Better Scores for Each of the Big 4

For the sixth year in a row, Delta Air Lines soared above its competition in BTN's annual Airline Survey, but the results gave all carriers room to boast, as buyer satisfaction levels rose nearly across the board. All four U.S. carriers that had enough corporate use to merit inclusion in the survey improved their overall scores. More impressively, each one improved its score in all 10 categories with only one exception: United Airlines dropped four-hundredths of a point on a five-point scale in buyers' rating of its distribution channels.

Despite concerns following years of consolidation, these scores indicate that competition remains strong among the largest carriers. FINRA manager of corporate travel services Carol McDowell said that post-consolidation, she's seen airlines work harder to set themselves apart from one another to earn corporate customer loyalty. At the same time, U.S. carriers have continued to rake in healthy profits in 2016, which they are investing back into their own products and services. "All of the airlines are doing quite a bit to ensure they keep our business," McDowell said. "They're asking more of what they can do on their own, and at the rep level, they're open to listening and ideas and taking that back to their senior management."

With scores up among all carriers, Delta lost only a slight edge in its premium over the other three carriers. Its total score was 0.77 points above its closest competitor, compared with a 0.9-point difference last year.

Rankings of the other three carriers, a much closer race, moved around this year. American Airlines, whose overall score improved the most, moved up to second place, pushing both United Airlines and Southwest Airlines down one spot in the rankings compared with last year.

Delta Builds on Success

As in 2015, Delta Air Lines improved its operational performance, an area in which it has staked particular pride. Nov. 8 marked its 200th day in 2016 without a canceled flight. It had only 161 such days in the full year of 2015 and zero in 2010. That "relentless focus on operations," according to Delta senior vice president of global sales Bob Somers, factored into the carrier's once again dominant performance this year, including its operational guarantee, in which corporate customers earn compensation should Delta's on-time and cancellation performance fall below that of both American and United on an annual basis. In May, Delta added international and regional flight performance, uncontrollable delays and cancellations and mishandled baggage complaints to the guarantee.

Survey respondents cited the products and services Delta has developed for corporate travel clients, including its Corporate Priority program, which offers benefits and protections to corporate travelers regardless of frequent-flyer status. At the recent Association of Corporate Travel Executives Global Summit in Amsterdam, Microsoft group manager of strategic sourcing Georgie Farmer, when asked to name an airline that is doing well on the personalization end on a global basis, said, "Definitely Delta from a corporate perspective, in how they recognize [corporate travelers] in travel disruptions: not to get bumped off and a whole bunch of other areas, as well."

Buyers also singled out the Delta Edge reporting program, which expanded to include meetings spend this year. In meetings pricing, Delta beat its competitors by more than a full point in BTN's survey, the biggest victory margin of any individual category. "The last five years has been a series of 'the next big first' and building beyond contract value that takes our relationship to a different level," Somers said. "We will continue to innovate and use customer feedback to see where we should be next in investing time, effort and technology."

This year, Delta also worked to reduce the length of its contracts by cutting down legal terms and conditions and simplifying its pricing table, which also came as a request directly from customers, vice president of sales operations and development Kristen Shovlin said.

Delta's highest scores were in client communications and complaint/problem resolution. The carrier suffered a bit of a black eye in August when a power outage caused a systemwide operations shutdown followed by thousands of cancellations and delays. Respondents to BTN's survey, however, mentioned the incident in a positive light, praising the carrier's handling of the situation, including "constant communication" and compensation for affected travelers.

In another problem scenario, one of a Delta client's top travelers had booked an international flight at the last minute, but a travel agency ticketing error forced him to take a different flight that included a double connection. Thus, he arrived later than he needed. The company's account manager at Delta reached out to the agency behind the error and sent a letter of apology and gift basket to the traveler. "I felt they went out of their way to rectify the situation, and the traveler was fortunately very understanding and remains loyal to Delta today," the buyer said.

Shovlin said the key in maintaining high scores in BTN's survey has been spreading awareness for the corporate travel experience across the entire team. Delta highlights its BTN Airline Survey honors with stickers on the sides of its aircraft, and staff across all functions are eager to keep the streak going, she said. "Every one of the 80,000 strong have a piece in this overall traveler experience, making sure that it shines across every touchpoint," Shovlin said. "The entire travel journey has been invested in."

American Gains Ground

American Airlines increased its score by 0.26 points, more than any other carrier. Some of American's most significant improvements came in the three categories related to negotiations: transient pricing, meetings travel pricing and services and amenities. Last year, the carrier received fewer than 3 out of 5 points in each of those categories. This year, all increased comfortably above that mark, and American moved from last to second or third in each.

The carrier has made several tweaks throughout the year to simplify negotiations, managing director of strategic account sales Hank Benedetti said. In September, for example, it expanded the number of fare classes available for corporate discounts, letting buyers get more opportunities for discounts and more capability to capture travel under their contracts, he said.

The carrier also has worked with its partners in the Oneworld alliance to create more seamless pricing and discounts, senior vice president of sales Alison Taylor said. In August, the carrier tapped low-cost carrier VivaLatinamerica CEO Joe Mohan as vice president of alliances and partnerships to deepen relationships and create a seamless, common set of policies.

Networks, partnerships and frequencies was American's highest-scoring category. The carrier has built up its network to the Asia/Pacific region, moving from third-largest U.S. carrier network serving the region to second-largest in a short time, Benedetti said.

