BUSINESSWEEK ONLINE : DECEMBER 11, 2000 ISSUE
NEWS: ANALYSIS & COMMENTARY Revolt of the Business Class For business travelers, 2000 may go down as the year the airlines had their way with them. Not only are delays, oversold flights, mishandled bags, and other complaints up across the board, so is the price of that lousy service. In November, the nation's major airlines announced their sixth price increase this year. A typical round-trip domestic coach ticket with a three-day advance purchase now costs $1,100, according to American Express Co. (AXP) That's up 13% from last year. Airlines blame the price hikes on higher fuel and labor costs, but with the overall economy still strong and airline profits robust, many travel experts think the carriers are just being greedy. ''The airlines want to know how high they can go before people stop buying tickets,'' says Steven Shook, a consultant at Carlson Wagonlit, a large corporate-travel agency. CANNY PLANNING. Armies of executives, of course, aren't likely to stop taking to the skies. There are, in fact, fewer empty seats then ever. Still, companies are getting shrewder about their travel planning. For years, they have been negotiating deals directly with airlines. Now they are forcing employees to fly coach and take connecting flights. They are utilizing low-cost airlines such as Frontier (FRNT) and JetBlue Airways. And many are shifting business to lower-priced online travel services. All that finagling is paying off. American Express estimates that while the average posted fare may have risen to $1,100, the actual price paid by business travelers is more like $624. That is the widest spread between those two prices that American Express has seen since the company began tracking those numbers five years ago. Thanks largely to the Internet, corporate travel managers have far more tools at their disposal to work the system than they did even a few years ago. Especially helpful are online corporate-booking services, such as Sabre Holding Corp.'s (TSG) GetThere and American Express' AXI Travel, that reduce work in corporate travel departments by allowing employees to make reservations themselves. Employees making their own reservations tend to save about 10% per reservation because they are more flexible, says Mark Williams, travel manager for the accounting firm Pricewaterhouse-Coopers. Companies are also turning increasingly to negotiated rates. But these have drawbacks. When a work slowdown at United Airlines Inc. caused flight cancellations earlier this year, Chicago-based R.R. Donnelley & Sons Co. (DNY) had to allow employees to fly on other carriers without discounts. And negotiated rates are no guarantee of a great price. ''We negotiate a discount, and the airline raises its overall rates,'' laments Cindy Heston, a travel manager at Thomson Consumer Electronics Inc. That has prompted some 58 companies to take the extra step of becoming designated travel agents by Airlines Reporting Corp., an airline-run entity that certifies travel agencies. Brokerage firm Raymond James Financial Inc., for instance, estimates that the move will save it $200,000 in commissions in its first full year. Other companies exact their savings through their staff. Managers at tool and appliance maker Black & Decker Corp. (BDK) fly business class to Europe when they need to be rested for early meetings, but the company encourages them to fly home in coach. Then there's CIBA Vision, the Atlanta-based contact-lens unit of Swiss giant Novartis (NVS). It rebates $1,000 to any employee who agrees to fly coach overseas. CIBA Vision says it expects to save about $750,000 this year using this system. A little extra money for employees and a lot less for the airlines. Now, that's satisfying. By Christopher Palmeri in Los Angeles, with Wendy Zellner in Dallas, Ann Therese Palmer in Chicago, and Nicole St. Pierre in Washington _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Revolt of the Business Class TABLE: Up, Up, and Away INTERACT E-Mail to Business Week Online

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