JANUARY 23, 2006 — The roster of the 25 decision makers who exerted the greatest sway over the corporate travel industry in the past year constitutes an awesome lineup. While many on the list are obvious choices, Business Travel News editors had several tough judgment calls to make in picking this all-star team. The decision as to who is drafted onto this team is made solely by editors based on their assessments as to the degree of influence on business travel decision makers were perceived to have had.

BTN editors gave full consideration to dozens of nominations submitted by buyers, suppliers, agents and consultants, in many cases vetting nominations through interviews with informed sources and the candidates themselves. The following profiles of the 25 most influential executives of 2005 document the individual efforts that together look like a highlight reel of major league accomplishment. By adding up the importance and impact of the key decisions of the past year, business travel industry players and spectators can get a better understanding of how the playing field changed and where the game is going.

This is Prism Group president Michael Whitesage’s seventh appearance on our annual list and Norman Mineta’s sixth appearance—his fourth as U.S. Secretary of Transportation, and the only executive to return to the list from the year before. This is StarCite founder John Pino’s fourth, Concur CEO Steve Singh’s third and Dolce International’s Andrew Dolce’s second appearance on BTN’s Top 25.

Graham Atkinson
Senior Vice President of Worldwide Sales and Alliances
United Airlines
As it progressed through a bankruptcy restructuring, United Airlines in 2005 pursued cost savings in many areas, including distribution, but also reinvested in its product, services and corporate sales organization. While retrenching in the domestic market, the carrier expanded its international network by launching a bevy of overseas routes and furthering alliance links.

Graham Atkinson, United senior vice president of worldwide sales and alliances, helped lead many of those initiatives throughout 2005. He made a particular effort to communicate the carrier’s travel distribution proposals to top corporate and agency clients, which accelerated industry dialogue on evolving corporate travel distribution channels. Those proposals included a $5-per-ticket incentive for agencies willing to shift bookings from traditional global distribution system channels to new distribution models.

“The discussion had been going on for some time, dating to Web fares, most-favored-nation clauses, DCA agreements, etc., but United’s actions in early 2005—right or wrong—almost single-handedly took it out of the arcana and into front-page news,” said John Smith, president of Chicago-based agency Tower Travel Management.

“Transparency typically is a good thing in any business, and in a complex distribution chain like ours, it is even more important,” Atkinson said. “We needed to get these issues out in the open. Someone actually had to start explaining why it was important for airlines and to begin to look at solutions. The deregulation of the industry a few years ago was always going to lead us down the road of differentiated content and differentiated distribution partners. That will be seen as one of the major trends of 2005.”

United’s intended timeline did not necessarily pan out as planned, nor has the “gain-sharing” proposal for travel agencies penetrated the market as deeply as the airline may have hoped. Yet, corporate buyers and agency executives applauded United for its consultative and creative approach. “Graham should be applauded for thinking outside of the box,” said a buyer at one of the airline’s top accounts. “By the time change actually happens, it should not come as a surprise to anyone.”

“Graham’s distinguishing feature is the courage to explore creative, new avenues, to challenge the status quo and to allow the people who work for him to challenge the status quo,” added Derek Lewitton, an architect of United’s distribution strategy before becoming vice president of sales for ITA Software this year. “He has not missed the opportunity to reinforce his and United’s commitment to bring helpful change to the industry.

Support from United for GDS alternatives drew interest from Wall Street. “As much as any other airline, United in 2005 was at the forefront of the anti-GDS rhetoric that helped create negative overhang on the share price of Sabre, and to a lesser degree, Cendant and Amadeus,” said one observer.

Meanwhile, United last spring began implementing a three-tiered corporate pricing program for all accounts. Though it was not the first to overhaul customer deals in the wake of published airfare reform, United presented a framework with the key elements of differentiated share-based benefits and discounts on all published fares—including those on United’s low-fare Ted operation, previously excluded from most corporate programs.

That corporate pricing structure—similar to competitor programs but overall, a unique variation—drew plaudits from travel management sources.

“It was not just to respond to what Delta had done, but to respond to changing travel patterns. It was a unique opportunity to solve a problem that developed over time,” Atkinson explained. “Executing on that was a huge undertaking. Our 1,200-plus contracts had to be addressed one way or another. We have not lost a single account as a result of the process—we kept all the contracts we wanted to keep—which is the first acid test of any major change. It was a huge body of work that in some ways was a distraction, but we learned a lot from it and sent a strong message to the market about rational pricing.”

As airfare reform took hold in early 2005, United was in the midst of reorganizing its sales department. It redefined roles and territories for account managers, focused resources on the most important corporate customers and grew the overall size of the organization. “We have gone in a different direction than most of our direct competitors,” Atkinson said. “A number of them have been downsizing, which opened opportunity for us.”

On the product side, United in 2005 replaced all previous mainline service between New York and both Los Angeles and San Francisco with smaller aircraft configured with first, business and premium economy cabins.

“The Premium Service program exceeded our expectations and we can define it now as very successful,” Atkinson said, noting strong customer demand and passenger mix, anecdotal feedback from top customers and “very, very strong” yields. “Any concerns we may have had about customers being comfortable flying transcons on a Boeing 757 rather than a Boeing 767 widebody have been truly dispelled.”

In June, United launched Business1, which, among other things, compensates registered program members with bonus mileage anytime a flight from Chicago O’Hare to one of several business destinations is delayed at least 30 minutes. A few months later, the airline began implementing the ExPlus program, guaranteeing mainline or bigger regional jet service on longer flights from O’Hare. It also continued offering premium-economy seating across its network and grew Ted services.

“Ours is, without a doubt, the most defined segmentation strategy of any U.S. carrier,” Atkinson said. “It is no coincidence that Business1 does not look like Ted, and ExPlus does not look like P.S., and the back of the plane does not look like the front. The trend United is leading is unbundling services, defining segments of customers and offering products that meet their needs.”

Atkinson also has been heavily involved in United’s international strategy. In the past year, the airline launched new codeshare agreements with foreign carriers and coordinated more closely with Star Alliance partners through such initiatives as the common IT platform awarded to Amadeus. The 2005 highlight of the carrier’s overseas developments, Atkinson said, was a further push into China’s exploding travel market by doubling capacity to Beijing and Shanghai.

Steven Brill
Founder and CEO
Verified Identity Pass, Inc.
In a December 2002 column published in Newsweek, Steven Brill, the media mogul who founded Court TV, outlined an idea for a privately issued and government-backed smart card that would speed prescreened travelers through airport security. “Those with cards,” wrote Brill, “could get on a fast, EZ-Pass-like line, swipe their cards through a machine (that would also check the thumbprint or do an iris scan) and move quickly onto a train or into a terminal or office building.”

In the article, Brill wrote, “After studying the security and legal issues involved during the past year, I am tempted to try launching it myself.”

In the year that followed, he did just that, transforming an idea in a Newsweek column into an emerging business that has spurred imitators and gained momentum. In less than three years, Brill founded Verified Identity Pass, gained Transportation Security Administration support for a widescale privately operated program and signed a handful of airports to turn the idea into reality. As the only company currently operating a registered traveler program, Brill said VIP is in discussions with major airports throughout the United States and is poised to mimic the company’s success at Orlando Airport—the first to sign with VIP and the only active trusted traveler program in the country.

Transportation Security Administration undersecretary for security James Loy outlined the concept of the registered traveler program within a year of 9/11—but Brill was the biggest proponent of a program that would be TSA-approved, yet privately operated.

“I had to work to convince people in Washington that the private-sector model was the only way that this would happen as opposed to some big government program, which would cost billions and never happen,” Brill told Business Travel News.

In November, Brill got his wish. During testimony before a House subcommittee, TSA director Kip Hawley said the government would establish requirements for background checks and set standards for the program, while approved private companies would manage registered traveler operations at airports. As such, the permanent Registered Traveler program last year took its biggest step forward, employing as its template the ongoing Orlando sub-pilot (BTN, Nov. 14, 2005).

“We were searching for a place to do a private-sector program and Orlando has a reputation for wanting to do cutting-edge things, especially technology-wise and customer-service-wise. Instead of talking to everybody in the world I could, I had heard that Bill Jennings, who is the CEO of Orlando airport, was the kind of guy who would want to do this first—and he was.”

Although VIP had secured an interested party to join in the mission to launch a privately operated fast-track airport checkpoint, “the worst imaginable thing happened,” Brill said. “It was naïve and stupid of me not to figure out that this would happen, but airport authorities are public entities and they can’t just give you a contract. It has to be competitive. Jennings said this is great, but the law requires that we put this out to public bid. It’s almost like I had submitted a book outline to a publisher and the publisher said, ‘That is a great idea for a book; we’re going to put it out there and see which writer wants to write it.’”