Buyers praised American's Flex Funds, through which buyers and agents get around-the-clock access to fee waivers without the need of approval. The carrier is looking for more products, both buyer and customer facing, to continue to boost its scores. In October, for example, it became the first carrier to fly with a true premium economy cabin, a distinct cabin rather than a section of the economy cabin with more legroom, which has provided more opportunities in contracting. "This has been a year where, instead of digesting a merger, we started immediately hitting the things that buyers wanted," Benedetti said.

United's Turnaround

Analysts and observers agree: It's a new day at United Airlines, and a little more than a year into his job, president and CEO Oscar Munoz deserves a good deal of the credit. While the carrier slipped a place in rankings, it made significant gains in complaint resolution, communication with buyers and customer service for travelers. After a few years of struggling following its merger with Continental, United's operational reliability has improved this year. Like Delta, United has introduced an operational guarantee to buyers and is on track to meet that guarantee this year.

Despite being sidelined by a heart attack and transplant early in his tenure, Munoz has made an indelible mark on morale. Analysts have noted a change in employee attitude at the carrier. Munoz said investing in service has played a role in that, mentioning a flight attendant who told him that she was tired of saying, "I'm sorry," to customers.

Munoz has green-lighted initiatives to address obvious shortfalls, but not without cost. "You roll out pretzels and a couple of snacks, and it's a $100 million total tab," Munoz said. "It's simple to take those off, and I recognize that, but we were so underinvested for so long. We can bring customers back and make them feel good about United."

Munoz has also initiated organizational change. The carrier now has a single team to manage all customer-facing functions and create a consistent experience for travelers across the United network. Kate Gebo, who ran Munoz's office, leads the team as senior vice president of customer service delivery.

With larger improvements ongoing, the carrier has sought to "reintroduce" United to the corporate market, Americas vice president of sales Jake Cefolia said. The carrier gained $85 in corporate sales for every $1 it lost this year, a striking improvement over 2015's $5-to-$1 ratio. "Given the advances made in operating reliability, products and services, putting us on par with major competitors if not ahead, this was the year to go out and win business," Cefolia said. "It demonstrates the important measures and changed culture."

One change that boosted customer service scores was a new escalation desk within the sales support organization, he said. Opening that desk has cut back on the backlog of problems like baggage issues and refunds.

Additionally, United has made sales support services more efficient by reducing demand for them, Cefolia said, including giving travel agents more leeway in rebooking travelers after schedule changes or irregular operations.

Now the carrier is comparing the biggest drivers of satisfaction with where it needs the most improvement. One of biggest gaps appears to be service support automation, Cefolia said. The carrier is beta testing a self-service portal on which agents and buyers can self-service on waivers and favors. "It's not the dollars and cents of the deal but how flexible we are with the service and how much automation is put in," Cefolia said. "We'll be making up ground there next year."

Southwest's Value

While Southwest trailed its competitors in total score, it also was the only carrier to come within firing range of Delta in any individual category: In overall price and value, it scored only eight-hundredths of a point below Delta.

That score plays right to Southwest's core proposition, manager of business development Dave Harvey said. The carrier has held a hard line on not charging bag fees, the only major U.S. carrier not to do so in some fashion, and in not charging change fees. In the past few months, it also allowed A-List and A-List Preferred status members who arrive early to go on standby for earlier flights without paying the fare differentials.

Southwest has staked its reputation on being the lowest-cost major carrier, but it often costs the least only if counting lack of bag fees and change fees. Still, for some buyers, the absence of those fees is a significant benefit. "We use mainly Southwest Airlines because we have changes in staff schedules and they are so helpful making changes and not charging an additional fee," one buyer said. "Also, we enjoy not having to pay for baggage fees. It helps our budget."

Besides the price-value relationship, Southwest scored highest in communications with buyers and complaint/problem resolution. One reason is that Southwest gave account managers more autonomy to take care of problems when they arise, Harvey said. Southwest also benefits from simpler contracts, which tend to be five or six pages, compared with 30- or 40-page contracts offered by competitors, he said. And the carrier recently has been doing more custom contracting for buyers who need something outside the standard template. "As far as our deals, discount structures and waivers and favors, we now sit down with companies when coming up with preferred agreements and look at the overall system level and geography to come up with a workable solution," Harvey said. "That's a model we would like to scale."

Even so, the simple template remains the predominant choice for most corporate buyers. For some, it's a benefit. "They keep it simple," McDowell said. "Domestically, I've asked each of our airline partners to go to a revenue-based program rather than a marketshare program. Take all that complication away."

Southwest trailed the competition in the category of networks, partnerships and frequencies, but it has built significantly in that area, Harvey said. It grew from Dallas following the expiration of the Wright Amendment two years ago, and it has acquired extra slots out of Washington, D.C., and is seeking more corporate business through service in California. Southwest has begun international service in recent years, and while the majority is to leisure destinations, it sees significant corporate traffic on its routes to Mexico City and San Jose, Costa Rica, he said.

Travel buyers for global programs may look at Southwest differently next year, however, when the carrier switches to a new reservations system. Among its benefits, the system will allow Southwest to partner and codeshare with international carriers. "Our vision is to be the most flown, loved and prosperous carrier around the globe," Harvey said. "Thinking about destinations in Asia, Europe or deeper South America, while we won't be flying our own metal there anytime soon, via a direct partnership we can unlock that to some of our managed corporate business to win."