Business Travel Coalition

ASTA / BTC Media Alert

2010-04-12T10:59:27Z

MEDIA ALERT

Major Travel Agencies and Corporate Travel Departments Seek Partnership With Airlines Over Unbundling, Merchandising, Distribution

**Leaders of Key Companies, Industry Organizations Host Media Call to Discuss Impact on Business, Leisure Travelers**

WHAT
A press conference-call to discuss airline product unbundling and merchandizing and how travel intermediaries and corporate travel managers can support airlines in their unfolding strategies in this area.

CAPSULE
An unprecedented number of corporate travel departments, travel companies and industry groups from around the world are sending a letter this week to major U.S. airlines offering to partner in an effort to maximize traveler uptake and resulting airline revenue growth from ancillary products and services. Learn about their perspectives, concerns and vision for the future of airline product unbundling.

WHEN
Wednesday, April 14 at 2:30pm (ET)

WHO
--Paul Ruden, Senior Vice President, Legal and Industry Affairs, ASTA
--Kevin Mitchell, Chairman, BTC
--Art Sackler, Executive Director, ITSA
--Michelle De Costa, Global Travel Manager, Sapient

HOW
To register for this press conference-call please go to http://bit.ly/aOHx8W (30 seconds)

###

CONTACTS

ASTA || Kristina Rundquist | 703-739-8710 | KRundquist@asta.org

BTC || Kevin Mitchell | 610-341-1850 | mitchell@BusinessTravelCoalition.com

Subscribe to Business Travel Coalition via email by entering your email address below:

BTC (FINAL Reminder) -- TIME-Sensitive Travel Distribution Policy Issue

2010-04-11T18:25:11Z

April 12, 2010

To: Industry Colleagues
From: Kevin Mitchell (BTC)

I ask that you give serious consideration to joining your corporate travel manager colleagues listed below as signatories to an airline CEO letter regarding a wholesale shift of distribution costs to travel management companies and corporate customers. There is no issue of greater strategic importance to airline supply-chain participants and to the future success of corporate managed travel programs. There is an equal number of travel management firms who have signed on as well, but that have not been listed below yet. This is a truly global issue; so no matter what country you are headquartered in, let's pull together now!

If after reviewing the letter below you can support this initiative please authorize us to list you and your organization as a signatory to this most important letter. I would appreciate if you could do this by the close of business on Monday, April 12. Together, we can create a more hopeful future for travel procurement.

+++++

AIRLINE SIGNATORY LETTER

Sun Apr 11 18:25:11 2010

[name]
Chief Executive Officer (AA, CO, DL, UA, US, WN, B6, AS)
[address]

Dear Mr. [ ]:

As corporate travel departments, travel management companies (TMCs), online travel agencies (OTAs) and global distribution systems (GDSs), we write you to offer our partnership in extending your ancillary products and services in a manner that is consistent with consumer interests and that works optimally with de facto travel procurement systems and practices. We wish to support you in your efforts to maximize traveler uptake and resulting revenue growth from ancillary products and services. To that end, we ask you to ensure the full scope of your products is made accessible and transparent to all travelers, regardless of channel choice.

Your airline has shown that it values its corporate customers and respects the requirements of modern procurement programs. Your most valuable customers rely on the services of TMCs; together they have invested significant time and money in technologies that enable efficient shopping, booking, payment and reporting for airline products and services. The prime objectives of managed corporate travel programs have been to enable companies to control expenses and to fulfill agreements with airlines through enforceable travel policies.

Going forward, the success of these managed travel efforts is fundamentally dependent upon travel intermediaries having efficient access to the full range of airline options for any particular trip, and being able to monitor and track the comprehensive final cost of airfares plus related services purchased. To illustrate, in order to transact and subsequently report ancillary fees such as seat upgrades and checked baggage, TMCs, and indeed all travel agents, booking air travel must have the ability to deliver such fees transparently in the shopping/booking process. Importantly, the well-established and proven workflow processes of TMCs that feed into corporate clients’ systems rely almost exclusively upon the airline booking and servicing capabilities of GDSs.

Similarly, the millions of consumers who shop and book travel on OTA sites every month, which collectively account for some 16 percent of all U.S. airlines’ bookings, have encountered an increasingly complex landscape of air travel options to evaluate. The current lack of clarity and accessibility of a la carte products prohibits widespread consumer adoption - a hindrance to achieving the revenue generation objectives that predicated your airline’s implementation of an unbundled pricing strategy in the first place.

Your airline, your distribution partners and your biggest customers have a responsibility to enable travelers to compare both the true costs and benefits of their full scope of air travel options. The only path to near-term, broad availability of your airline’s ancillary products is to develop and deploy merchandising capabilities within the existing technology framework of your distribution system partners and corporate customers.

As those partners and customers, we have developed principles and standards which we ask you to review and commit to through a public statement of support. We are requesting that you help us help you by working cooperatively, diligently and in good faith with TMCs, OTAs, GDSs, and corporate travel managers on the rapid development of industry technical standards to ensure that your unbundled products are easily accessible by all travelers via any GDS in which you participate.

We look forward to hearing from you at your earliest opportunity.

Sincerely,

Fujitsu America, Inc.
Sapient
Oracle
Assurant, Inc.
SAP AG
Wells Fargo & Company N.A.
NetApp
Grant Thornton LLP
HealthCare California
Symantec
University of Texas
Campbell Soup Company
Freudenberg-NOK
Autodesk, Inc.
BB&T
Tognum AG
Nexion
Watlow Electric Manufacturing Company
NetJets Europe, Ltd
Cox Enterprises, Inc.
CSC
Lowe's Companies, Inc.
Dollar Tree
Eaton Corporation
UCB Pharma
The University of British Columbia
SPAA Scottish Passenger Agents Association
Finnish Business Travel Association FBTA
Advantage Focus Partnership
Business Travel Coalition
Stryker Corporation
Tommy Hilfiger
Adidas Group
Brown Jordan International
Carey International
Nordson Corporation
Schaeffler Technologies GmbH & Co. KG
Zetron, Inc.
Cannon Design
The Remington Group Ltd
Crowley Maritime Corporation
Frudenberg-NOK
Medical Whistleblower
United Communications Group (UCG)
Regence BlueShield
CLEANTRAKS, LLC
Comfort Inn
Sterling Jewelers, Inc.
Zimmer, Inc.
Hanesbrands Inc.
FLO Corporation
Goss International
Lumbermens Merchandising Corporation
PAR Travel Tech, Inc.
Provisur Technologies, Inc.
Stephens, Inc.
Westfield Insurance

Authorize us to list you as a signatory to this letter.