As the bid opened up to Brill’s competitors—including Electronic Data Systems and Unisys, both of which operated government-run trusted traveler pilot programs—VIP moved to distinguish itself and gain the contract.

“It turned out to be the best thing that happened for us,” Brill said. “The competitive process turned out to be much more healthy. We’re much better off that we went through a competitive process and we were forced to figure out our economic model, our marketing plan, our advertising plan.”

Orlando granted the business to VIP and in July the company launched the first program to be funded, operated and marketed by an airport and its private-sector partners.

Since then, Brill has actively been in discussions with “every major airport in the country,” and has signed San Jose and Indianapolis airports. In addition to government contractors EDS and Unisys, Saflink Corp. last month partnered with Microsoft, Johnson Controls and Expedia to launch a program similar to VIP’s (BTNonline, Jan. 6). Brill in November said between 30 and 40 major U.S. airports are poised to sign registered traveler deals in the next six months. Yet, VIP has been the only company so far to sign such deals with airports.

Brill removed many of the hurdles to privatize the registered traveler program but welcomed competition in the burgeoning market. “I knew that if the business model worked the way it did in Orlando, then there would be others entering the field,” said Brill. “That’s a good thing because when CNN started televising some trials we killed them in the ratings, but it sort of legitimized the idea. It created, if you will, a larger industry for Court TV. Here, the fact that there are some other players getting into it legitimizes the idea and we will get less than 100 percent of a much larger pie, as opposed to 100 percent.”

Brill continued: “When I started Court TV, most states did not allow cameras in the courts. Most people said, ‘You have a good idea but it’s not allowed.’ I said, ‘We’ll convince judges.’ And we did. There were a ton of hurdles with this, but I guess the essence of someone who is an entrepreneur is a hopelessly inveterate optimist.”

Michel de Blust
Secretary General
Guild of European Business Travel Agents
Secretary General
ECTAA, European Travel Agents and Tour Operators Association
A mighty political battle has raged throughout this decade to limit the International Air Transport Association’s dictation of how and where travelers buy airline tickets. In 2005, a change finally came.

In January, it removed a number of restrictions on buying a ticket in a different country than where a trip originates. Then, in June, IATA agreed that travel agencies need only apply for a single accreditation across Europe rather than accreditation in each country—a cumbersome procedure that frustrated agents for many years.

The fare rule changes did lead to some cheaper tickets, especially on complex long-haul itineraries in business class. However, for multinational travel buyers the most significant consequence of these reforms is that it will be much easier to set up operation centers that can handle reservations across European borders. Other improvements, such as reducing the requirement to provide safes in which to keep paper ticket stock, also will help reduce operational costs for agents and clients.

Last year, BTN cited American Express director of industry affairs Bernard Harrop for his role in getting travel buyers behind the IATA reform campaign. This year, it recognizes the person whose lobbying persuaded the European Commission to force IATA to change. Business travel has feeble representation in Brussels but one of the rare exceptions is Michel de Blust. Ably assisted by Isabelle Leroy, legal adviser to the Guild of European Business Travel Agents and ECTAA, de Blust has succeeded in making the voice of travel heard where others have failed.

“His inside knowledge of the workings of the European Commission and his contacts have enabled an early response and proper consultation on the issues that affect business travel,” said a well-informed source. “Almost all the recent changes in IATA’s approach stem from his guiding hand. Not everything in Europe has changed the way we wanted it to, but a lot less would have gone our way if he hadn’t been there.”

One issue not going GEBTA’s way is the deregulation of global distribution systems in Europe. Virtually the entire travel industry is united in believing curbs must be placed on Amadeus in markets dominated by its three airline owners. Latest signals from the Commission indicate full deregulation will take place nonetheless. Fighting a rearguard action is therefore top of de Blust’s in-basket.

Nor is the battle with IATA completely finished. In December 2005, GEBTA withdrew its longstanding complaint to the European Commission about IATA because it was so pleased with the progress it made. Nevertheless, the objective of establishing a single agency billing and settlement plan for the European Union has still not been achieved. De Blust will continue to pursue this goal in 2006.

Andy Dolce
Chairman and CEO
Dolce International
When Andy Dolce, chairman and CEO of Dolce International, announced his conference center chain would abandon industry precedent and allow new customers to avoid complete meeting package style of per-day, per-attendee meeting pricing (Meetings Today, Dec. 6, 2004), the move signaled a change for the industry.

The conference center industry long had sought to distinguish itself as different from the hotel industry by vigorously defending the sanctity of its all-in-one service approach to the meetings industry, and its standards of quality. In order to win new customers away from hotel chains, conference centers softened their approach to pricing.

Dolce previously had allowed a break in pricing structure for associations, but his announcement one year ago spurred other conference center chains to reconsider how they market corporate meetings services (Meetings Today, Feb. 7. 2005). Dolce said the strategy has been effective in growing new business. New customers are given a European Plan room rate and services are added a la carte. “Last year, we were able to increase our group EP business by 57 percent on same-store sales,” Dolce said. “It was terrific.”

Leading up to the decision to soften CMP pricing, Dolce said the company surveyed existing customers who expressed strong satisfaction with the all-inclusive pricing and services.

“Then we interviewed 25 company meeting planners who we don’t do business with to get their take,” Dolce said. “They told us that the pricing was confusing, that they were having difficulty with procurement and that they would love to use conference centers but they were hung up on the CMP pricing.”

Dolce launched basic packages with the option to add more services. “It worked very well. As we’re looking at rebooking for 2006, the people that bought the EP package are converting over to the CMP. We’re getting some pretty good conversion rates,” he said.

Customers were able to see the value of the CMP after adding up the cost of services piece-by-piece, Dolce said, and buyers could convince procurement that the CMP was cost-effective. The influence of procurement fundamentally has changed the meetings industry, he said. “We had a strategic planning session looking at the way we do business and we saw all these changes taking place. All the research indicated the meeting planning process was changing. Procurement was playing a major role and customers were buying differently. Our customers had tighter budgets,” he said. “We saw all these things happening and we thought we really needed to reinvent our sales process, not only in the way we sold but also in terms of how we price.”

As the hotel market continues to rebound, Dolce said he hopes his industry can regain a larger share of the corporate meetings market. However, Dolce said hotels have not turned their attention away from meetings as of yet. Hotels have better meetings facilities than in previous years and they’ve learned how to find sales opportunities in corporate group business, he said.

The CMP still represented 71 percent of group room nights in 2005 for Dolce International, but Dolce said the flexible pricing approach for new customers would continue. “They still buy all the other services. They still are buying the dining services, so we’re not losing any revenue,” he said.

The challenge in softening the CMP has been avoiding commoditization. Focusing on price, at the cost of value, is dangerous. “You have to be careful,” he said. “If we can continue to differentiate ourselves from hotels by product offering, not just pricing, there is less risk of being commoditized.”

Kenneth Esterow
President and CEO
Travel Industry Services, Americas
Cendant Travel Distribution Services
In the past year, an active Cendant Travel Distribution Services announced several deals to expand access to travel supplier content and provide technology for direct airline reservations systems, including corporate portals to rivals American and United Airlines. It also continued to integrate the Orbitz for Business and Travelport corporate travel platforms, and further developed its European portfolio.

Last month, Cendant announced “mid-course adjustments” for the separation plan unveiled earlier this year. Cendant TDS is preparing to spin off and trade publicly by October 2006.

“It certainly came full circle, starting with all the acquisitions we had at the beginning of the year, and then ending the year with the strategic realignment,” said Cendant’s Ken Esterow, who this year took on the new role of president and CEO of travel industry services in the Americas for TDS. “2005 was a year to assemble all the pieces,” Esterow said, crediting the TDS team.

Cendant signed full-content GDS agreements with Air Canada, AirTran, KLM and Lufthansa. Some deals, like Air Canada’s, represent newer economic models requiring travel agency buy-in, while the AirTran deal exemplifies wide-reaching arrangements covering various distribution channels. “It is our footprint, not only the global distribution system side, but also on the online travel agency side,” Esterow said, referring to such Cendant subsidiaries as Cheaptickets. “It enabled us to reach a fair arrangement in which they distribute all their content through Galileo and Galileo agencies. We have been committed to taking a leadership role and making sure all the fares are available for sale within our environment.”

Sabre signed a similar deal with AirTran, which late last year ended participation in both Amadeus and Worldspan.

Through Orbitz for Business and Travelport, Cendant also continued adding preferential supplier pricing for corporate travel clients, including discounted rates on Lufthansa. “It is absolutely critical for us to be credible as a direct provider of travel services to be able to offer the same levels of discounts for corporate travel that the more established players traditionally have,” Esterow said. The goal, however, is not to duplicate the value proposition of traditional travel management companies, but to cultivate a technology-based, low-cost business model.

