Competitors Narrow the Gap on Delta

Delta has beaten its own record, winning BTN’s Airline Survey for the eighth consecutive year. All its competitors, however, have upped their game. In BTN’s 2018 Airline Survey, fielded among corporate travel managers and agents, Delta once again earned the highest score in every single category by a healthy margin. Meanwhile, United, American and Southwest each improved on their 2017 scores in every category. For United, that improvement was enough to overtake American for second place. It’s the first time United has outscored American since 2015. The survey scores each airline in each category on a five-point scale, and United and American each broke the four-point barrier in a handful of categories, the first time either has done so in their post-merger states. Southwest remained in fourth place, but its total score improved more than any other carrier, up from 3.21 in 2017 to 3.46 this year.

Delta Aims to Globalize Success

Although it might be tempting to interpret this year’s results as a crack in Delta’s seemingly impenetrable armor, it’s a crack one would need a magnifying glass to see. Delta’s scores remained more or less the same as last year; generally, its scores in individual categories were within a few hundredths of what it scored in 2017, and its overall score was 4.39, one hundredth of a point down year over year. Still, the carrier still maintains a healthy premium over its competitors; the gap is wider than 0.6 points in all but three categories.

Eight isn’t enough for Delta executives, of course, who still want to push its scores higher. “Our goal is to keep an open dialogue because it will always be a journey in how to add value,” VP of sales operations and development Kristen Shovlin said. “Since the merger [with Northwest]—and the 10th anniversary just happened [in October]—we’ve put an emphasis on how we take our business and transform it back to a time when it was about relationships and partnerships.”

Some travel buyers taking BTN’s survey praised Delta for hosting events that enabled travel professionals to tour airports and fleets so they could better understand operations and the business. Others praised consistent and helpful communication from their sales reps. Communication with buyers was Delta’s strongest individual score, as it was last year, and the airline also scored well for its account managers and sales reps. “Our rep with Delta is amazing,” one buyer said. “He is always in touch, lets me know what is coming, helps whenever I need it and makes sure our travelers are happy and comfy and responsive at all times.”

Resolving complaints was another high-scoring area for Delta and the one where its gap from competitors was the largest. “When and if an issue becomes a problem for one of our travelers, I do not need to get in panic mode,” another buyer wrote. “Our Delta account manager and [the] Delta executive desk solves the issue, and if they can’t, they provide an alternative solution.”

Delta has been concentrating on spreading some of its best practices to its joint-venture partners, making it a more seamless experience for corporate travel buyers. Part of that has centered on the bigger picture—having Virgin Atlantic’s fare structure line up better, for example, or making check-in and seat selection available across partner portals—but it also has involved some of the tools and services particular to the corporate space. This summer, for instance Delta and Air France-KLM aligned corporate travel benefits in their Corporate Priority Program, which gives corporate travelers across all the carriers access to better seats, priority boarding and priority for rebooking during irregular operations. It is globalizing its Delta Edge portal for travel professionals, as well. “It’s been very clear the future is global, so we’ve decided a differentiator will be our relationship with our partners, making it more integrated than the rest of the industry,” SVP of global sales Bob Somers said. “Our core strength is our domestic business, but our goal is for our global footprint to account for 50 percent of revenue coming from around the world.” Right now, that revenue ratio is about 70 percent domestic and 30 percent international, Somers said.

As it aligns those products, Delta is clearing regulatory hurdles to bring its alliances with Virgin Atlantic and Air France-KLM into a single mega JV. It also kicked off its JV with Korean Air this year as it cleared the necessary regulatory hurdles and now is seeking approval for a JV with Canadian carrier WestJet.

Delta also continues to leverage its record of operational excellence. As of early November, the carrier has had 208 days with a 100 percent completion factor on its mainline flights, compared with 193 days at this point last year. Across the entire Delta brand, which also includes Delta Connection flights, Delta has had 118 days with 100 percent completion, compared with 64 at this point in 2017.

The carrier pioneered operational guarantee agreements with corporate customers a few years ago, in which it promised compensation should its operating statistics fall below both of its chief competitors. This year, it further refined its reporting metrics to show customers completion and on-time data based on their specific travel footprint, not just overall performance.

