aio86
Posts: 910
Joined: Sat Sep 16, 2000 12:16 pm

Airline Corporate Contracts

Fri Jul 13, 2007 4:56 pm

I am investigating on behalf of my employer the possibility of arranging a corporate contract with an airline to carry our business from Southern Africa to the United States. Our office spends about 2 million dollars a year on travel, mostly to the US, and at present we spend the money on a variety of carriers: SAA, Delta, BA, LH, TP, etc. About 50% of the office flies C class, the rest Y. We have no specific relationship with any one carrier, but would be willing to establish a carrier of choice granted they offered us certain favorable conditions. In addition, there are 12 other branches in Southern Africa (with similar or more business per year) that use JNB as the main hub for intercontinental flights that could potentially come on board with us if we were to get a favorable offer. We cannot, however, promise a company a certain amount of business, we can only estimate based on past flying.

I have never negotiated a contract like this before, and am curious what other companies get when they negotiate these contracts.

My preconceptions were the following:

-Discounts (20, 30, 40, 50%)
-Free upgrades from full fare Y to C
-Lounge access (we already get this with SAA)

What else might I expect them to offer? What else should I push for? Will I likely be able to do anything if I approach code-share airlines (for example, UA, which code-shares on JNB-IAD, JNB-JFK, JNB-LHR and JNB-FRA flights or BD which code-shares on SAA¡¦s JNB-LHR.

Thanks for your information and input!
 
ORDagent
Posts: 580
Joined: Wed Dec 17, 2003 6:24 am

RE: Airline Corporate Contracts

Fri Jul 13, 2007 11:30 pm

Corporate contracts can be very convoluted. The airline will base the discounts on the total volume of revenue generated vis a vis the market share precentige you give them for specific routes. Here are specific thoughts for you.:

Discounts (20, 30, 40, 50%)

For only 2 millian in total revenue discounts above are not going to happen except possibly off of full C fares or based on availability of J/D discounted C inventory. Since I'm based here in the states the discount programs may be more or less agressive based on local market conditions.

-Free upgrades from full fare Y to C

On carriers that have 3 cabin aircraft the upgrades are usually undiscounted C to F but of course that is dependant on the classes offered by your preffered supplier. Upgrade certs are usually given quarterly based on market performance by the client.

-Lounge access (we already get this with SAA)
That's easy to get. What I find the airlines do often and by it's very nature includes status match from competitors FQTV program. It's a way to get lounge access and get your road warriors to go with the new preffered vendor

Other goodies:
Waivers for changes or errors are an important item that the carriers may offer as in general they are much less willing to offer that kind of service to the general public. If the airlines still pays commsion they may offer an override or rebate to the agency of record or the corporation. Fees for standbye or upgrades/exchanges may be eliminated or reduced.

Alliances.
Star / Oneworld / Skyteam etc. may offer the discounts amongst all of the members. In your case if you fly SAA to LHR and UA to SFO etc the discount will carry over the entire tarrif.

Lastly. If you don't have a travel managment company (once known as travel agents) you may want to consider one seriously. A two million dollar account isn't huge but still nothing to snease at. The better agencies are adept at finding and negotiating to contracts on you behalf as they are the experts at this kind of thing.
 
aio86
Posts: 910
Joined: Sat Sep 16, 2000 12:16 pm

RE: Airline Corporate Contracts

Mon Jul 16, 2007 3:35 pm

Thanks for the pointers.

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