On the hotel front, Cendant launched the Best Available Rate program, which assures business travelers that rates offered by participating chains are the lowest publicly available. The program now covers more than 30,000 properties and benefits managed travel programs in instances where directly negotiated corporate rates are not available.

In June, Orbitz for Business announced the Board Room Rates program, identifying properties “typically preferred” by business travelers. Several large chains are participating.

On the consumer side, TDS entered into several new merchant hotel content deals with major chains, covering Orbitz, Cheaptickets and Lodging.com.

Meanwhile, Cendant continued to beef up its global presence. In Europe last February, it completed the purchase of Ebookers, followed a few weeks later with the finalized acquisition of Gullivers Travel Associates. “It helps us have more of a direct relationship with suppliers on the other side of the pond,” Esterow said.

Cendant TDS also advanced its technology services business in 2005 by backing reservations systems, corporate booking portals and other supplier-direct channels. “We are going where the transactions are going,” Esterow said. “It is all about maintaining a relevance with the supplier community and making sure we are in place as the industry continues to evolve.”

In furnishing direct corporate portals for both American and United, Cendant continues to apply Orbitz supplier-direct booking technology. Orbitz also powers American’s and Northwest’s consumer Web sites.

Cendant also recently added Delta to the carriers using Supplier Link, technology that now accounts for half of all Orbitz airline transactions. Designed to reduce airline distribution costs, the Supplier Link program “is still the only proven direct-connect technology that works at scale,” Esterow said. He said, however, the incremental benefit of applying Supplier Link to corporate travel bookings “is not clear.”

In September, Canada’s WestJet became the first carrier to select Cendant’s new AiRes reservations platform, covering ticketing, scheduling and checkin. Cendant said the system is more flexible and efficient than legacy systems and the company expects to announce more low-cost carrier clients in 2006.

Meanwhile, Cendant TDS is searching for a CEO following Sam Katz’s departure, coinciding with last month’s announced changes. Cendant CEO Henry Silverman cited lower-than-expected performance, and “specific, identifiable issues that mainly affect our international online operations.” He said TDS “is still growing, and in the aggregate, highly profitable.”

“We are very excited about 2006 and becoming an independent company, answerable to shareholders who are interested in investing in travel distribution,” Esterow said. “We feel very well positioned. Now we need to execute.”

Jonathan Gray
Sr. Managing Director, Real Estate
The Blackstone Group
The midprice and extended stay hotel sectors in 2005 continued a two-year wave of consolidation that rotated around a single axis: The Blackstone Group, a financial investment, advisory and merger and acquisition firm. Blackstone’s real estate group, led by senior managing director Jonathan Gray, has had a hand in every major midprice and extended stay sector acquisition in the past two years and branched into full-service brands, singlehandedly reshuffling sectors and realigning players, leaving corporate buyers to consider new brands and owners.

In 2005, Gray’s group—which is only one division of Blackstone’s varied financial holdings—purchased Wyndham International for $3.24 billion and three months later spun Wyndham’s franchising rights and management contracts to Cendant, purchased La Quinta Corp. and its Baymont Inn & Suites, La Quinta Inns, La Quinta Inn & Suites, Woodfield Suites and Budgetel brands for $3.4 billion, bought a small, Kansas-based extended stay chain and sold extended stay brand Summerfield Suites, which it picked up in the Wyndham deal, to Hyatt.

Blackstone’s rapid acquisition-and-divestiture cycle mirrored its actions in 2004, as it during that year bought Extended Stay America and Prime Hospitality, combined the new acquisitions’ extended stay elements with its existing Homewood Studio Suites brand to form Extended Stay Hotels, then sold Prime’s midprice AmeriSuites brand to Hyatt, which used the new properties as the key cog in its own entry into the heated midprice sector.

Blackstone’s real estate group, which Gray has headed since its inception in 1992, has completed many acquisitions outside the hotel industry, but Gray in 2003 gave a hint as to Blackstone’s designs: “Since office buildings are structured around leases, it takes longer for distress to show up and, conversely, for upturns to materialize,” Gray told BTN in 2003. “Hotels, however, are likely to catch the recovery sooner and should trend upward before offices.” Gray’s word was good, as the spate of acquisitions began only months thereafter.

Kip Hawley
Director
Transportation Security Administration
When Edmund S. “Kip” Hawley took over as head of the Transportation Security Administration in July, he was charged with transforming the four-year-old agency from a bungling federal bureaucracy into the sentinel for U.S. airports.

Hawley, who helped conceive TSA after the Sept. 11, 2001, terror attacks, assumed control of an agency that had fallen into disfavor with Congress and travelers after an embarrassing series of gaffes, from privacy and efficacy concerns about prescreening passengers with a system called Secure Flight to congested security checkpoint queues.

Hawley, a veteran transportation official, set his sights on reducing waits at checkpoints, particularly for business travelers. In November, he announced the U.S. would allow passengers who voluntarily undergo a criminal background check to participate in a nationwide registered traveler program by June 20.

Travelers who pass the background check and pay a fee can enter special security lines where they have their identities confirmed using biometric information, such as an eye or finger scan. They will avoid random and time-consuming secondary screenings.

“We’re going to look to get the program up and operating as fast as we can,” Hawley told a House of Representatives panel in November. Such business travel groups as the Association of Corporate Travel Executives and the National Business Travel Association applauded the news.

“Business travelers, travel managers and their companies will be pleased to learn that after more than three years of promoting the importance of a Registered Traveler program, a timeline is finally set for putting the program in place,” said NBTA executive director Bill Connors. “Registered traveler will increase the level of air travel security by shrinking the proverbial haystack for airport screeners, and it will speed the screening process at airports, making travel more pleasant and more productive for business travelers.”

Hawley’s announcement came one month after the completion of a 14-month test at airports in Los Angeles, Houston, Minneapolis, Boston and Washington, D.C., involving 10,000 frequent travelers. A separate, privately administered trusted traveler program in Orlando became the winning model after officials decided the federal program, which involved only one carrier at each airport, was too limited. The Orlando program, begun in June, addressed some of these concerns by allowing TSA-approved travelers to buy an $80 smart card embedded with such biometric information as fingerprints and iris scans. The program is open to travelers flying on all airlines. Airport officials in Boston and Indianapolis indicated they would pattern similar initiatives after Orlando.

Hawley has blazed other paths at TSA as well. A few weeks after announcing the Registered Traveler rollout, TSA said it would relax rules in place since the terror attacks banning scissors and small tools from airplanes. Improvements such as reinforced cockpit doors and better screening made the rules unnecessary, TSA said.

Yet TSA, under Hawley’s leadership, isn’t backing down on moving ahead with Secure Flight, despite congressional concerns about privacy and a U.S. Department of Justice report that concluded the prescreening initiative to check the names of 2 million passengers a day against terrorist watch-lists is unfocused and ill-prepared. In December, Hawley brought back random airline passenger searches out of concerns airport security had become too predictable.

“Terrorists do watch our security process to try to understand it,” Hawley said. “They will not be able to beat the system because it is unpredictable.”

Kevin Healy
Vice President of Planning
AirTran Airways
AirTran Airways in 2005 soared into the official ranks of major U.S. airlines, according to the U.S. Department of Transportation, as AirTran Airways continued adding service to more business destinations and pushing rival Delta further down a path to Chapter 11. It also executed a strategy to reduce the number of distribution channels in which it lists inventory, without losing focus on the corporate market.

“Given all the turmoil in the industry, that we continue to bring in new airplanes and build our network is the biggest thing we have going for us,” said Kevin Healy, AirTran vice president of planning and a key member of a strong management team.

In 2005, the carrier progressed in diversifying operations beyond the Atlanta hub by strengthening its presence in business markets including Baltimore, Boston, Charlotte, Indianapolis, Minneapolis, New York, Orlando, Philadelphia and Washington, D.C.

In particular, it focused resources on Chicago Midway. After failing in its bid to buy assets from bankrupt ATA Airlines, AirTran continued organic growth at the airport. AirTran by May would operate 28 daily nonstop flights from Midway to seven cities. “Building business services in markets where we can stimulate demand is the network growth priority,” Healy said.

“They have placed their marker in various business markets to make it more attractive to different corporate buyers,” noted Robert Mann of R.W. Mann & Co., an airline industry consulting firm in Port Washington, N.Y.

At the same time, AirTran has maintained its efficiency and has posted profits or very small losses during the past several tumultuous quarters in which most competitors finished deep in the red. “They clearly are at a lower cost that Delta, even in restructuring, will not approach,” Mann said.