---

Subscribe to Business Travel Coalition via email by entering your email address below:

TIME-Sensitive (message from BTC)

2010-04-07T10:59:10Z

April 7, 2010

To:     Corporate Travel Managers
From: Kevin Mitchell (BTC)

I ask that you give serious consideration to joining your colleagues listed below as signatories to the airline CEO letter regarding a wholesale shift of distribution costs to the corporate customer. There is no issue of greater strategic importance to the future success of corporate managed travel programs. There is an equal number of travel management firms who have signed on as well, but that have not been listed below yet.

In late 2009 travel agents and corporate travel managers began informing the American Society of Travel Agents and Business Travel Coalition that American Airlines was exploring with them in meetings a “direct-connect” strategy that would flip the distribution system economic model from one where the airline funds its unbundling, merchandising and selling activities to a “user-pays” model.

In addition to layering on significant new complexities and costs to corporate managed travel programs, a “user-pays” model would result in high-value unbundled and repackaged content being available - for no channel fee - only through American’s direct-connect pipeline and for the airline to otherwise charge for the merchandizing and sale of its content through alternative channels. In other words, virtually all merchandising and distribution costs would be shifted to TMCs, and ultimately onto the backs of the airline’s best customers. Managed travel efficiencies would be substantially degraded.

Of course, in recent years numerous airlines have attempted to shift costs and other distribution burdens to the customer, but a unified supply chain has repeatedly and successfully pushed back by reminding airlines that it is agencies’ corporate customers who keep the lights on at airlines’ headquarters and that their managed travel needs must be respected. Unfortunately, we are faced with another one of these challenges to the investments of significant time and money in technologies that enable TMCs and corporate travel departments to shop for, purchase and report on airline products and services efficiently. (See background paper here .)

I invite you to consider joining dozens of TMCs and corporate travel managers in sending a signatory letter to all major U.S. airline CEOs encouraging them to work cooperatively and in good faith with GDSs, TMCs and corporate travel managers on the rapid development of industry standards that safeguard all participants’ interests. If after reviewing the letter below you can support this initiative please authorize us to list you and your organization as a signatory to this most important letter. I would appreciate if you could do this by the close of business on Friday, April 9. Together, we can create a more hopeful future for travel procurement.

+++++

AIRLINE SIGNATORY LETTER

Wed Apr 7 10:59:10 2010

[name]
Chief Executive Officer (AA, CO, DL, UA, US, WN, B6, AS)
[address]

Dear Mr. [                ]:

As corporate travel departments, travel management companies (TMCs), online travel agencies (OTAs) and global distribution systems (GDSs), we write you to offer our partnership in extending your ancillary products and services in a manner that is consistent with consumer interests and that works optimally with de facto travel procurement systems and practices. We wish to support you in your efforts to maximize traveler uptake and resulting revenue growth from ancillary products and services. To that end, we ask you to ensure the full scope of your products is made accessible and transparent to all travelers, regardless of channel choice.

Your airline has shown that it values its corporate customers and respects the requirements of modern procurement programs. Your most valuable customers rely on the services of TMCs; together they have invested significant time and money in technologies that enable efficient shopping, booking, payment and reporting for airline products and services. The prime objectives of managed corporate travel programs have been to enable companies to control expenses and to fulfill agreements with airlines through enforceable travel policies.

Going forward, the success of these managed travel efforts is fundamentally dependent upon travel intermediaries having efficient access to the full range of airline options for any particular trip, and being able to monitor and track the comprehensive final cost of airfares plus related services purchased. To illustrate, in order to transact and subsequently report ancillary fees such as seat upgrades and checked baggage, TMCs, and indeed all travel agents, booking air travel must have the ability to deliver such fees transparently in the shopping/booking process. Importantly, the well-established and proven workflow processes of TMCs that feed into corporate clients’ systems rely almost exclusively upon the airline booking and servicing capabilities of GDSs.

Similarly, the millions of consumers who shop and book travel on OTA sites every month, which collectively account for some 16 percent of all U.S. airlines’ bookings, have encountered an increasingly complex landscape of air travel options to evaluate. The current lack of clarity and accessibility of a la carte products prohibits widespread consumer adoption - a hindrance to achieving the revenue generation objectives that predicated your airline’s implementation of an unbundled pricing strategy in the first place.

Your airline, your distribution partners and your biggest customers have a responsibility to enable travelers to compare both the true costs and benefits of their full scope of air travel options. The only path to near-term, broad availability of your airline’s ancillary products is to develop and deploy merchandising capabilities within the existing technology framework of your distribution system partners and corporate customers.

As those partners and customers, we have developed principles and standards which we ask you to review and commit to through a public statement of support. We are requesting that you help us help you by working cooperatively, diligently and in good faith with TMCs, OTAs, GDSs, and corporate travel managers on the rapid development of industry technical standards to ensure that your unbundled products are easily accessible by all travelers via any GDS in which you participate.

We look forward to hearing from you at your earliest opportunity.

