack shortly after taking the position but expects to return early next year. Both inside and outside United, the consensus seems to be that Munoz will take the carrier in the right direction. “When [Munoz] came on board, he got everybody focused on
continuous improvement, and we’ve seen that play out in everything we do at United,” senior vice president of worldwide sales Dave Hilfman said. “Every group in the company has been looking under every rock for ways to improve and innovate.”
United’s highest scores came for its distribution and its networks, partnerships and frequencies. The carrier has grown its network—new service to Tel Aviv, China’s Xi’an, and New Zealand’s Auckland, for example—as well as its partnership network, including investment in Azul Brazilian Airlines.
That has allowed United to reach out to a new base of corporate clients, United president of sales for the Americas Jake Cefolia said. “In many ways, we were the victims of our own success, with a high share of a large number of corporate accounts,” he said. “As we’ve been growing our network,
internationally as well as with joint-venture partners, we can seek opportunities that weren’t available in the past.”
United also has worked to better coordinate schedules and service offerings with its JV partners, he said, and the carrier has benefited from a reorganization that moved distribution under sales, he added. Additionally, it has explored ways to include ancillaries in global
distribution systems, becoming the first U.S. carrier to offer its premium economy product through all the major GDSs.
To improve sales flexibility, United developed and implemented a tool to give its field sales team more decision-making authority this year, managing director of worldwide sales resources Karen Catlin said. It enables sales team members to, for example, adjust discount terms within
approved guidelines without having to go back for approval. “But they have pretty wide parameters,” she said. In October, the tool helped cut deal reworking by 20 percent.
While United’s lowest score was in the customer service area, it will continue to improve operations, Cefolia said. Part of that is coming from capital investment, not only in newer aircraft that require less maintenance but also in new ground equipment, including a laser-driven
self-parking system that allows aircraft to park without someone on the ground guiding them, avoiding the need to wait on the taxiway when ramps are cleared after lightning strikes, he said.
The carrier has even changed the way it measures its own performance, no longer considering aircraft that make it to the gate within 15 minutes of schedule to be on time, he said. “Our measure now is zero. We’re not going to give ourselves a 14-minute grace period now,” Cefolia said. “That’s
where our mindset is, and that’s how we schedule people and allocate ground equipment.”
Southwest Falters But Rates High On Value
Although Southwest Airlines’ score dropped 0.19 points year over year, the carrier continues to compete in the price/value equation among buyers. Southwest’s scores decreased year over year in nine of 10 criteria, most significantly in the three categories related to flexibility of
negotiation. Even so, vice president and chief marketing officer Kevin Krone said it had been an “insanely successful year” on the sales side in terms of new account volume. “We think differently than of lot of the airlines operating, and the corporate sales program is no different,” he said. “The
airline is built around things like our value, and we’ve really worked hard on that message: how different we are with things that are included in Southwest.”
Travel buyers’ perception of Southwest’s overall price value slipped this year, but it still outscored both American and United in that area, by about 0.6 points. The airline has continued to buck industry trends by foregoing change fees and fees for two checked bags. On the latter, it became
the last major player standing this year, as JetBlue moved to a tiered-fare system that includes a lowest tier with no baggage allowance. This summer, Southwest president and CEO Gary Kelly reiterated that the airline had no intention of changing that.
Southwest’s sales team and corporate booking tool, Swabiz, prompted praise from one buyer. “Southwest keeps track of our usage through our Swabiz account and contacts us if the rep notices we are traveling more frequently than our previous quarter’s contracted discount rate,” one buyer
said. “The rep proceeds to negotiate even steeper percentage discounts on our behalf with the corporate offices, and we usually receive a better discount each time our rep negotiates for us.”
The one area in which Southwest’s scores improved year over year was networks, partnerships and frequencies. This has been a big year of network growth for Southwest, particularly as the expiration of the Wright Amendment allowed it to add significant service from Dallas Love Field.
Southwest also saw strong business growth in Chicago, Atlanta and Washington, D.C., Krone said. Primarily a domestic carrier, Southwest has grown its international network through a new international hub at Houston’s Hobby Airport. Its international destinations trend toward leisure spots like the
Caribbean and resort cities in Mexico, but that adds value for those who earn frequent-flyer points on business travel, according to Krone.
American Moves To Post-Merger Initiatives
While American’s overall score dipped slightly year over year, its handling of the merger with US Airways earned kudos. “Don’t want to jinx it, but the merger has gone well for us so far,” said one buyer. “[It’s been] seamless from our point of view, which is an improvement over other
mergers. Communications have been timely and informative.”
The carrier’s movement to a single reservations system in October has been trouble free, aided by a drain-down approach that began this summer, in which certain reservations moved to the new system ahead of time. In the first five days after the switchover, American’s on-time performance was a
strong 89.4 percent and its completion factor hit 99.95 percent, American president Scott Kirby said during its third-quarter earnings call.
All corporate contracts are now merged, and all customer-facing features in airports fall under the single American brand, vice president of global sales Derek DeCross said. “The mantra here was integrate, then innovate,” he said. “We wanted to get everything right with the merger, and now
that we’ve pulled that off, we’re focusing more on innovation to get us where we need to be.”
Some of that innovation began this year, though, including a move to round-the-clock sales support for both in-person and online communications. That perhaps aided American’s higher score in client communications on BTN’s survey. Other initiatives have included ongoing
simplification of joint business contracts and the introduction of Flex Funds, which help corporate buyers and agents manage and access fee waivers through the carrier’s SalesLink online platform. That will be completed in the first quarter of 2016, according to DeCross.
In the second half of the year, American plans to introduce a corporate portal that will offer “on-demand, real-time reporting that will be critical data to see how clients are performing versus their contracts, which will help us help them with their travel program,” he said.
And last month, using the International Air Transport Association’s New Distribution Capability standards, American began a pilot to allow agents to book its Preferred and Main Cabin Extra seats through Sabre green screens and Sabre GetThere. The carrier plans to expand that and other
ancillary content to other online booking tools and GDSs next year, DeCross said.
American also is changing the way it manages bookings during irregular operations and schedule changes, he added. Previously, corporate travelers had to call American’s reservations department to make changes. By February, agencies will be able schedule those changes themselves.
BTN’s Airline Survey measures the way corporate travel buyers perceive airline performance. From late August to late October, BTN collected responses from travel manager and buyer members of the BTN Research Council and from a random sample of qualified subscribers of Business
Travel News and Travel
Procurement. BTN received completed surveys from 239 qualified respondents, those whose organizations spent at least $500,000 on airline tickets in 2014. Of those, 10.5 percent represented organizations with United States-booked air volume between $500,000 and $1.9 million, 39.7 percent
between $2 million and $12 million and 49.8 percent $12 million or more.
BTN developed the categories with travel buyers, corporate travel agency managers and airline sales executives. It averaged scores in each category to create an overall score for each carrier, weighing each category equally. Respondents graded only
those airlines with which they negotiated a contract or booked a meaningful amount of business in the past year. Participants who offered no response for a particular category or airline were not included in that category or airline’s average rating. The survey listed the largest domestic airlines as identified
by the U.S. Department of Transportation, excluding regional affiliates of major carriers. Alaska Airlines, Frontier Airlines, JetBlue Airways and Virgin America elicited responses from less than 20 percent of the final survey sample and therefore were excluded from this report. Equation Research hosted the
survey and tabulated the results.
This report originally appeared in the Dec. 14, 2015,
edition of Business Travel News.