As a result, AirTran continues to apply pricing pressure against major carriers, notably Delta. Delta in early 2005 cited AirTran, in part, for its decision to enact airfare reform across the domestic market. The new published pricing structure, however, did not save Delta from bankruptcy, and AirTran now stands to benefit from a noticeable domestic Delta capacity reduction.

“It is what we have been waiting five or six years for, and now we are in a position to take advantage,” said AirTran CEO Joe Leonard last autumn.
“We will all be better off if airlines focused more on their own profitability and less on market share,” Healy added. “The more efficient we become, the more pressure it puts on other airlines to do the same. We do not view competing against Southwest as a bad thing: At least you are competing with a more rational competitor.”

Meanwhile, AirTran’s distribution developments in 2005 exemplified an adaptable strategy designed for the evolving environment. In the fourth quarter, it stopped listing in the Amadeus and Worldspan global distribution systems, becoming the only U.S. major besides JetBlue Airways to reduce GDS participation since the federal government deregulated the sector in 2004. AirTran also “mutually agreed with Expedia, that as a result of the termination of our Worldspan agreement, to no longer participate in expedia.com.”

The airline, however, continues to be available through Expedia Corporate Travel and Cendant’s Orbitz, which, like Expedia, primarily has used Worldspan processing. Healy would not elaborate on just how AirTran is available in those channels, saying only “it is not through Worldspan.”

The airline also recently entered long-term distribution deals with Sabre and Cendant, both of which cover more than just full-content GDS arrangements. Following deregulation, major GDS operators have focused on establishing holistic, multifaceted partnerships with airlines and the AirTran deals provide insight into what future GDS relationships may look like.

Meanwhile, AirTran in 2005 activated direct connections with Outtask’s Cliqbook corporate booking tool and new-entrant distribution system G2 SwitchWorks. It also keeps working with Cendant and Sabre, and travel management companies, on new booking capabilities. “We have made a conscious decision to work with companies and tools that business travelers use,” Healy said. “We are creating automation consistent with the needs of corporate travel managers and TMCs, as opposed to building a Web-based, only-come-to-us Swabiz equivalent.”

As a result, AirTran is making available the benefits of its A2B corporate program, including seat assignments, upgrades and no-fee ticket changes. It also has upgraded its product, now centered on a fairly new fleet of Boeing jets, equipped with a business class and bigger overhead bins. Last February, AirTran became the first airline to offer inflight satellite radio.

Hu Jintao
President, People’s Republic of China

Wen Jiabao
Premier, People’s Republic of China
The names of its two national leaders may evoke a corny old Abbott and Costello routine, but if one may paraphrase that sketch’s most famous line to ‘Where’s on first?’ there was only one answer in 2005. Although India is in hot pursuit, China is the world’s boom business travel destination. Visitor numbers to Shanghai, for instance, rose an estimated 20 percent, as Westerners piled in to do business in a country where gross domestic product leaped 9.8 percent in 2005 alone.

There is an irony here for President Hu and Premier Wen, who assumed the reins of power in 2003. The pair have a reputation for wishing to temper the policy of economic growth at all costs, which was established by their predecessor, President Jiang Zemin. There is little sign of this happening. China has a $200 billion trade surplus with the United States, accounting for 40 percent of the U.S.’s trade deficit.

At least that imbalance will be addressed partially by last year’s deal with Boeing for an assortment of Chinese airlines to buy 52 B787s at a cost of $6.2 billion. Europe is not being neglected either. In December, Wen visited Paris to place an order for 150 Airbuses with a price tag of $9.7 billion. More can be expected. Boeing estimates China will buy 2,500 jets over the next 20 years to serve an air network that is growing by 9 percent annually. This makes China the world’s fastest-growing aviation market and it is expected to become the second-largest globally within 15 years.

The rise of China as a major business travel destination naturally has consequences for travel buyers. One is already being felt. The growing thirst for aviation fuel has contributed to China’s booming quest for oil, which is reckoned to have accounted for 40 per cent of the world’s growth in demand in recent years. Economists have traced a direct link between this and recent surges in oil prices, which have pushed up airfares through the imposition of fuel surcharges.

Buyers also are figuring out how they can integrate China into their travel programs. This is not easy because few of the rudiments, as they are understood in the West, are in place. All air tickets, for instance, have to be purchased through a local global distribution system called TravelSky, which provides very limited management information. Payment methods are also different, with invoicing and cash remaining dominant. Self-booking tools have yet to make any impact either.

International buyers are, for now, finding it hard to manage China in the same way that they do most major countries in their programs. Fortunately, their mission has been helped by the strong if not explosive growth in Chinese operations in 2005 by the leading multinational travel management companies, including American Express, Carlson Wagonlit Travel and Business Travel International, as well as such regional players as the Australian travel management company FCm Travel Solutions. International and Chinese buyers will need to follow suit in laying down the rudiments of travel management because, under Hu and Wen, ‘Go East’ will remain a key business mantra for the decade ahead.

Greeley Koch
President
Association of Corporate Travel
Executives
By the time leaders of the Association of Corporate Travel Executives learned the U.S. Department of State published a notice of proposed rulemaking in the Federal Register requiring implanting radio frequency identification transmitters in both American and foreign passports, there were only days left before the end of public commentary on April 4, 2005.

“This thing was buried out there,” said Greeley Koch, ACTE’s president and senior vice president of strategic sales at TQ3 Travel Solutions. “Clearly, the State Department didn’t know about the business travel industry, and so right away we contacted them to make sure they knew who we were and the impact this was going to have.”

To more efficiently exchange data between the card and the reader, the State Department in March planned to embed new EPassports with passive electronic tags containing biographical information. Originally developed for inventory and supply management, RFID technology never was intended for safety measures, and security experts argued unauthorized scanners several yards away could detect the chip’s signal, putting U.S. citizens abroad at risk for identity theft, kidnapping, terrorism or pick-pocketing.

“The big issue is what is called contact versus contactless technology,” Bruce McIndoe, CEO of Ijet Travel Risk Management explained to Business Travel News at the time (BTNonline, March 30, 2005). “Most privacy experts would prefer the government use contact technology, or smart card technology where the information is embedded on a chip. You can put the card into a reader, the information is encrypted on that chip and they pull the information off. So when you’re walking around, unless you have physical contact with that card, you can’t get your information off.”

In an April 2005 poll, 93 percent of ACTE’s roughly 2,500 members were opposed to the use of contactless technology. “That’s when we first crafted our response to the rules,’ ” Koch said.

Following that, ACTE worked with a contact at the Transportation Security Administration to connect with Frank Moss, U.S. State Department deputy assistant secretary for passport services. Koch presented his case and “it took off from there,” he said. “It’s all about finding the right person and using your contacts to get to them and providing them with the facts about the impact. It was something they couldn’t refute and that’s when they slowed things down.”
Their conversations led to Moss participate in a conference call about RFID technology during a session at ACTE’s Vancouver meeting last May, when he assured members the State Department would not roll out new generation passports until the U.S. Department of Homeland Security overcame privacy, security and identity theft issues.

Koch and ACTE continued a dialogue with Moss and the State Department that seemed to culminate with the appearance of Ann Barrett, managing director of passport services for the U.S. State Department’s Bureau of Consular Affairs, at ACTE’s London global conference in October. Barrett praised ACTE for focusing on privacy and provided details on how the State Department revised its approach to EPassports as a result. “We are using anti-skimming devices on the front cover and along the spine to protect data on the chip,” she said. “We also use basic access control. We have done everything we can to make sure the document has integrity and that the chip cannot be read from any distance” (BTNonline, Oct. 31, 2005).
The new passports will use contactless technology—part of the standards set forth for machine-readable passports in July 2005 by the International Civil Aviation Organization. Other criteria EPassports must meet include digital headshots as the primary means of identification and iris scans or fingerprints as secondary and optional, specific data structures for programming the chip and protection against unauthorized data alteration.

Barrett said volunteer flight crews traveling between Los Angeles and Sydney, Australia, began testing a prototype in June 2005. She and Koch said they would work together to have ACTE members test the passports as well. The State Department plans to roll out the EPassport by October 2006 to all 16 U.S. passport distribution locations.

“You hear all the time that the government bureaucracy sometimes works against you,” Koch said, “and that’s what we were pleased about: We found the right people, we used our connections to get there, presented our facts—and once you saw the facts, you could not go forward with it. I was pleased to see it could work out when you set it up and pursue it in the right way.”