Sincerely,

Oracle
Adidas Group
Wells Fargo & Company N.A.
Fujitsu America, Inc.
Dollar Tree
Grant Thornton LLP
Cox Enterprises, Inc.
University of Texas
Lowe's Companies, Inc.
Sapient
UCB Pharma
Tommy Hilfiger
BB&T
The University of British Columbia
Sterling Jewelers Inc
Zimmer Inc.
Lowe's Companies, Inc.
Hanesbrands Inc.
Stryker Corporation
Interactive Travel Services Association
Sterling Jewelers Inc.
Designs by Strawberry, Inc.
Stephens Inc.
FLO Corporation
American Society Of Travel Agents
Provisur Technologies, Inc.
Westfield Insurance
Goss International
Lumbermens Merchandising Corporation
MulvannyG2 Architecture
CSC
Eaton Corporation
Business Travel Coalition

---

Subscribe to Business Travel Coalition via email by entering your email address below:

Threat to Corporate Managed Travel Programs

2010-03-23T08:57:51Z

March 23, 2010

Dear Industry Colleagues,

In February, Business Travel Coalition provided an information package for your input regarding reports that American Airlines was considering a “direct-connect” distribution strategy that would add significant new complexities and costs to corporate managed travel programs. Importantly, a “user-pays” model, which this represents, would result in high-value unbundled and repackaged content being available - for no channel fee - only through American’s direct-connect pipeline and for the airline to otherwise charge for the merchandizing and sale of its content through alternative channels. In other words, virtually all merchandising and distribution costs would be shifted to TMCs, and ultimately onto the backs of the airline’s best customers. Managed travel efficiencies would be substantially degraded.

Of course, in recent years numerous airlines have attempted to shift costs and other distribution burdens to the customer, but a unified supply chain has repeatedly and successfully pushed back by reminding airlines that it is the agency corporate customer who keeps the lights on at airlines’ headquarters and that their managed travel needs must be respected. Unfortunately, we are faced with another one of these challenges to the investments of significant time and money in technologies that enable TMCs and corporate travel departments to shop for, purchase and report on airline products and services efficiently..

I invite you to consider joining your industry colleagues below in sending a signatory letter to all major U.S. airline CEOs encouraging them to work cooperatively and in good faith with GDSs, TMCs and corporate travel buyers on the rapid development of industry standards that safeguard all participants’ interests. If after reviewing the letter below you can support this initiative please authorize us to list you and your organization as a signatory to this most important letter. I would appreciate if you could do this by the close of business on Wednesday, March 24. Together, we can create a more hopeful future for travel procurement.

Please feel free to contact me with any questions, concerns or ideas.

Kind regards,

Kevin Mitchell
Chairman, Business Travel Coalition
mitchell@BusinessTravelCoalition.com
610.999.9247

+++++

AIRLINE SIGNATORY LETTER

[name]
Chief Executive Officer
(AA, CO, DL, UA, US, WN, B6, AS) (NOTE: The AA letter will be only slightly modified.)
[Address]

Re: Flight Path to Continued Success with Corporate Managed Travel

Dear Mr. [                ]:

We write you as corporate travel departments and the ticket agents that service us on a matter of utmost importance. We ask for your commitment to roll out your unbundling strategies in a manner that works optimally with our existing travel procurement systems and practices.

Your airline has shown that it respects the needs of corporate customers and the requirements of modern procurement programs. You appreciate that your best customers rely on the services of ticket agents and travel management companies (TMCs) that have invested, along with their corporate clients, significant time and money in technologies to implement tools that enable efficient shopping, purchasing and reporting on airline products and services. The prime objectives of corporate managed travel programs have been to enable companies to control expenses and fulfill agreements with airlines through enforceable travel policies.

The success of these efforts going forward is absolutely dependent upon TMCs having efficient access to the full range of airline options for any particular trip and, crucially, being able to monitor and track the final “all-in” price of the air travel and related services purchased. The well-established and proven workflow processes of TMCs that feed corporate technologies and systems rely almost exclusively upon the airline booking and servicing capabilities of GDSs.

Examples of unbundled airline products that are proving to be difficult for corporate travel managers and ticket agents to manage are fees for special seating and for checked baggage. TMCs booking air travel must have the ability to deliver such fees transparently in the shopping/booking process, to efficiently transact those services (i.e. booking and collection) and, especially for corporate travel managers, to report on those services purchased.

Only if merchandizing capabilities are developed and deployed in ways that respect and accommodate the technology solutions and procurement practices of your corporate customers can both you and we win. This is the only path to rapid and broad availability of your airline’s unbundled products that ensures they are conveniently accessible by travelers most likely to buy them. It is very clear that one-off, untested models for airline merchandizing, adopted one airline at a time, would create a crazy-quilt procurement model that would hurt corporate purchasers and the TMCs that support them by introducing major new costs and enormous inefficiencies.

We are requesting that you help us help you by publicly committing that your airline will work cooperatively, diligently and in good faith with TMCs, GDSs and corporate travel buyers on the rapid development of industry technical standards to ensure that your unbundled products are easily consumable by TMC customers via any GDS in which you participate. An unequivocal show of support by your airline for its corporate customers on this important issue would be the best flight path for your continued and long-term success with travel agents and corporate travel buyers. We are asking you to publicly support the attached Principles and Standards that were developed by your business partners and corporate customers.

We look forward to hearing from you at your earliest opportunity.

Sincerely,

CSC
Dollar Tree
Eaton Corporation
Fujitsu America, Inc.
HealthCare California
MulvannyG2 Architecture
Oracle
Wells Fargo & Company N.A.
Business Travel Coalition

*** Authorize your participation here. ***

Attachment

Airline Product Unbundling Principles & Standards

PRINCIPLE #1
Airline product unbundling initiatives should assure full consumer awareness and choice.

Standard: Airlines should ensure that all airfares, along with unbundled products and their associated costs, as well as any new types of bundled offerings with included components, be made available through industry distribution providers in which the airline participates in a manner that enables transparent, easy-to-understand and comparative displays along with offerings from other airlines, so as not to prevent consumers from having complete and accurate information at an early stage of the shopping and booking process.

PRINCIPLE #2
Airline unbundling initiatives should reinforce and not undercut the value of TMCs’ or corporations’ contracts with those airlines

Standard: Airlines should not alter mutually agreed contractual principles in terms of discounts, commissions or other negotiated benefits based on the TMC’s or corporation’s use of any particular distribution channel so long as that industry distribution provider is one in which an airline participates to sell its products and services.

