NEW YORK -- The push by major U.S. airlines to increase Internet
bookings appears to be driving a wedge between the carriers and
their best customers.
A growing number of corporate customers, who account for about
two-thirds of airline ticket sales, are up in arms because fares
offered on the Web are often unavailable to business travelers. The
airline industry, by its own design, has created a system that
offers heavily discounted seats to leisure travelers at the last
minute, while business travelers, the main customers of most
carriers, are forced to pay hundreds of dollars more per seat.
A bigger concern for corporations is that Internet fares are
enticing travelers to book "out of policy," which in the end means
corporations fail to meet their quarterly market share requirements
and occasionally lose their negotiated discounts.
"They are sabotaging their customers' ability to make their
[market share] hurdles," said Shannon Stewart, vice president of
marketing at Navigant Inc., an Englewood, Colo.-based corporate
The growth of Internet booking has even found critics within the
airline industry. "Anytime an airline comes out with any customer
offer that is so aggressive that it basically circumvents the
arrangements you have with your large customers, it creates
tension," said Pat Terrion, senior vice president of sales for
Terrion, a frequent critic of many airline Internet sites, said
the industry is enticing travelers to book travel at the last
minute, away from their designated agencies and away from their
preferred airline partners. "You have to learn how to promote your
product through the Internet in a way that adds value," said
Terrion. "If you sell purely on price, you lose on price." Despite
his concerns, Terrion believes 30% of BA's direct bookings will be
sold over the Web by 2004.
Since the Internet exploded in the mid-1990s, travel has been
considered one of the most lucrative markets for electronic
commerce. In recent years the major airlines cut commissions for
third-party consumer Web sites, thus preventing outside software
vendors from dominating the distribution of travel.
A more recent trend is for airlines to offer on-line fare sales
that telephone reservationists or travel agents cannot access. For
example, Northwest Airlines and Continental Airlines offer
last-minute weekend travel that can be booked on line for an extra
discount of $20. If the fares are booked by telephone, the traveler
pays the extra $20.
Many Web sites also offer bonus miles to frequent travelers, an
incentive likely to entice road warriors who spend a lot of time on
Ralph Brown, president of R.D. Brown, a travel consulting firm
based in South Elgin, Ill., said business travelers who search the
Web often believe they are being good corporate citizens. "A lot of
management people do feel financially responsible to watch the
company's money," said Brown. He said some employees may be
concerned that a manager will punish them for spending too much for
tickets, or worse, a company will refuse reimbursement if the
ticket is too expensive or booked outside of policy.
Brown said the best defense for companies is to have a
"controlled Internet solution," essentially a bookable Web site for
corporate employees that conforms to policy and places the booking
through the designated agency.
Companies also need to tighten up travel policies. One way is by
designating a single charge card for the entire company.
Brown said the amount of travel dollars lost to the Internet is
usually less than 3% at a given company. He added that smaller
companies, like law firms, are more vulnerable to Web bookings than
large companies with strict oversight.
Cindy Heston, travel manager at Thomson Consumer Electronics, in
Indianapolis, said Web bookings have not been a major threat to her
company's travel policy but have been more of an annoyance.