Kevin Maguire
Manager of Corporate Travel and Fleet Services
Tokyo Electron America
Following a five-year push to arrange collective buying agreements with travel industry suppliers, a consortium of 12 midmarket companies, including Tokyo Electron America and Bose Corp., last year made large strides in a once taboo buying model when it secured contracts with hoteliers. With collective agreements in place with rental car companies, data management firms, traveler security services providers and now hotels, Tokyo Electron Travel manager Kevin Maguire—cofounder of the consortium and one of the architects of its modified approach—has been instrumental in changing supplier perceptions of the oft-shunned buying practice.

While consortium buying conjures up perceptions of a one-size-fits-all approach that delivers the same rate to all parties involved, Maguire and Co. modified the approach to make it more palatable to the travel industry and a better fit for participating companies.
“Nobody has fully understood collective buying in the travel industry because in the past it’s been one agreement for 20 companies,” Maguire said. “That never really worked very well in most cases. Ours is not that way. We want an agreement per company that is better than what it was before.”
This consortium concept was the child of brainstorming sessions between Maguire, Gary Polito of Bose Corp.—the other architect of the concept— and other travel managers, who in 2001 presided over various local National Business Travel Association chapters. Adidas, International Sematech and Raymond James Financial also belong.
“We’re really not the same size, but we did share a couple of things: We shared the same vendors to a large degree, but we also thought that it would make sense if we had city pairs that were similar that we could collectively sit down and, instead of buying half the cake, we could buy the whole cake.”

What struck the group as a logical solution for leveraging volumes, drew resistance from travel suppliers—and initially many a deaf ear.

“The first challenge is getting them to listen, but once they do it’s a whole different story,” Maguire said. “The progressive vendors—those who have a futuristic view of the industry—have been said this makes sense, we may need to make some changes, but we understand, we agree and want to be a part of it. The old-line suppliers are the ones with the biggest problems with it.”

With one dozen companies in the consortium, the group has sparked a wealth of interest from like-minded buyers. While Maguire said they are considering expanding the group—with a proposed cap of 25 companies—the consortium is delicately weighing how interested parties would fit in.

“We’re at 12, with six others that have submitted information. They’re not part of it yet is because we want to see if they match,” Maguire said. “The biggest stumbling blocks are: They have to be willing to share information and once they’re a part of it they have to be willing to support the suppliers. They can’t decide halfway in that they won’t support a particular agreement.”

Paul Matsen
Executive Vice President and Chief Marketing Officer
Delta Air Lines
Delta Air Lines in the first week of 2005 restructured its domestic pricing, leading to the largest overhaul of airfares since American Airlines’ short-lived Value Pricing initiative in the early 1990s. Following a localized rollout in Cincinnati in mid-2004, Delta’s nationwide redesign reduced last-minute business fares, lowered change fees, eliminated many onerous ticketing restrictions and narrowed the gap between the highest and lowest prices in a given market.

Meant to improve the airline’s revenue picture while defending against share shift to low-cost carriers, Delta’s SimpliFares prompted widespread changes to corporate relationships and tested the elasticity of business travel.
“It is giving companies more flexibility to avoid a Saturday-night stay and has created opportunities that may not have existed in the past,” said Delta chief marketing officer and executive vice president Paul Matsen, a leader in developing and implementing the new fare structure. “In a very volatile year, we are proud that SimpliFares remain in place. We have defied expectations, and the world has not come to an end.”

Delta’s large competitors—American, Continental, Northwest and United—during the first half of 2005 matched many aspects of the new structure, including corresponding adjustments to all corporate contracts.

“The year got off to an unexpected start,” said Graham Atkinson, United senior vice president of worldwide sales and alliances. “There was an urgent need to analyze what Delta SimpliFares meant for our contractual relationships and then refine agreements with all 1,200 of our top corporate customers.”

Initially, many companies had lower domestic per-ticket costs as lower published pricing more than offset reduced discounts.

“The market definitely appreciated the looser restrictions and a compression in fares between last-minute walk-up Y fare and the leisure ticket,” said Scott Gillespie, CEO of Travel Analytics.

“Carriers already had started to move in that direction and this was a big leap forward on a path they all needed to go down,” added Bob Brindley, vice president and general manager of WorldTravel BTI’s Travel Procurement Solutions division. “Delta expedited it, and the new structure succeeded in closing the gap between high-level fares and discount fares and generating greater demand for some of the last-minute fares.”

Robert Mann of R.W. Mann & Co., an airline industry consulting firm in Port Washington, N.Y., said SimpliFares “put the neutron bomb to the issue of whether or not there is low-priced stimulation and elasticity in the business travel marketplace.”

“Everybody who has objectively looked at this—including American and grudgingly Northwest—has realized there has been stimulation and that inelasticity is not what it was thought to be,” Mann continued. “The results have not been negative. In fact, many people acknowledge it has been positive.”

Airline revenue trends—including passenger yields and unit revenues—gradually improved during the year as carriers pushed though published airfare hikes in response to spiking jet fuel costs, while leaving intact the lower corporate discounts introduced earlier in the year. As a result, many corporate buyers now are no longer seeing the per ticket savings evident in the first half of 2005. At the same, airline executives who previously feared significant revenue loss in the wake of SimpliFares now see positive indicators.

“It was a pleasant surprise to us that concerns in the media—that this would mimic the fare wars of Value Pricing from the early 1990s—did not come to pass,” Matsen said. “There were a lot of draconian predictions about what this would mean for industry revenue, and that, too, did not come to pass.”

More than just a published pricing redesign, SimpliFares covered many aspects of sales and distribution, including corporate discounting strategy, reworked agency incentive programs, a relaunched consumer Web site and adjustments to unpublished pricing, including groups and meetings.

Matsen, with Delta since 1994, led the creation of the carrier’s first consumer Web site, transformed the SkyMiles frequent flyer program, launched the Delta/American Express co-branded credit card and advanced Delta’s domestic and international alliance strategies. He is responsible for marketing, sales, distribution, Delta Technology and Song, which is merging back into the mainline product.

Norman Mineta
Secretary
U.S. Department Of Transportation
U.S. Transportation Secretary Norman Mineta capped a year of milestones in 2005 by announcing a major accomplishment in a longstanding effort to liberalize air travel between the United States and the European Union: an agreement on a regulatory framework that may put changes in motion as early as October.

The pact, announced in November, commits both sides to “the highest standards of aviation safety and security” and calls for deeper cooperation in the areas of competition law and policy, government subsidies and support, environment and consumer protection. Negotiations on a second phase would be scheduled once the parties implement the initial agreement. It potentially will allow U.S. and E.U. airlines to fly more freely between any cities on both continents and to third countries beyond, boosting access to markets on both sides of the Atlantic.

While Mineta must still overcome concern by long-haul carriers protective of their exclusive landing rights at London’s Heathrow Airport, including British Airways, American Airlines, United Airlines and Virgin Atlantic, he can still celebrate tangible progress on a top initiative since taking office in 2001.

“It provides new opportunities for U.S. and European airlines, healthier competition for a growing travel market and greater connections between cities and towns of all sizes on both sides of the Atlantic,” Mineta said. “More broadly, this agreement would bring nearly 750 million people and 26 countries together to comprise the largest and most lucrative open aviation market ever created.”
While European government ministers still must approve the deal before it can take effect and it faces some hurdles in the U.S. Congress from such lawmakers as Minnesota Rep. James Oberstar, the ranking Democrat on the House Committee on Transportation and Infrastructure, over revised limits on foreign ownership of U.S. carriers, the first phase of the agreement put an exclamation point on a busy year for Open Skies agreements.

In addition to the pact with the European Union, Mineta signed a new deal with India in April, boosting flights between the United States and one of the fastest-growing economies in the world even as he initiated talks with Thailand and Hong Kong. In 2004, the United States signed a major Open Skies pact with China.

“We are seeing liberalization of international air services markets around the globe,” Mineta said in Hong Kong in April at the end of a 10-day trip to Asia to promote the deals. “The reason is clear. Open Skies works.”

Keith Mullineux
EMEA Travel Manager
General Electric
Keith Mullineux was inadvertently nominated for this list in October 2005 by a fellow buyer, Schlumberger global travel manager Neil Hammond.
“I want to compliment Keith on GE’s approach,” Hammond told BTN when the pair attended a roundtable on European travel management. “It is blazing a trail throughout Europe, which is desperately in need of some standardization. What GE is doing is paving the way for Europe to become as simple as we imagine the U.S. to be.”

BTN has recognized U.K.-based Mullineux’s achievements before. In 2003, BTN named him International Travel Manager of the Year for starting arguably the most ambitious consolidation of a travel program yet seen in Europe. In 2005, he all but completed his mission.