PRINCIPLE #3
Airline should make available their unbundling initiatives in a manner that does not discriminate against a TMC or corporation based on a TMC’s or corporation’s choice of reservations or fulfillment processes that best meet its needs.

Standard: Airlines should not withhold content or otherwise discriminate against TMCs or corporations with respect to access to airfares or discounts, including unbundled products and services or new types of bundles offerings, based upon the TMC’s or corporation’s choice to obtain such access through any industry distribution provider in which the airline participates.

PRINCIPLE #4
Airline unbundling initiatives should be made available in a manner that increases or at least maintains the efficiencies of the prevailing travel procurement processes utilized by TMCs or corporations.

Standard: Airlines should commit at the CEO level to work cooperatively, diligently and in good faith with distribution system providers, travel management companies and corporate travel managers to develop solutions to address existing and potential new challenges related to efficient procurement (from shopping to booking to consumption to reporting) of airline ancillary items and product bundles - including cooperation in development of and adherence to industry-wide technical solutions.

PRINCIPLE #5
Airline unbundling initiatives should avoid economic models that create a classic “free-rider(1)” problem wherein an airline has no incentive to use merchandizing and distribution services efficiently or economically because corporations shoulder the cost.

Standard: Airlines that choose to introduce new merchandizing initiatives in order to increase revenue should be responsible for the costs of making those offerings available to corporations that buy those services, and to the TMCs upon whose services those corporations rely - and upon whom airlines rely to sell and service their products.

(1) <<MORE ABOUT FREE RIDER>>
If airlines get GDS services for free, then economists will tell you that you have created a classic free-rider problem in which the user of the services has no incentive to do so efficiently or economically because someone else bears the freight. The concept is simple. Anyone who consumes a service that is paid for by someone else has the inherent incentive to over-indulge. Airlines themselves recognize this in their business model, which is why they assess a hefty service fee every time consumers using all but the highest priced tickets make a change.

Examples of how an airline might “over-indulge” in GDS services if the tab is paid for by corporations could be helpful. Two examples:

a. Today, airlines have a disincentive to make very frequent schedule changes because each time they do, they generate a cancel and a rebook in the GDS, both of which result in an added charge to the airline as both transactions drive added DP costs in the GDS – as well as added costs for the travel agency who must notify the client. If GDS participation is free to the airline, why would airlines not engage in more schedule change churn to respond to “maximize” fleet utilization?

b. More globally, an airline that knows the corporation pays the GDS bill will have no disincentive to demand from the GDS added functionality the carrier may want – like more ability to merchandise and sell unbundled products to corporations, like pre-reserved or special seating for a fee, often in an ad hoc non-standardized way, because for the airline, “price is no object.”

Subscribe to Business Travel Coalition via email by entering your email address below:

IMPORTANT Business Travel Coalition Message

2010-03-18T13:21:27Z

March 18, 2010

Dear Industry Colleagues,

In February, Business Travel Coalition provided an information package for your input regarding reports that American Airlines was considering a “direct-connect” distribution strategy that would add significant new complexities and costs to corporate managed travel programs. Importantly, a “user-pays” model, which this represents, would result in high-value unbundled and repackaged content being available - for no channel fee - only through American’s direct-connect pipeline and for the airline to otherwise charge for the merchandizing and sale of its content through alternative channels. In other words, virtually all merchandising and distribution costs would be shifted to TMCs, and ultimately onto the backs of the airline’s best customers. Managed travel efficiencies would be substantially degraded.

Of course, in recent years numerous airlines have attempted to shift costs and other distribution burdens to the customer, but a unified supply chain has repeatedly and successfully pushed back by reminding airlines that it is the agency corporate customer who keeps the lights on at airlines’ headquarters and that their managed travel needs must be respected. Unfortunately, we are faced with another one of these challenges to the investments of significant time and money in technologies that enable TMCs and corporate travel departments to shop for, purchase and report on airline products and services efficiently..

I invite you to consider joining dozens of TMCs and corporate travel buyers in sending a signatory letter to all major U.S. airline CEOs encouraging them to work cooperatively and in good faith with GDSs, TMCs and corporate travel buyers on the rapid development of industry standards that safeguard all participants’ interests. If after reviewing the letter below you can support this initiative please authorize us to list you and your organization as a signatory to this most important letter. I would appreciate if you could do this by the close of business on Wednesday, March 24. Together, we can create a more hopeful future for travel procurement.

Please feel free to contact me with any questions, concerns or ideas.

Kind regards,

Kevin Mitchell
Chairman, Business Travel Coalition
mitchell@BusinessTravelCoalition.com
610.999.9247

+++++

AIRLINE SIGNATORY LETTER

[name]
Chief Executive Officer
(AA, CO, DL, UA, US, WN, B6, AS) (NOTE: The AA letter will be only slightly modified.)
[Address]

Re: Flight Path to Continued Success with Corporate Managed Travel

Dear Mr. [                ]:

We write you as corporate travel departments and the ticket agents that service us on a matter of utmost importance. We ask for your commitment to roll out your unbundling strategies in a manner that works optimally with our existing travel procurement systems and practices.

Your airline has shown that it respects the needs of corporate customers and the requirements of modern procurement programs. You appreciate that your best customers rely on the services of ticket agents and travel management companies (TMCs) that have invested, along with their corporate clients, significant time and money in technologies to implement tools that enable efficient shopping, purchasing and reporting on airline products and services. The prime objectives of corporate managed travel programs have been to enable companies to control expenses and fulfill agreements with airlines through enforceable travel policies.

The success of these efforts going forward is absolutely dependent upon TMCs having efficient access to the full range of airline options for any particular trip and, crucially, being able to monitor and track the final “all-in” price of the air travel and related services purchased. The well-established and proven workflow processes of TMCs that feed corporate technologies and systems rely almost exclusively upon the airline booking and servicing capabilities of GDSs.

Examples of unbundled airline products that are proving to be difficult for corporate travel managers and ticket agents to manage are fees for special seating and for checked baggage. TMCs booking air travel must have the ability to deliver such fees transparently in the shopping/booking process, to efficiently transact those services (i.e. booking and collection) and, especially for corporate travel managers, to report on those services purchased.