United Soars to Post-Merger High

This year, United earned its highest score in the BTN survey since its 2010 merger with Continental, as buyers praised the corporate travel-focused products the carrier has launched over the past few years. “[United] has really stepped up to the plate and offers a best-in-class program—finally!” one buyer remarked.

In particular, buyers complimented the Jetstream portal for corporate customers and travel management companies, released last year. One buyer noted that it has “given us more control over our services fund and United as a whole has done a tremendous job of streamlining or enabling self-service for our TMC to take care of our travelers.” Others praised the carrier’s Corporate Preferred program, launched this summer, in which corporate travelers get priority consideration for upgrades and reaccommodation. One buyer called it “long overdue but the right step towards providing their valued corporate accounts with more priority, protection and amenities.”

In addition, United launched a new corporate discount program, Propel, this summer for midsize travel programs. For those with at least $250,000 in annual spend, it offers five tiers of discounts based on the program’s market share. It also is including discounts on its JV partners—Air Canada, ANA and Lufthansa Group—for travel with a point of sale in the U.S. or Canada.

United SVP of worldwide sales Jake Cefolia, who has taken the mantle from longtime sales leader Dave Hilfman in advance of Hilfman’s retirement at the end of the year, said the improvement in United’s score indicates that “the investments we’ve made in servicing our customers as well as making sure we have a compelling value proposition to those customers … is being recognized.” The carrier intends to pick up the pace and is creating a “sales laboratory,” a small selling team that will test out new products and services for customers and determine what should be scaled up from there, he said. “The last few years, we’ve been launching one new product per year on average,” Cefolia said. “Frankly, I think we could be launching three to five new products a year.”

The meetings arena has been another focus for United. While flexibility in negotiating meeting pricing was United’s lowest score, that’s also one of the areas in which United improved the most, up to 3.52 compared with 3.16 last year.

Cefolia said his team has increased attendance at meetings-focused industry events and “has spent a lot more time working with the contracted corporate customers to better understand where opportunities reside and introduced more competitive pricing in markets on standard agreements.”

United’s highest score—and the highest individual category score for any airline on the survey besides Delta—was for its networks, partnerships and frequencies. The carrier has significantly bulked up its domestic network this year, adding about 40 domestic routes and several new international routes despite some grumblings from the profit-focused investment community. In addition, United has been working on tighter integration with its JV partners, Cefolia said. Besides including them in Propel, United has made boarding passes from partners available through its mobile app and this year is adding partners’ flight statuses to its app, he said.

United’s score in communications with buyers boasted the highest premium over American and Southwest. The carrier has created regional advisory boards on top of its larger corporate customer advisory board; it just conducted the first in California, and one is on the way in New York, Cefolia said. “We take pride that we have a team that is really out there, very visible with the customers and spends as much time listening as talking—and we have a lot of great stuff to talk about,” Cefolia said.

American Hones Focus on Communication

Like United, American Airlines this year earned its highest post-merger scores, and the carrier has put a heavy focus on building up its sales team and improving communication with corporate customers, SVP of global sales and distribution Alison Taylor said.

Since 2017, American has added 136 sales associates and introduced a new training curriculum for its sales team, she said. In addition, it has launched a new newsletter for its corporate customers and has significantly increased the volume of communications to them; they are not getting just news about major events like hurricanes but “know about the great things we are doing on our journey to be the easiest company to do business with,” Taylor said.

One buyer cheered the “constant contact” from the company’s American Airlines representative. “She listens to our needs and acts on them and is very responsive to any issues,” the buyer said. “We understand that while we are not American’s biggest customer, we certainly are very important to them, and I credit that feeling to our rep.”

Product has been another focus for American, Taylor said, including increasing Wi-Fi availability across its fleet and expanding availability of its Flagship Lounges, which offer high-end dining options. The next is scheduled to open in Dallas early next year. The carrier also is on track to become the first North American carrier to have a dedicated premium economy cabin across its widebody fleet by May 2019, Taylor said. “We haven’t seen travelers buying down from business,” American Airlines sales strategy manager Anthony Rader said. “We’re seeing it as an upsell [from economy] to a great product and great meal services.”