GE now has the same travel management company (Carlson Wagonlit Travel), the same self-booking tool (GetThere) and even the same global distribution system (Sabre) across 23 countries, with all reservations being handled through a service center in Warsaw. The United Kingdom was the first country to go through the process and Hungary was the last.

While many American companies have underestimated the operational and cultural challenges of running a travel program across Europe, it is equally true that too many have given up on the idea. Mullineux’s achievement has been to demonstrate that with enough sensitivity, determination, patience and resources, it can be done.

“GE consolidated the U.S. back in 1992, putting it all through a center in Phoenix,” said Mullineux. “Then someone got hold of a map of Europe and saw it looked to be the same size. However, we quickly realized we had to multiply the complexity by a factor of 23.”

Asked what advice he would give other travel managers contemplating following the same path, Mullineux’s response is to allow plenty of time and expect the unexpected: “You will never anticipate everything that is going to leap up and bite you,” he said.

Brian Nichols
Hotel & Ground Transportation
Programs Manager
Deloitte Services LP
Loading hotel rates into global distribution systems for years has persisted as a contentious issue in the corporate travel industry, inciting an annual rash of finger-pointing between corporate travel buyers and their hotel suppliers.

Although issues have yet to be completely resolved, the National Business Travel Association last March tempered the heated he-said-she-said debate with the release of a white paper outlining a defined process both buyers and hotel suppliers should follow to load negotiated rates.

The white paper was a collective effort forged by travel buyer and supplier members of NBTA’s hotel committee, but committee chair Brian Nichols, hotel & ground transportation programs manager at Deloitte Services LP, jumped to the forefront in outlining issues and solutions addressed in the paper—and sharing many of his company’s best practices with the industry.

“The hotel committee usually tries to take up one or two major issues to address and somehow improve for the industry,” Nichols said. “We look across the industry to see what’s broken and is high impact—what would actually matter if we fixed it? Rate loading came out as the glaring, obvious choice because it was a major issue and had a lot of noise around it, but the discussions were rarely productive.”
In addition to the hotel committee’s quarterly meetings, the annual NBTA conference and a “large number of conference calls,” Nichols said the committee worked on outlining and structuring the paper for about a year and a half, during which it reached out to others in the industry for feedback.

The issue of rate loading clearly is not without its complexities, but Nichols and the hotel committee focused not on technical issues but how hoteliers and buyers can better communicate, set schedules and hold one another accountable for their various tasks in getting rates loaded in a timely and accurate fashion.
“A lot of people, when they approach rate loading, get overwhelmed by understanding the GDS,” Nichols said. “You don’t have to understand all that, but you can make simple process and timing and communication improvements that make it better.”
Buyers received the white paper with open arms as others in the industry soon latched onto its message. On the supplier side, the Hotel Electronic Distribution Network Association, an organization of more than 200 companies in the hotel distribution industry, in September endorsed the paper’s contents and welcomed Nichols to speak at their December conference. “Improper loading of rates has long been a challenge facing the hotel electronic distribution community and the corporate customer,” said HEDNA president Jimmy Suh last year. “We applaud the NBTA hotel committee’s efforts to clarify and instruct travel managers on overseeing the loading process.”

Furthermore, several hotel companies noted the paper was instrumental in initiating a structured dialogue with clients and a blueprint for action. For example, Choice Hotels uses the white paper to train new account managers. “So much has to do with good communications,” said Christine Chippindale, senior director of travel industry sales at Choice Hotels International. “The NBTA white paper outlines the nuts and bolts of the process for everyone. If you can focus on these things, your rates will be loaded successfully.”

Further proving the value of the white paper, Nichols practiced what he preached. At Deloitte, he developed a timeline to specify precisely when and how rates would be loaded which began even before issuing requests for proposals, spoke with a broader range of higher-level hotel executives and those managers directly responsible for rate loading, and developed penalties, including potential exile from the company’s hotel program, for hotels that did not comply with agreed-upon rate-loading practices. As a result, nearly 100 percent of Deloitte’s 2005 negotiated rates were loaded into global distribution systems on time and accurately (BTN, July 4, 2005).
“There were definitely things that we were doing at Deloitte that other companies weren’t necessarily doing,” Nichols said. “We threw those in the white paper, but not unilaterally. I put those out as ideas and then we went to that audience of the committee and people thought that it made sense. Also, other people did the same thing and I picked things out of the ideas that were contributed by others and we’ve implemented those at Deloitte.”

As the NBTA white paper on rate loading nears its first birthday, Nichols said its contents would not stay static—as further changes in technology and pricing continue to shift, potentially creating new contentious issues.

“Any white paper that gets published can’t stay the bible for too long,” Nichols said. “The distribution technology is changing fairly dramatically and there are also hints in the industry that the pricing models may change. So as those things change, the white paper will need to be updated.”

Mark O’Riordan
CEO
Meridian
Last year in the United Kingdom, Her Majesty’s Revenue & Customs authorities were poised to enact a law that would make it difficult for companies to reclaim value-added tax following stays at U.K. hotels, until Mark O’Riordan, CEO of Ireland-based VAT reclamation firm Meridian, rallied the support of Meridian employees, clients, hoteliers, legal experts and even Parliament members to challenge the law.

Victory came just weeks shy of the Jan. 1 enactment date, when British HM Revenue & Customs authorities reversed the policy that would have mandated companies file for hotel VAT reclaims using a company name and address, not those of the traveler, as rooms most often are booked (BTN, Dec. 5, 2005). “If implemented as intended, international companies investing or doing business in Britain would suffer substantial reductions in their VAT refunds, thereby raising the cost of doing business in the U.K. by up to 17.5 percent,” O’Riordan told customers during the rule challenge.

“When you have American or Japanese clients traveling, they don’t travel to the U.K. for a day or two, they generally stay for a week,” O’Riordan said. “They don’t want to stay at your Holiday Inn, but usually higher-tier hotels. They’re spending $400 or $500 on VAT and that’s a significant come-back for them, if they can get it.”

Part letter-writing campaign and part legal battle, opposition to the rule began last summer when U.K. authorities initiated the change for tax filings. Within months, Meridian sent official dispatches to HM Revenue & Customs authorities, while securing a legal opinion that sided with the company by senior barrister Paul Farmer. Following a meeting with U.K. officials, Meridian—in a strongly worded alert to clients—declared it “a top priority” and said it would “devote significant attention and resources to launch a challenge in accordance with U.K. and E.U. law.”

“We met the authorities here in Dublin,” O’Riordan said. “We stressed that this was very much a serious thing from our perspective and our clients’ perspective. We believed we had legal rights on our clients’ side. Therefore, we spent quite a lot of money getting legal opinions on it and we sent that out to the U.K. authorities. I also felt that we needed to get awareness of this and if the companies don’t hear anything apart from a bulletin from Customs, then we’d get nowhere. We raised it to our clients and got feedback from them. They agreed that it was unfair.”

With Fortune 500 clients on its side, Meridian urged customers to protest the rule through a letter-writing campaign. Eventually, O’Riordan and other Meridian employees secured some rank to its cause—in the form of a Member of Parliament.
“When customers and the authorities wouldn’t heed what we thought, we raised it to the opposition—the Conservative Party—through an MP named Richard Spring,” O’Riordan said.

Meanwhile, the company secured the aid of some U.K. hoteliers and trade associations. “We raised it with the Confederation of British Industry. I raised it then with Irish Hotel Confederation. They put us through to the hotel chains and the confederation in the U.K. It took time to move these people, but eventually they saw the merit in it,” O’Riordan said.

On Dec. 15, O’Riordan was notified that his efforts had paid off. “We have received representations that the proposed changes—particularly in relation to hotel expenses—would make it very difficult for overseas companies and the hotel sector to satisfy the basic invoicing requirement so overseas companies would be able to recover the VAT they incur in the U.K.,” HM Revenue & Customs said in a statement.

Doug Parker
Chairman, President and CEO
US Airways
The first significant domestic airline consolidation in several years occurred this past autumn, pairing a resurgent America West Airlines with a chronically unprofitable US Airways. The merger not only saved US Airways from a troubling fate, but also proved that financial capital can be made available to the domestic aviation sector under the right circumstances. Doug Parker, AWA’s CEO since 2001, now has the reins of the new US Airways, which has been dubbed “the first national low-cost hub-and-spoke network carrier.”

In early 2005, legacy US Airways was in a dire position. It had sunk back into Chapter 11 bankruptcy protection, was suffering from operational problems and deteriorating customer confidence, faced fresh attacks from healthier low-cost competitors and was reliant on the flexibility afforded by the federal government, the bankruptcy court and financial backers. Its liquidation—had it come to that—would have occurred as early as last spring, with a potentially significant market impact, most notably along the East Coast. As a result, many of the carrier’s corporate clients had become hesitant to enter into new or renewed deals.