Only if merchandizing capabilities are developed and deployed in ways that respect and accommodate the technology solutions and procurement practices of your corporate customers can both you and we win. This is the only path to rapid and broad availability of your airline’s unbundled products that ensures they are conveniently accessible by travelers most likely to buy them. It is very clear that one-off, untested models for airline merchandizing, adopted one airline at a time, would create a crazy-quilt procurement model that would hurt corporate purchasers and the TMCs that support them by introducing major new costs and enormous inefficiencies.

We are requesting that you help us help you by publicly committing that your airline will work cooperatively, diligently and in good faith with TMCs, GDSs and corporate travel buyers on the rapid development of industry technical standards to ensure that your unbundled products are easily consumable by TMC customers via any GDS in which you participate. An unequivocal show of support by your airline for its corporate customers on this important issue would be the best flight path for your continued and long-term success with travel agents and corporate travel buyers. We are asking you to publicly support the attached Principles and Standards that were developed by your business partners and corporate customers.

We look forward to hearing from you at your earliest opportunity.

Sincerely,

[signatory]
[signatory]

*** Authorize your participation here. ***

Attachment

Airline Product Unbundling Principles & Standards

PRINCIPLE #1
Airline product unbundling initiatives should assure full consumer awareness and choice.

Standard: Airlines should ensure that all airfares, along with unbundled products and their associated costs, as well as any new types of bundled offerings with included components, be made available through industry distribution providers in which the airline participates in a manner that enables transparent, easy-to-understand and comparative displays along with offerings from other airlines, so as not to prevent consumers from having complete and accurate information at an early stage of the shopping and booking process.

PRINCIPLE #2
Airline unbundling initiatives should reinforce and not undercut the value of TMCs’ or corporations’ contracts with those airlines

Standard: Airlines should not alter mutually agreed contractual principles in terms of discounts, commissions or other negotiated benefits based on the TMC’s or corporation’s use of any particular distribution channel so long as that industry distribution provider is one in which an airline participates to sell its products and services.

PRINCIPLE #3
Airline should make available their unbundling initiatives in a manner that does not discriminate against a TMC or corporation based on a TMC’s or corporation’s choice of reservations or fulfillment processes that best meet its needs.

Standard: Airlines should not withhold content or otherwise discriminate against TMCs or corporations with respect to access to airfares or discounts, including unbundled products and services or new types of bundles offerings, based upon the TMC’s or corporation’s choice to obtain such access through any industry distribution provider in which the airline participates.

PRINCIPLE #4
Airline unbundling initiatives should be made available in a manner that increases or at least maintains the efficiencies of the prevailing travel procurement processes utilized by TMCs or corporations.

Standard: Airlines should commit at the CEO level to work cooperatively, diligently and in good faith with distribution system providers, travel management companies and corporate travel managers to develop solutions to address existing and potential new challenges related to efficient procurement (from shopping to booking to consumption to reporting) of airline ancillary items and product bundles - including cooperation in development of and adherence to industry-wide technical solutions.

PRINCIPLE #5
Airline unbundling initiatives should avoid economic models that create a classic “free-rider(1)” problem wherein an airline has no incentive to use merchandizing and distribution services efficiently or economically because corporations shoulder the cost.

Standard: Airlines that choose to introduce new merchandizing initiatives in order to increase revenue should be responsible for the costs of making those offerings available to corporations that buy those services, and to the TMCs upon whose services those corporations rely - and upon whom airlines rely to sell and service their products.

(1) <<MORE ABOUT FREE RIDER>>
If airlines get GDS services for free, then economists will tell you that you have created a classic free-rider problem in which the user of the services has no incentive to do so efficiently or economically because someone else bears the freight. The concept is simple. Anyone who consumes a service that is paid for by someone else has the inherent incentive to over-indulge. Airlines themselves recognize this in their business model, which is why they assess a hefty service fee every time consumers using all but the highest priced tickets make a change.

Examples of how an airline might “over-indulge” in GDS services if the tab is paid for by corporations could be helpful. Two examples:

a. Today, airlines have a disincentive to make very frequent schedule changes because each time they do, they generate a cancel and a rebook in the GDS, both of which result in an added charge to the airline as both transactions drive added DP costs in the GDS – as well as added costs for the travel agency who must notify the client. If GDS participation is free to the airline, why would airlines not engage in more schedule change churn to respond to “maximize” fleet utilization?

b. More globally, an airline that knows the corporation pays the GDS bill will have no disincentive to demand from the GDS added functionality the carrier may want – like more ability to merchandise and sell unbundled products to corporations, like pre-reserved or special seating for a fee, often in an ad hoc non-standardized way, because for the airline, “price is no object.”

Subscribe to Business Travel Coalition via email by entering your email address below:

Business Travel Coalition Message (IMPORTANT)

2010-02-26T09:18:04Z

February 26, 2010

PERSONAL & CONFIDENTIAL

Dear Travel Industry Colleague,

I write to seek your participation in resolving an emerging problem of strategic importance to your organization. Recently, there have been troubling reports that American Airlines (AA) is exploring a “direct-connect” strategy that would flip, at your expense, the distribution system economic model from one where the airline funds its unbundling, merchandising and selling activities to a “user-pays” model.

The major consequence of such a model would be to make high-value content that you need available only through AA’s direct-connect pipeline, or alternatively, for AA to otherwise charge for the merchandizing and sale of its content through the distribution channels you prefer. It’s time for concerned travel managers and travel management companies to get educated about what’s at stake and to make their preferences clear to the airline industry.

As we understand the AA user-pays program, airline customers, through higher service fees imposed on them when their travel is managed outside of aa.com, would directly pay for AA’s distribution activities. Many consumers facing higher service fees, would migrate to aa.com where there is no comparison shopping. Corporate travel managers would scramble to contain costs as their efficient managed travel systems and processes will have been undermined.

Corporate travel departments would likewise face runaway costs that they cannot control because AA, as the initiator of merchandizing and distribution services, would have no incentive to do so efficiently or economically because corporations would shoulder the cost. If other airlines were not to appreciate the anti-consumer impact of AA’s plan, they would likely follow.