Distribution, one of the carrier’s highest-scoring categories, has been front and center at American, as well, particularly as it has developed strategies around the International Air Transport Association’s New Distribution Capability standard. As yet, the carrier is the only one in North America to offer incentives for segments booked on NDC connections, and there will be “NDC-powered content delivered to the corporate marketplace” starting next year, managing director of strategic account sales Hank Benedetti said.

In October, American went live on SAP Concur’s TripLink, enabling corporate travel buyers to capture data booked directly on the airline’s website. Taylor said “many great companies are lining up” for trials with the technology, including Google.

Like its competitors, American is solidifying its global JV strategy. It is “getting closer” to getting its necessary approvals for a JV with Latam and took a small stake in China Southern last year. This year, it also announced it would once again seek a joint business agreement with Qantas; the U.S. Department of Transportation rejected such an agreement in 2016.

Next year, American will launch a data portal called SalesLink Insights that will enable corporate travel buyers to monitor contract performance, spending—including on nonairfare items like checked bags and change fees, Benedetti said—and operational data. American is testing the portal with high-profile agencies and corporate customers, Taylor said. One buyer said that tool would be “valuable in program management.”

Southwest Sees Fruit from Corporate Business Investment

Southwest has significantly built up its corporate sales efforts as its scores improved on BTN’s survey. Meanwhile, many of its weakest scores this year are areas already tapped for investment in the near future.

Over the past year and a half, Southwest has grown its corporate sales organization from about 25 to more than 80, including doubling the number of sales employees in the field and developing teams focusing on specific segments, such as government travel. The carrier is on track to quadruple the number of new contracts from 2017 to 2018. “[Southwest seems] to be focusing on the corporate market more than I have seen before, so I look forward to that positive change,” one travel buyer said.

Southwest VP of corporate sales Dave Harvey said the airline is “starting to see the fruit” of its investment into the corporate market, noting one of the strongest gains on BTN’s survey was for account managers and sales reps, up from 2.96 last year to 3.25 this year. “We’d heard a lot in 2017 [from customers] that they were not seeing enough of us,” he said. “We’ve now been getting more active in building those relationships.”

The carrier is making “major investments” in its Swabiz business platform, Harvey said, which should improve scores around distribution channels, traditionally one of Southwest’s weaker areas in the survey. For example, travelers cannot book international travel through Swabiz, and its reporting needs improvement. Harvey said reporting will be addressed in “major announcements” around the end of the year. “We were the first to market with that direct booking tool in the space 15 years ago, but we hadn’t put the investment in it,” Harvey said. “Now, we’re not only playing catch-up, but we’re going to move ahead of the competition.”

While negotiating services and amenities pulled in Southwest’s lowest score this year, it also was among the biggest gainers, up from 2.68 last year to 3 this year. The carrier has worked to be more flexible with its contracts, such as enabling travelers to get higher loyalty tier benefits from the beginning and status matching, Harvey said. It is exploring personalization strategies, as well. For example, Southwest is looking at how it can use data for “surprise and delight techniques,” like a traveler who had a bad experience on a previous trip receiving a drink coupon on the next trip, he said.

Networks, partnerships and frequencies is another area where Southwest could make gains. It has built up its network, particularly out of Cincinnati and for intra-California travel, Harvey said. Additionally, it is getting close to launching its service to Hawaii—not a major business destination but a big one for meetings and incentives—and Southwest will be the sole carrier to take on Hawaiian Airlines on routes between the Hawaiian islands. Southwest’s recent switch to a new reservations system has enabled codesharing, which the carrier has indicated will be a future strategy, as well.

As it did last year, Southwest outscored both United and American for each its customer service and its overall value. The carrier has stood firm in not charging change fees or fees for checked baggage, and it is exploring ways to add more value. Late last year, for example, it added a same-day standby benefit for A-List and A-List Preferred travelers.