Instead, thanks to AWA, US Airways again was reinvented as a viable competitor. “These two airlines, now combined, are by far the most financially stable of the Big Six airlines,” Parker said during a recent BTN interview.

AWA in late 2004 had indicated its intention to participate in industry consolidation when it considered buying parts of bankrupt ATA Airlines. It dropped out of that bidding but soon began talks with US Airways. A deal officially was announced last May.

The merger faced initial skepticism among some observers and Wall Street analysts, but market reception warmed as the carriers pieced together financing and began securing necessary approvals. The transaction was completed in September, marking the first consolidation among the nation’s 10 largest carriers since early 2001 when American Airlines wrapped up its purchase of Trans World Airlines.

“Some were of the view that capital will not flow in this industry. We proved that it will if you can put together a model that works,” Parker said. “We also proved that consolidation can create a lot of value. The two companies could not raise money individually, but by putting them together, we were able to raise more than anybody has.”

The successful pursuit of financing by America West and US Airways also “has shown that a lot of this hemming and hawing about the need for access to foreign capital is simply misplaced,” said Robert Mann of R.W. Mann & Co., an airline industry consulting firm in Port Washington, N.Y. “Initially, I was not a proponent of this deal, but the performance was obviously masterful, and the money says why.”

Noting renewed cooperation from industry labor groups and a more lenient regulatory stance, Parker said the transaction also “showed that the environment is better than it has ever been” and that other industry players “now are looking at this and saying that maybe they should do the same thing.”

Some industry analysts have made similar suggestions. “Prospects for industry consolidation appear somewhat better moving into 2006, given the surprisingly strong availability of equity capital,” said Fitch Ratings, in a December research note. “Witness the recapitalization of new US Airways and some indications that the opposition of antitrust regulators to big mergers may have waned during a period of industry financial crisis.”

The merger also may help improve the health of the overall industry. Though capacity reductions were not as significant as they would have been had US Airways liquidated, the combined entity removed 50 jets from service. “In the grand scheme, it is a small reduction in capacity for the industry,” Parker said, “but as we [and other domestic airlines] pull down capacity 10 percent or so, it has enormous impact in our ability to generate revenues.”

“We consider America West to be one of the industry’s most competent carriers when it comes to revenue management,” said J.P. Morgan Securities analyst Jamie Baker last spring, when the merger started to become a reality. “US Airways is considered one of the less, if not least competent. Given the identified need for significant revenue synergies, we expect the pro-forma US Airways to price rationally, a welcome positive for industry revenue trends.”

Meanwhile, the AWA-US Airways merger saved as many as 30,000 airline jobs had US Airways been forced to shut down. It also created a more viable supplier for many corporate travel programs as complementary route networks helped the new entity stake a larger claim in many business markets. Renewed US Airways also maintained domestic United Airlines and worldwide Star Alliance affiliations, becoming the only current domestic low-cost carrier to participate in a global airline alliance.

The company already relocated to AWA’s Tempe, Ariz., headquarters, began code sharing between the two brands, aligned ticketing policies, co-located airport facilities and began trading on the New York Stock Exchange with the ticker symbol LCC.

The airline also consolidated the corporate salesforce into a centralized model resembling that of legacy AWA. New US Airways also is adopting as its common reservations system the Electronic Data Systems platform already in place at AWA.

“The biggest challenge the combined company now faces is integrating the two entities without disrupting service and trying to realize as many of the projected benefits as possible in the shortest time period,” said Calyon Securities analyst Ray Neidl in a December research note. “This has to be done against the backdrop of high and volatile fuel prices and tough competition. However, we believe that this management team is strong and capable of achieving its goals.”

Parker served as an executive at America West since 1995, after stints at American and Northwest airlines. He was named CEO days before terrorist attacks in September 2001, and was widely credited with reversing AWA’s fortunes in the following years.

John Pino
Founder, Executive Chairman
StarCite Inc.
When John Pino, founder and executive chairman of meetings technology firm StarCite Inc., announced in August 2005 that the company had integrated its multiple tools gained through years of acquisitions and development into one system (Meetings Today, Aug. 15, 2005), he launched the industry’s closest effort yet to provide an “all-in-one” meetings management technology system.

The news followed an announcement in May that Michael Boult, founder and former COO of Eclipse Advisors, had joined StarCite as president and COO (BTN, June 6, 2005). Boult was promoted to CEO in October.

“This was the year that we finally got everything in place for accelerated growth,” Pino said. Boult has a reputation for expanding companies and making them successful, Pino said. “For any company to have this global ambition that we’re talking about, the most important thing is people,” Pino said. “We want to grow aggressively, we want a seasoned person and somebody who understands the industry.”

Boult has a wider perspective on the meetings industry and how it fits into corporate travel programs, Pino said. It’s the all-encompassing approach that StarCite wants to pursue, he said.

“It’s important that we not just deliver technically but we that we’re always in touch with where the industry needs to go and where our clients need to go,” he said.

Integrating StarCite’s various tools into one system, called Global Meeting Solutions, illustrates the company’s drive to provide clear solutions for the complex meetings management industry, Pino said. “The technology is brilliant and complex but customers don’t need to understand that. They just need something that works easy. The data needs to be aggregated and we’re intent on aggregating not just the group data, but the transient as well.”
All StarCite customers gradually will be transitioned to the new system. Pino said most major customers would be using the new system by the end of 2006. It also must switch supplier-side customers to the GMS system.

GMS is defined by five steps, or modules, in the meetings management process that correspond with the different functionalities of the system: plan, budget, buy, attend and measure.

“These power words represent the most direct way of doing the functionality within the modules,” Pino said. “There is a way to do meeting management and there is a process that works. Our feeling is if you do these five things, you’ve got a program that we know absolutely will work.”

Not every customer wants to tackle all five steps at once, Pino said, so GMS is designed to allow customers to separate the steps required.
“We knew we needed the complete platform, but we also knew that people will do it in stages, so that’s the reason for the modular approach,” he said.

It also has been a year of major partnerships for StarCite. The Philadelphia-based company announced it had been selected as the preferred meetings registration provider of mega travel management company TQ3Navigant in July. It also announced in 2005, partnerships with third-party hotel request-for-proposals provider Uversa International Inc., Hyatt Hotels Corp., Carlson Hotels Worldwide and American Express, among others.

“StarCite has always focused on the buyer side of the equation first and foremost—building that up over the past several years has allowed the marketplace to be viewed by suppliers as essential,” Pino said.
StarCite also accelerated its growth in Europe in 2005 with a partnership with Maritz Europa (Meetings Today, June 6, 2005).
“We had a lot of optimism about doing it, but I don’t think we realized how quickly it would take off,” Pino said. “It’s exceeded the expectation. They have the contacts and the buyers and European companies have the same problems, so they need the same solutions. It certainly signals the beginning of the next part of our evolution into achieving that vision that we set out so long ago,” he said. “We’ve had really nice growth, but you get to the place that if you’re really going to be a player it has to be faster and it has to have more impact.”

Mary Power
President and CEO
Convention Industry Council
The Convention Industry Council, under the leadership of president Mary Power, in 2005 delivered on its promise of developing meetings management standards when it released an electronic toolbox for meeting managers that included more than 200 event management and business templates, guides and checklists. The software, called Apex OfficeReady for Meeting and Event Planning, was the highlight of the fifth and supposedly final year of the council’s Accepted Practices Exchange initiative. The release of the remaining Apex projects has been delayed until later this year.

“We launched the toolbox in July 2005, and since then we’ve sold about 1,000 copies,” Power said. “The most exciting thing about Apex is it pulls the whole industry together. This isn’t just a product by one or two organizations, it’s really saying, ‘We as an industry can pull together and make ourselves more professional.’ That’s the key to the success of Apex.”

Having tangible results from the five-year Apex project was a big step. “For so long Apex was an idea, and now it’s something they can touch and they can feel,” she said. “They can see some of the tools and how it streamlines things.”
In addition to direct sales, Hyatt Hotels Corp. bought 4,000 copies of the toolkit to give to its clients, and conference centers also have bought the software in bulk, she said.

“It took the banking industry 42 years and it took the real estate industry 25 years just to come up with one standard agreement on how they handle bank fees or how they handle a standard real estate contract. We’re trying to do it in five,” Power said.

Power said previous industry attempts at standardization were hampered by logistics and infighting over which forms and templates.

“When we started this five years ago, everybody said that one form would be great, but it has to be mine,” Power said. “The great news is that technology is moving along at a fast enough pace that they can use their forms, because Apex is all about the content.”