On January 29 we sent a letter to AA chief executive Gerard Arpey seeking answers to questions of concern raised by travel agents and corporate travel managers. American declined to directly address the questions. Consequently, the American Society of Travel Agents and Business Travel Coalition are now taking the next step to inform the industry in detail of the problems caused by a user-pays model and to build consensus around how to evolve the distribution system model in a way that is equitable and efficient for all participants.

For your perusal and input we have developed an Issue Backgrounder as well as a draft-set of travel distribution Principles & Standards that, once finalized, we will use to seek adoption by all airlines that value and respect their business partners. (We are seeking early airline input on these principles as well.) Your feedback on this issue and these documents would be greatly valued. Please feel free to provide your perspective in an email or via a phone call. Feedback would be appreciated by close of business on Wednesday, March 3.

Thank you in advance for considering this request.

Sincerely,

Kevin Mitchell
Chairman
Business Travel Coalition
mitchell@BusinessTravelCoalition.com
610-999.9247

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EU Aviation Stakeholder Summit Signatory Letter (BTC Request)

2009-11-28T10:26:27Z

Dear Travel Industry Colleague,

As you may have read recently in the news, the Association of European Airlines (AEA) is calling on the European Commission to organize a Stakeholder Summit regarding the crisis gripping the European commercial aviation industry. That is an excellent idea, provided all stakeholders have a seat at the table.

BTC was asked to address a similarly focused U.S. Department of Transportation Stakeholder Forum on 12 November. We work with European travel organizations and with Directorates-General TREN, COMP and SANCO on a variety of issues and will be transmitting the letter pasted in below to Transport Commissioner Antonio Tajani on Wednesday, 2 December.

If you would like to be included as a signatory to this letter, please so indicate at http://surveymonkey.twi.bz/n by the close of business on Tuesday, 1 December.

Kind regards,

Kevin Mitchell
Chairman, Business Travel Coalition

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SIGNATORY LETTER

2 December 2009

Mr Antonio Tajani
European Commissioner for Transport
B-1049 Brussels

Dear Commissioner Tajani,

We travel industry representatives write to express our deep concerns about the perilous financial state of the European airline industry and the loss of jobs every day and to urge you to support a Stakeholder Summit in Brussels at the earliest possible opportunity. All prospects to ease current and proposed regulatory burdens and to increase efficiency for European airlines must be reviewed with the greatest sense of urgency by the Commission and airline industry stakeholders.

The crisis gripping the airline industry is without precedent in the history of commercial aviation. It comes at a time when the health of regional economies is inextricably linked to a financially viable air transportation system, for example, to move just-in-time manufacturing parts, or to ensure mid-size European communities have efficient access to important European and global business centers. The airline industry has become the one industry that virtually every other industry has come to depend upon to service its own customers and grow its businesses. A socially and ecologically sustainable civil aviation industry should be an important goal for Europe.

In recognition of the airline industry crisis, the U.S. Department of Transportation on 12 November conducted a one-day stakeholder forum and is now forming a Federal Advisory Committee on the Future of Aviation to identify threshold-problems and to build stakeholder-consensus around solutions and action. We believe stakeholders in North America and Europe would benefit if Washington and Brussels conducted parallel problem-solving processes as airline alliances, among other interlinked commercial aviation elements, have necessitated a harmonized approach to regulatory regimes. What’s more, such a corresponding process would provide the opportunity for the exchange of best practices with respect to including all stakeholders’ interests in smart air transportation policy development and regulatory oversight.

We believe a productive Stakeholder Summit should include a corporate travel manager group, a consumer group, a travel agency association, global distribution system representatives, labor, no-frills airlines, major network airlines, representatives from mid-size and large airports and economists. Its objectives should be to reduce current difficulties for all aviation sector stakeholders, work on solutions, increase performance, preserve and create quality jobs and secure social rights for employees. In order to establish a level-playing field, the regulation of the labor market is needed and the harmonization of the highest working conditions is required.

We hope that you will urgently support the convening of a Stakeholder Summit so that we can stabilize the business and help expedite a return to growth and services to an industry that is an economic fulcrum across all our economies.

Sincerely,

[signatory]
[signatory]
[signatory]

Copy:

Mr José Manuel Durão Barroso, President, European Commission
Ms Meglena Kuneva, Commissioner for Consumers
Ms Neelie Kroes, Commissioner for Competition Policy
Mr Stavros Dimas, Commissioner on the Environment
Mr Günter Verheugen, Commissioner for Enterprise and Industry
Mr Jo Leinen, Chairman of the EP Committee on the Environment, Public Health and Food Safety
Mr Brian Simpson, Chairman of the EP Transport Committee
Mr Siim Kallas, Commissioner for Administrative Affairs, Audit and Anti-Fraud

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Signatory Letter Transmitted to Transportation Secretary LaHood

2009-11-19T07:11:36Z

November 19, 2009

The Honorable Ray LaHood
Secretary
U.S. Department of Transportation
1200 New Jersey Ave. SE
Washington, DC 20590

Dear Secretary LaHood,

We the undersigned applaud your most important leadership in forming the Federal Advisory Committee on the Future of Aviation. Never has the future of U.S. commercial aviation been so threatened, or has there been so much at stake. However, the initiative risks failure if it proceeds, as many previous commissions have, in the absence of well-debated and agreed upon objectives for U.S. national transportation and air transportation policies.

You asked for suggestions regarding the top five problems facing the industry. The über problem from which virtually every other major industry difficulty subsequently flows is that the U.S. has never had a coherent national air transportation policy that has been updated over time. What’s more, one cannot select the right problems to address, or adequately evaluate solutions, unless policy objectives are set forth in a clear manner.

When initiatives such as the 1993 Baliles Commission fail to produce desired changes, some voice frustration, but fail to ask why. Recommendations are transmitted to Congress where a policy-framework to evaluate and support adoption of proposals is virtually nonexistent. What’s more, vested interests, including some represented on these commissions, work to ensure that nothing comes of recommendations.

