ORLANDO -- There's no escaping the $5 air transaction fee. The
marketing-savvy online agencies have made sure of it.
So, Robin Schleien, president of Carlson Wagonlit Travel in
North America, said his agency needs to promote a $5 fee in order
to effectively compete. And now CWT has one.
The $5 fee is part of a new, standardized service offering
called i-Select, which was unveiled last week at the Association of
Corporate Travel Executives Global Conference here.
"The Internet travel agencies have had a field day in the
media," Schleien said. "CFOs are reading about [$5 fees], and you
have to respond to it. You have to stand up and speak" to market
conditions.
The $5 fee covers implementation of CWT's self-booking tool, Web
reporting, travel-intelligence service, profile management, policy
management, customer support, electronic pretrip authorization and
an account representative.
Corporations may choose to add other services, such as a VIP
desk, private fare-loading or consultative services, and pay more
money as a result.
A condition of the $5 fee is that CWT retains air commissions
and overrides. If i-Select customers demand to keep those payments,
then the online booking fee increases to $8.
Naturally, offline reservations services cost more. CWT's
i-Select clients pay $15 for domestic telephone bookings and $25
for international telephone bookings. A customer-service call to a
travel consultant costs $10.
The total possible charge on a domestic itinerary is capped at
$25 for online and offline bookings, which means online bookers are
charged for no more than two customer-service calls. International
itineraries are capped at $35.
Schleien admits that many of CWT's current clients --
corporations with huge travel budgets and complex programs --
require customized service and, therefore, wouldn't be a good fit
for i-Select. However, there's a significant market segment looking
for a simple, standardized service, said Schleien, and CWT is
determined to get its share of that segment.
"We're going to prove the model by getting new clients, not by
transferring current ones," Schleien said.
"Knocking on the doors of $1 million to $5 million clients is
not the way to do it, but we plan to bring in 20 to 40 prospects in
a business market. We've already assigned salespeople to this."
CWT is not the first mega-agency to introduce a $5 fee as part
of a standardized service.
American Express has had such an offering for the past two
years.
However, American Express chose not to shine a bright light on
the low-cost service by attaching a brand name to it.
"We didn't publicize [the low-cost service] because it appeals
to a small segment of the market, companies with simple programs,"
said Pam Arway, American Express' executive vice president and
general manager of corporate travel in North America.
"You must have the $5 fee to compete with the online agencies,
but what corporations find in nine out of 10 cases is that for a $5
fee, they're not getting what they need. I'm happy to put a large
client on a $5 [pricing plan], but they don't usually want it."
Nevertheless, CWT's launch of a branded, low-cost service is a
good idea, according to Norm Rose, industry analyst and president
of Travel Tech Consulting.
"The $5 price point has been established, and making that the
focus [of a separate service] is a smart strategy," Rose said.
"Carlson is trying hard to meet the new market dynamics."
One of the leaders in changing market dynamics, Expedia, said
that while CWT is matching its $5 fee, the agency's challenge is
matching Expedia's technology.
"How much can you automate? That's the value. That's the secret
sauce," said Matt Hulett, president of Expedia Corporate Travel.
"We're really good at presenting an environment where travelers can
be successful booking their own trips. You can't force-feed a
solution that doesn't work for the traveler."
In the end, it's all about online adoption, Hulett said, and
Expedia is in a position to get better adoption rates than
traditional agencies because many business travelers have already
used Expedia to buy leisure travel.
"Brand matters," Hulett said.
To contact reporter Jerry Limone, send e-mail to [email protected].