Runzheimer recently surveyed Travel Management Network (TMN) members on their airline negotiation capabilities. This survey reports on organizations airline negotiations, including type of discounts and percent savings, arrangements that reap the highest cost savings, soft dollar benefits and overall satisfaction with airline negotiations. Highlights from the survey (currently based on 48 respondents) are listed below. Full survey results will be available soon.

About Survey Respondents

Respondents to our survey represent organizations of various travel expense budgets. Thirty percent of respondents maintain budgets of $5 million or less, 35% have budgets between $5 million and $20 million, and 35% have total travel expenses of more than $20 million (Table 1).

Table 1 Respondents’ Annual Travel Expense Budget
	Percent of Respondents
$1,000,000 or less	11%
$1,000,001 - $5 million	19%
$5,000,001 - $10 million	15%
$10,000,001 - $20 million	20%
$20,000,001 - $50 million	24%
More than $50 million	11%
Overall
Average	$46,237,794
Median	$16,800,000

Survey Highlights

Airline negotiations are essential to most corporate travel programs, and travel managers are often evaluated on the results of their agreements. Nearly all respondents to our survey (96%) report they negotiate with airlines. Of these respondents, two-thirds conduct negotiations on their own. Eighteen percent of respondents allow their travel agency to negotiate on their behalf while 16% report negotiations is a joint effort (Table 2).

Table 2 Negotiator of Airline Discounts (Of Organizations that Negotiate with Airlines)
	Percent of Respondents
Negotiator	1996	1998	2000	2002	2004	2006
Organization negotiates	30%	45%	37%	45%	69%	66%
Travel agency negotiates	26%	23%	16%	32%	7%	18%
Both organization and travel agency negotiate	44%	32%	47%	23%	24%	16%

Runzheimer Comments: We continue to see a trend in travel managers that view negotiations as one of their prime responsibilities—one that will uphold the value of a managed travel program and support cost savings initiatives.

Volume discounts continue to outrank net fares as the most successful negotiated fare as reported at 67% and 53%, respectively (Table 3). An additional one-half of respondents seek system discounts. However, 30% of respondents report that volume and system discounts reap the highest cost savings, followed by net fares (11%) and fixed fares for travel between specific cities (Table 4).

Table 3 Successfully Negotiated Fares
	Percent of Respondents
Type of Discount	1996	1998	2000	2002	2004	2006
Volume discount	58%	50%	41%	53%	66%	67%
Net fares	N/A	N/A	N/A	67%	51%	53%
System discount	N/A	N/A	N/A	51%	45%	49%
Meeting/group discounts	50%	45%	31%	37%	49%	36%
Discounts on all fares for travel between specific cities	50%	43%	41%	39%	33%	33%
Fixed fares for travel between specific cities	N/A	N/A	19%	31%	35%	27%
Other	4%	6%	6%	8%	12%	4%
*Total does not equal 100% because of multiple answers N/A – Not Asked

Table 4 Arrangements Receiving the Highest Cost Savings
	Percent of Respondents
	2004	2006
System discounts	25%	30%
Volume discounts	26%	30%
Discounts on all fares for travel between specific cities	11%	14%
Fixed fares for travel between specific cities	16%	11%
Net fares	11%	11%
Meeting/groups discount	N/A%	2%
Other	10%	2%

Table 5 clearly demonstrates that most travel managers continue to negotiate all fare types as reported by 80% of respondents. Gaining in popularity is negotiating for discounts on specific city pairs (53%), on specific fares (37%), on specific flights (23%), and off-peak travel (13%). An increase in negotiated fares for group travel and meetings is also evident.

Table 5 Types of Discounted Fares Negotiated
	Percent of Respondents
Type	1999	2001	2004	2006
On all fare types	72%	63%	42%	80%
On specific city pairs	44%	25%	33%	53%
For ad hoc meetings	31%	25%	18%	40%
For group travel	35%	25%	27%	40%
On specific fares (e.g., first class)	19%	12%	6%	37%
For training meetings	31%	17%	14%	27%
On specific flights	25%	5%	13%	23%
On off-peak travel	16%	3%	6%	13%
*Total does not equal 100% because of multiple answers

The average percent discount (off normal coach) associated with the discounted fares noted in the above table is shown in Table 6. Discounts on specific fares yield the highest potential savings reported at an average 26%. The average negotiated discount on off-peak travel is 23%, a 22% discount on specific flights, and the average discount on specific city pair travel is reported at 22%.

Table 6 Discounts Associated with Negotiated Fares
	Percent
Type	2006
On specific fares (e.g., first class)	26%
On off-peak travel	23%
On specific flights	22%
On specific city pairs	22%
For group travel	14%
For training meetings	14%
For ad hoc meetings	12%
On all fare types	12%
*Total does not equal 100% because of multiple answers

Most respondents (31%) report their average negotiated discount to be between 6% and 10% as shown in Table 7. A dramatic increase is shown in the percent of respondents who have secured a discount of 5% or less. It seems quite evident that substantial discounts are becoming difficult to achieve by most respondent organizations.

Table 7 Average Discount Negotiated Off Airline Fares (Of Organizations that Negotiate Discounts)
	Percent of Respondents
Discount	2000	2002	2004	2006
5% or less	8%	6%	4%	21%
6% to 10%	22%	24%	23%	31%
11% to 15%	26%	18%	19%	17%
16% to 20%	24%	20%	15%	10%
21% to 25%	8%	18%	14%	14%
26% to 30%	6%	8%	13%	2%
More than 30%	6%	6%	13%	5%
*Total does not equal 100% due to rounding

Fifty-three percent of respondents report the use of simplified fares as an alternative to negotiating in some markets (Table 8). Sixty-three percent of this group of respondents does not believe the introduction of guaranteed lower airfares has simplified their air travel program.