As noted during the forum last week, 16 years after the Baliles Commission most problems facing the airline industry remain. We now run the risk of a more damaging repeat of this outcome though. If in 16 years, in 2025, the destination for aviation is essentially 1993 with the same unsolved problems that Governor Baliles wrestled with, then we will have a disaster on our hands.

We deregulated 31 years ago but never had an adequate debate regarding public policy objectives and desired outcomes. Instead of a coherent air transportation policy we have a patchwork of legislative and regulatory prescriptions that are a consequence of lurching from crisis to crisis.

We need to develop public-policy objectives and a framework for effective analysis and oversight such that it does not take a tragedy outside Buffalo to recognize a flawed regional airline business model. Or, to identify that there is significant safety and security risk when U.S. aircraft are sent to third-world countries to be overhauled by workers whose backgrounds cannot be verified, who are not tested for drugs and alcohol, who rely on pictures in manufacturers’ manuals to perform repairs because they cannot read detailed English instructions and whose oversight by FAA and TSA is uneven, or non-existent.

We urge you Secretary LaHood to allocate the first 2 months of the committee’s efforts to debating and building consensus around transportation and air transportation public-policy objectives. Importantly, we recommend that the process be transparent and open to the press, as the Baliles Commission was. Let’s take advantage of the crisis gripping the airline industry to forge a future that truly strengthens U.S. travel and tourism as well as our economy, workforce, way of life and position in international aviation.

Sincerely,

American Society of Travel Agents
International Brotherhood of Teamsters
Business Travel Coalition
Aerospace States Association
Consumer Travel Alliance
Travel Management Alliance
International Association of Exhibitions and Events
Association of Retail Travel Agents
Advanced Travel Partners
The Travel Team, Inc.
Austin Travel
Balboa Travel Management
Eaton Corporation
HealthCare California
Thermo Fisher Scientific
Lowe's Companies, Inc.
Sapient
Trondent Development Corp.
Zetron, Inc.
Quad City International Airport
Northern Kentucky C.V.B.
AAA Tidewater Virginia
Aladdin Travel & Meeting Planners
Aviation Innovation, LLC
Blake Associates
Caldwell Travel, Inc.
Chase & Associates
CI Travel
Clear Sky Associates
Consulting Strategies
Cresta World Travel Ltd
El Sol Travel
FLO Corporation
Fox World Travel

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Optimizing NextGen Investment

2009-11-03T11:14:11Z

PRESS STATEMENT

For Immediate Release

Optimizing NextGen Investment

Airline Passenger-Rights Legislation Can Help

Radnor, PA, November 3, 2009--Business Travel Coalition (BTC) today issued the following statement in response to U.S. Department of Transportation (DOT) Inspector General’s October 28, 2009 Congressional testimony regarding concerns over achieving mid-term goals for the Next Generation Air Transportation System (NextGen) to address airport congestion problems currently impacting airports, airlines and customers, particularly in the New York City (NYC) area.

From the IG’s written testimony: “NextGen is an important initiative to enhance capacity, reduce delays, and fundamentally change the way air traffic is managed in the United States.”

BTC STATEMENT
A substantial NextGen implementation risk is not addressing the congestion-problem holistically. Sub-optimal results will likely be evidenced if NextGen technology is merely overlain on the unworkable architecture of over-scheduling of flights and associated airline policies, processes and practices at these congested NYC airports. Pouring scores of billions of dollars of new technologies on irrational scheduling practices is akin to “paving the cow paths,” i.e. step-change improvements in efficiency and innovation would not be possible. Incremental improvements are certainly achievable, but true reengineering must take place to secure the greatest return possible on NextGen investment.

BTC believes that pending legislation in the U.S. Senate (S.213) and House (HR 674) that would phase in a requirement that passengers be given the option of deplaning at 3 hours of an extended ground delay would provide the catalyst for such overall reengineering efforts, especially at NYC-area airports. The specific 3-hour concept is central as an agent-of-change.

While NYC-area and Philadelphia airports can typically amount to some 12% of the Operational Evolution Partnership (OEP) 35 operations, they can cause more than 45% of the delays and 48% of the delay minutes throughout the National Airspace System (NAS) resulting in material financial, lost-productivity and environmental costs for all stakeholders.

The delays are chiefly caused by over-scheduling of flights where the demand exceeds capacity at critical times of the day; using many regional jets (70 passengers and below) instead of fewer larger jets; and increasing non-air carrier operations, such as private jets.

Solutions for the over-scheduling problem at NYC have been (1) politically unpalatable, such as DOT-sanctioned slot auctions, (2) impossible to develop and implement because of antitrust laws, or (3) competitively unfeasible because airline “A” would not unilaterally reduce its schedule only to have airline “B” fill in and increase its market share, and in some cases raise airport-costs for airline “A.”

A Congressionally-mandated passenger-deplanement rule in excess of 3 hours (preferred by most airlines) would likely encourage airlines to ignore the consequences of potential DOT fines in order to maintain market shares at NYC, and elsewhere. Alternatively and very importantly though, according to industry experts a 3-hour rule could only be workable for NYC airports if airlines drew down their schedules and reengineered operations to better match the capacity-limitations of the airports.

If they did not, negative media publicity and resultant political pressure from so many “illegal” delays would be a weekly event with attendant calls for further Congressional intervention. Airlines would have very strong unilateral incentives to right-size their NYC airport operations during the hopefully generous time before such legislation were to become effective.

Interestingly, reduced NYC-airport airline flight schedules may not necessarily negatively impact airlines' bottom lines, especially if a single flight operated with larger equipment can replace several small regional jets. Additionally, an improved pricing environment from reduced capacity would be an offset as would significant operational benefits from more efficient system-wide operations across the U.S.

With airline industry capacity and operations declining, now would be an opportune time to both economically model and test this hypothesis before demand returns in full force.

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CONTACT

BTC || Kevin Mitchell | 610-341-1850 | mitchell@BusinessTravelCoalition.com

About BTC
Founded in 1994, the mission of Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to their organizations.

