Getting beyond the impasse between airlines and the corporate travel community

Imagine trying to complete a jigsaw puzzle, with missing pieces, in the dark. That’s how corporate travel buyers feel currently when trying to access airline products and services.

As carriers seek more modern ways to sell their products and services, the travel management community has found itself playing catch-up, and the relationship has been souring in recent years with carriers moving away and removing content from legacy distribution channels.

The conversation — mostly — comes down to commercial terms, with airlines working on thin margins and trying to reduce distribution costs. Their reaction is to remove some content from legacy systems and/or levy surcharges on content that continues to be booked in those channels.

But the frustration on the travel management side comes down to losing control of travel programs and a lack of appreciation of the value they provide.

That frustration bubbled over at the Institute of Travel Management Autumn Conference this week with airline executives and travel managers from large corporations airing their views during a panel discussion that included three speakers from each side. Conference organizers asked that the travel managers not be identified in news accounts.

With the anniversary of American Airlines’ controversial announcement of a new content strategy in sight, the carrier’s senior director of global sales Kyle Cumbie stressed that the program was built around the traveler and “all the things that come with modern retailing.” Since April, 50% of its indirect volumes comes from channels driven by the new distribution capability (NDC) technology standard. 

“We feel like that’s a pretty positive result, and we expect that through the end of this year and into next that number will only increase,” he said.

The travel buyers on stage said they understand the economics behind the decision but, as one put it, they are “diametrically opposed on the corporate side” when it comes to how airlines are treating travelers as the end customer.”

“It is us, the organization, that is the customer,” the travel manager continued. “Where you are removing content from the channels we use, we don’t really have alternatives right now. Every day my email is blown up by ‘I can find this cheaper if I go direct, I can do this better myself. Why do we have an agency? Why do we have a booking tool? Why do we have you?’ We want to work with you, we need you. Maybe you don’t need us quite as much as you used to, but leisure travel will plateau and maybe drop off and we can’t find a way through together right now.”

Cumbie explained that the strategy is driven by the new reality of where people are traveling and what the carrier’s data is showing, which is that its revenue mix is 35% leisure, 35% blended and 30% corporate travel.

“So if we look at that 30%, corporate and business travel is still very important, but the managed corporate volume is much less than it was, and SME [small- to medium-sized enterprises] is growing significantly more at levels that we have never seen before.”

He also stressed the desire for airlines to move to technology that is 10 years old from systems that are 40 years old “because it inhibits our ability to give the best experience to your travelers.”

One buyer said travel management companies also want the best experience, but it needs to be done in the environment they work in. The buyer compared bringing bookings made out of policy and booking tools back into internal processes and systems to trying to put toothpaste back in a tube.

Most large airlines are now developing new distribution strategies, with Air Canada announcing its diverse approach in April and more recently United announcing its plan to remove some content from legacy channels.

Other airlines in the room described the situation as a “transitional period,” adding that some corporate customers and agency partners are moving to the newer NDC-driven channels but acknowledging that it was not easy.

Matt Raos, senior vice president of global sales for Qatar Airways, said that it had chosen to have its NDC solution through the global distribution systems to avoid “friction in the distribution chain” as well as have it available through aggregators.

“I know it’s disruptive, I know it’s difficult and that not everything is there and even the things that are there don’t look the same,” he said. “I just caution buyers that if you don’t get on board this train, there is probably going to be some content, and good content, that you’ll miss out on.”

British Airways global sales director David Oppenheim said the carrier’s business mix had changed with huge growth in leisure traffic while business traffic is “still meaningfully below what it was.”

He added that while business travel is still very important, the yield gap — the average price paid by leisure traveler versus business traveler — had also been narrowing, meaning that at times giving the same deals and discounts to corporate travelers could make them its “worst business.”

Travel managers urged airlines to look at the relationship more holistically, with one pointing out the “value proposition of what we bring to the table” with hundreds of thousands of travelers worldwide who potentially also tap into leisure travel via their employer.

“To me,” the travel manager added, “it goes both ways, which is why I’m expecting the partnership to be looked at holistically.”

At the end of the day, travel managers said they and the travel management companies they work with just want their voices to be heard.

“We need you to be our voices in your own organizations,” one travel manager told the airline executives. “We need your leadership to understand the pain we are going through because it really does have a massive impact on our programs.”