Table 8 Use of Simplified Fares in Lieu of Negotiating (Where/When Available)
	Percent of Respondents
Yes	53%
No	46%

An equal percentage of respondents (50%) using simplified fares report either a reduction in air travel spend or have not realized cost savings through its use (Table 9).

Table 9 Air Travel Spend Reduced with Use of Simplified Fares
	Percent of Respondents
Yes	50%
No	50%

Three-fourths of respondents report they negotiate with airlines for “soft-dollar” benefits. Upgrade coupons remain the number one “soft dollar” benefit received by respondents (88%) as shown in Table 10. Airline club memberships are making their way back to percentages seen in the ‘90’s, this year reported at 52%. Also making a resurgence is “bartered-for” airfares, increasing 13 percentage points since 2004.

Table 10 Special “Soft Dollar” Benefits Received from Airlines
	Percent of Respondents
Soft Dollar Benefit	1999	2001	2004	2006
Upgrade coupons	85%	77%	87%	88%
Airline club memberships	54%	35%	49%	52%
Waiver of advance purchase restrictions	35%	27%	38%	36%
Special wait-list clearance	35%	23%	33%	36%
Waiver of Saturday-stay restrictions	35%	15%	15%	24%
Bartered-for airfares	73%	73%	8%	21%
“Bartered-for” goods or services	46%	15%	13%	6%
Other	8%	8%	28%	24%
*Total does not equal 100% because of multiple answers

Thirty-nine percent of respondents take a neutral stance on satisfaction with their airline negotiations (Table 11). Thirty-four percent of respondents report satisfaction while 18% are either dissatisfied or very dissatisfied with their negotiations.

Table 11 Satisfaction With Airline Negotiations
	Very Dissatisfied	Dissatisfied	Neither Satisfied nor Dissatisfied	Satisfied	Very Satisfied
Satisfaction level	7%	11%	39%	34%	9%

More than one-half of respondents report that airline negotiations have been more difficult then in previous years (Table 12). However, 23% of respondents believe that negotiations are an improvement.

Table 12 Most Recent Airline Negotiations Considered:
	Percent of Respondents
More difficult than before	52%
An improvement over previous years	23%
Less important to our overall program objectives	11%
Easier, the airlines more receptive	7%
Other	11%
*Total does not equal 100% because of multiple answers

Respondent comments on airline negotiations include:

• Because we are in a secondary market, we do not have the same competitive edge that larger markets have so our options are limited.
• Too many targets in contract
• Airlines do not understand CTD's
• There is no negotiation involved—it's usually a 'take it or leave it" proposition
• Airlines see the process as primarily one-sided i.e., it is the company's responsibility to deliver volume/market share.
• Inflexible—airlines change plans that negate previous negotiations.
• Airfares, in general, are higher than they used to be.  It is extremely difficult to negotiate with any organization which is facing financial ruin.  The more they negotiate lower fares for us, the quicker they fold.  Not a good scenario for ideal negotiating.

Runzheimer Recommends: We advise that you begin negotiating with a single carrier on one city-pair—the quickest way to ruin a deal is to play one carrier against another. Remember the basic principles of negotiations:

• Seek a win-win agreement
• Understand your volume structure
• Know your travelers
• Establish a target price before negotiating
• Care about your supplier's profitability
• Leverage your negotiating capabilities with data intelligence

Our new travel service, Runzheimer Travel Source™ can assist you with capturing timely and accurate data intelligence that uphold your volume and market share commitments, plus much more. For more information, click here:

http://www.runzheimer.com/web/tms/RunzheimerTravelSource.aspx

ANNAPOLIS, MD (April 6, 2006) – Asia is growing in popularity more rapidly than any other overseas destination among American travelers, as 2005 visitors increased by 10% over 2004 (Source: U.S. Dept. of Commerce). In 2005 alone, more than 4.7 million Americans visited Asia, an increase of 34% compared to 2000. For the same period (2000 vs. 2005), U.S. visitors to Europe increased only 3%. China’s continued economic expansion is fueling much of the growth, and this expansion brings a heightened awareness for the region. The 2008 Summer Olympics will be held in Beijing. The 2010 World Expo will be held in Shanghai. American professional sports organizations, such as the National Football League, National Basketball Association and Major League Baseball, increasingly have been incorporating Asian venues for exhibition games. Business opportunities have brought many American workers to Asia, and this business travel exposure has led to return vacations for leisure purposes.

Travel throughout Asia also continues to be among the most affordable in the world. Competitive international airfares put Asian destinations within similar price ranges as European destinations. Yet favorable exchange rates in China, Thailand, India and Vietnam mean that U.S. dollars buy far more in the way of lodging, dining and shopping. U.S. and international airlines and hotel companies have been moving rapidly to meet the increasing demand. Over the past year, Continental Airlines and American Airlines have launched new daily non-stop flights to China, and in 2006 Air China, China Southern and China Eastern will be launching new daily non-stop flights between San Francisco, Los Angeles and New York and Shanghai, Beijing and Guangzhou. With the addition of larger aircraft from Boeing and Airbus, projected to be in service by 2007, the expansion is projected to continue.

For more information contact Paul Cohen or John Riggin at

john@partnerconcepts.com

Runzheimer's Travel Management Network provides travel price benchmarking information for more than 300 locations.  The average per diems for two popular business travel destinations are as follows:

City	Per Diem
Atlanta, GA	$194.26
New Delhi, II	$213.89

Figures are in USD and include first-class lodging average daily rate plus three meals.  For per diem information for more than 100 US and 200 international locations visit Runzheimer's Travel Management Network at travel@runzheimer.com