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Record of Proceedings -- 9/22/09 Passenger Rights Stakeholder Hearing

2009-09-29T08:22:01Z

To: Travel Industry Colleagues

The PDF at http://businesstravelcoalition.twi.bz/w contains a record of the proceedings of the September 22, 2009 Passenger Rights Stakeholder Hearing conducted in 2200 Rayburn House Office Building in Washington, DC. The hearing was produced on behalf of airline passengers by FlyersRights.org and Business Travel Coalition (BTC). The PDF also includes all print media coverage through today (42 hearing-related articles as well as the September 8, 2009 BTC passenger rights report and analysis.

The standing-room-only hearing replicated a Congressional hearing in every important way except that expert witnesses were questioned not by Members of Congress but by professional aviation industry journalists and travel industry specialists. The purpose of the format was to bring immediate transparency to both sides of the debate and to ensure all relevant issues were aired. By all measures this objective was met.

A highlight of the hearing was an impromptu and spirited exchange between Senator Barbara Boxer (D-CA) and former American Airlines Chairman and CEO Robert L. Crandall wherein the Senator learned to her surprise that Mr. Crandall supported her 3-hour deplanement-rule, so long as it was phased in from a 4-hour initial rule.

Consistent with the stated purpose of the hearing proceedings, and the BTC mission of bringing transparency to issues of strategic importance to customers, the PDF includes the testimony and biographies of the opponents and proponents of passenger rights legislation as well as their contact information so that Congressional staff and members of the press have ready access to expert commentary on this important consumer issue.

Kevin Mitchell, Chairman, Business Travel Coalition
Kate Hanni, Executive Director, FlyersRights.org

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BTC Invitation to Travel Industry BarCamp

2009-05-20T14:20:02Z

BarCamp Philadelphia
Travel Sustainability: Toward a Real Industry

July 9, 10 Q Lafayette Hill, PA

To: Travel Industry Leaders
From: Kevin Mitchell (Business Travel Coalition)

If you are reading this email you among the global travel industry participants whom Business Travel Coalition has come to deeply respect for your expertise, industry-mindedness and leadership. You are invited to attend an exclusive gathering of hand-picked leaders to discuss some of our industry’s most critical issues. (See invitee list here.)

Difficult problems threatened the sustainability of many aspects of the airline and business travel industries before the economic malaise came upon us. One of the most intractable problems is that we rarely act like a real industry (the way, for example, the oil or pharmaceutical industries do). It’s time for us to come together in this season of change and find a new and better way forward.

The silver lining in this current economic crisis may be a window-of-opportunity to remake ourselves into a unified and powerful industry. None of the problems BTC has ever worked on exist neatly in a single silo; the impacts of government or industry initiatives are much broader and are often characterized by collateral damage to many other industry participants. To be fair, a typical industry is cohesively led by dominant suppliers. In contrast, our industry is a collection of independent-minded suppliers of inputs to the travel experience such as hotels, travel management companies, airlines, labor, rental cars, airport authorities, technology providers and charge card companies, among others.

As an industry we are an assemblage of different interests toiling away on issues within our individual silos that correctly looks to outsiders, including governments, like we are highly fragmented and seemingly incapable of agreeing on and prioritizing our own problems, let alone solving them. We need to turn away from these constricting silos and toward inclusive coalitions organized around issues of strategic importance to the entire industry. If the jet-fuel crisis of last summer taught us anything it was that all our fortunes are tied together. Airlines lost money, labor lost jobs, airports lost service, communities lost connectivity, hotels lost guests, travelers lost service and corporations lost productivity.

We have the opportunity to find common ground in identifying solutions and initiatives vis-à-vis our industry’s most pressing problems, and to adjust strategies to help us come out on the other side of the current economic crisis and to strengthen our industry to meet the crises ahead. To this end, BTC is convening the travel industry’s first BarCamp on July 9 and 10 just outside Philadelphia at the ACE Center with an unprecedented and diverse assemblage of the best-of-the-best from corporate travel management, airlines, government, hotels, technology providers, travel management companies, airports, associations, media, academia, labor, analysts and consultancies.

What Is A BarCamp?

In contrast to a top-down planned traditional conference with keynote speeches, expert presentations and preset agendas, a BarCamp is a bottoms-up format where the agenda and discussion topics are determined by the participants onsite and where every participant is expected to lead a session, help lead one or participate in other meaningful ways. The format facilitates a massive exchange of expertise and ideas and is particularly effective in situations involving conflicting ideas, complexity and diversity of thought or industry participants. All that is set in advance is the venue and umbrella theme, which for us will be Travel Sustainability.

Examples of silo-issues that could be discussed in one or more BarCamp sessions at this gathering could include:

NextGen

Energy policy

Regional airline model

Aircraft maintenance and crew outsourcing

Immunized global alliances

Distribution system reform

Prior to the actual BarCamp, there will be an online planning process where potential discussion topics will be suggested by some registrants and where other registrants will indicate sessions they are willing to lead. I will provide additional detail along the way. Industry leaders will find this BarCamp experience an invaluable opportunity to reconnect with customers, interact with industry participants they would otherwise not have the opportunity to be with and stress-test the assumptions that underlie their Boardroom strategies. From personal BarCamp experience, I can assure you, no matter your standing in the travel industry, you will leave the BarCamp with new ideas, connections and hope for the future.

Expected BarCamp Outcomes

Massive exchange of industry expertise and ideas

Shared perspectives

Passion around top-priority strategic issues

How to Register; Cost

This BarCamp will quickly go to wait-list status, so register as soon as you can to ensure your opportunity to participate and to contribute. Register here .

The cost of $295 is all-inclusive and includes the following:

All BarCamp sessions (Thurs. & Fri.)

Morning & afternoon breaks (Thurs.)

Lunch (Thurs.)

Cocktails & hors'deurves(Thurs.)

Dinner (Thurs.)

Overnight accommodation (Thurs.)

Full breakfast (Fri.)

Morning break (Fri.)

Lunch (Fri.) (either in the dining room, or boxed for traveling)

Note: If you do not require overnight accommodations, the package rate is $149.

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