The toolbox ensures that no matter what form a company uses for its requests for proposal or rooming lists, the information is consistent and complete, she said. Vendors receive necessary information in a company’s first request, rather than through a series of follow-up phone calls. The toolkit is designed to interface with Microsoft Office software, including Word, Excel and PowerPoint components.

“We did a poll of over 20,000 planners. For 80 percent, the most advanced technology they used was a Word document or an Excel spreadsheet,” Power said.

The software also was designed to allow for easy updates as Apex wraps up other projects—including a guide and template for contracts.

“We’re not getting in the way of anybody’s creativity, because we’re not saying what has to be in those paragraphs. It’s just where the paragraphs need to be, so that they’re easy to find,” she said. “We thought that if we could help people understand what is the purpose of a clause and why it is important, then as they put their contracts together they will have a good understanding.”

Under Power’s leadership, 2005 was a banner year for the Convention Industry Council. The National Business Travel Association in March joined as a member organization, bringing CIC’s membership to 31 organizations representing more than 100,000 individuals as well as 15,000 firms and properties involved in the meetings, conventions and exhibitions industry. Last year was also the 20th anniversary of the council’s certified meeting professional program, and the number of CMP-designated individuals passed the 10,000 mark.

“We are the umbrella. Basically, most of the meeting planning organizations are members of CIC,” she said. “The fact that we represent a cross-section means that big things in the industry can be accomplished. Apex is a big thing for this industry that will benefit everybody. The CMP program raises the bar for the professionalism of the industry.”

Sy Price
Global Corporate Travel Manager
Intel
Intel in 2005 set new standards for its hotel program, convincing preferred suppliers to install wireless Internet access across properties to enhance traveler efficiency. The move pushed other hotels to join the growing trend of Wi-Fi access and set apart Sy Price, Intel’s global corporate travel manager, for creating a travel management policy focused on productivity.

“We ask in our selection criteria that the hotels have wireless capabilities,” Price told Business Travel News in June 2005. “If they don’t and they’re still a key preferred hotel for Intel, then we’d work closely with our sales and marketing organization, our information technology group, as well as the right people at a specific hotel or chain to implement wireless solutions to ensure that when our travelers are at the hotel, they can utilize wireless capabilities in their rooms or lobbies” (BTNonline, June 20, 2005).
Intel, which has a global hotel program with more than 400 hotels across 50 markets, first implemented the program encouraging Wi-Fi adoption after transitioning to a new global travel management company in 2003. At that time, only about 9 percent of the company’s preferred hotels had wireless capabilities. By the end of 2005, 85 percent offered Wi-Fi services—just shy of Price’s 90 percent goal for the year.

Though Intel’s corporate mission is focused on wireless adoption, it does not require hotel partners to implement Intel solutions in order to be a part of its corporate hotel program. Even so, Price admitted the arrangement is “a three-way win” for Intel, its travelers and the hotel. “We’ve had a very positive response from the hotels we’re selecting that have wireless capabilities because our employees like that capability from a productivity perspective,” he said.

The hotel industry increasingly has made Wi-Fi technology available to travelers, and now provides more than 60,000 hotspots around the world. Brands such as Hilton, Hyatt, Omni and Kimpton have made wireless Internet access the standard across properties, while other companies, including Marriott, are taking steps to roll out the technology across most hotels.

Price, at Intel for the past 10 years in a variety of purchasing roles, recently moved to the company’s client platform architecture and planning division, in a position he said is “drastically different” from his previous role as global corporate travel manager.

David Radcliffe
CEO
Hogg Robinson
2005 was a big year for U.K.-based travel management company Hogg Robinson—but 2006 already is bigger. Earlier this month, Hogg effectively announced the end of Business Travel International, which had served clients in 100 countries for 16 years.

BTI is disappearing because neither of its two parents—Hogg and the Dutch-owned BCD Holdings—could find a way to buy out the other after two years of negotiations. Following the split, BCD bought TUI’s share of the TQ3 Travel Solutions Network plus U.K. independent The Travel Company. This leaves BCD well covered in such major markets as the United States, where it owns WorldTravel BTI, the United Kingdom and Germany.

Hogg owned or controlled the BTI partners in 21 countries, including the United Kingdom, central Europe, the Nordics, Canada and fast-emerging China and India, but Hogg had nothing in the largest market of all: the USA.

Seeing which way the wind was blowing with BTI, Radcliffe took out an insurance policy in April 2005 by acquiring Sea Gate Travel Group, a well-respected super-regional based in New York. The wisdom of this move subsequently has been proven, allowing Hogg to continue post-BTI as a genuine transatlantic contender in global travel management.

Another benefit of the Sea Gate acquisition was its strong niche business in sports travel, an interest shared with BTI Germany, the official accommodation handler for this year’s soccer World Cup. Hogg now is promoting this division vigorously. The other business line that Hogg developed in 2005 was expense management through the acquisition of Australian expense solutions provider Spendvision. Hogg subsequently won the Queensland government travel and expense management account, for which other short-listed candidates were technology companies outside the travel sector.

Radcliffe also divested in 2005 by offloading Hogg’s employee benefits business. As a result, Hogg’s interests are solely in business travel for the first time in its 160-year history.

Asked what influence he had on the business travel market in 2005, Radcliffe said Hogg offered an alternative—in the United States at least—to a relentless march towards low-cost, low-service transactions. “It’s about what our cost can do for our clients’ overall travel expenses, not just the cost itself,” he said.

Robert Salerno
President and CEO
Cendant Car Rental Group Inc.
When Cendant Car Rental Group—parent of the Avis and Budget brands—announced in August it was discussing with corporate customers a 7 percent to 8 percent increase in negotiated rates, it became the first car rental company to publicly address an across-the-board rate increase on the corporate side, which—as analysts noted—had been a long time coming.

While corporate travel buyers noted that many major rental car suppliers last year also moved ahead with rate increases of their own, Cendant Car Rental Group, headed by president and CEO Robert Salerno, was the first, while also being most vocal and active in notifying clients of impending negotiated rate increases.

The move to raise corporate rates came on the heels of a published rack rate hike and amid ongoing pricing pressure from auto manufacturers.
Cendant in June enacted published rate increases of $5 for daily and $20 for weekly Avis and Budget rentals, beginning Sept. 10. While at the time the company at the time asserted that the published rate increases “do not directly impact our contracted rate,” a company executive gave a glimmering of things to come, adding, “we have to discuss the issue across the board.”

Although some suppliers have elected not to give guidance on how much rates will jump, Neil Abrams, president of Purchase, N.Y.-based Abrams Consulting Group, last year said buyers should look for higher rates from rental car firms for 2006—somewhere in the 5 percent to 7 percent range. “There hasn’t been a wholesale corporate rate increase in some time,” he said “Certainly, with the fleet costs—which are the single largest expense by far out of any in the business—going up, now’s the time to do it.”

Fleet costs have been the most cited reason for price increases. Cendant in July said manufacturers were raising such costs by 15 percent to 20 percent—depending on manufacturer and vehicle type—for 2006 model year vehicles (BTN, Aug. 15, 2005).
Abrams said fleet expenses represent 40 percent to 50 percent of rental car companies’ expenses. Given the rise in costs, most of major rental car companies, including Hertz, Cendant and Dollar Thrifty, last summer announced increased published rates (BTN, July 18), yet those other major car rental companies were less inclined to talk about the prospect of raising rates for corporate customers.

“Let’s be honest, no one likes price hikes, in any business,” Salerno said via email. “But we felt like the more open and honest we were with our customers and partners was the only way to go. Doing what we did, believe it or not, drew positive comments from much of our customer base.”

Steve Singh
Chairman and CEO
Concur Technologies
When Concur Technologies in May 2002 launched its imaging service—a system through which customers can digitally send, store and archive receipts—Steve Singh, chairman and CEO of the Redmond, Wash.-based expense reporting provider, said: “In the next few years, you’re going to see a strong adoption of imaging. It’s a sleeper solution for us.”

More than three years later, Singh’s prognostication has come to pass. Since its release, other expense companies have countered with similar products and the majority of Concur customers have latched on to the imaging concept by integrating the system into their expense reporting processes.

Concur was among the first to release a receipt imaging software solution integrated with its expense management tool. The homegrown service allows Concur users to fax receipts and invoices to a designated telephone number so that an image of the receipt can be stored digitally, archived and linked with the appropriate expense report. Expense report approvers then immediately can view receipts and invoices to check compliance.

“Within the first three months of its release we only had about a dozen or so customers,” Singh said. “Now, the majority of our customers use imaging or have contracted to use imaging. Our number of customers is in the 1,500-plus range now.”

Yet, the road toward making receipt imaging a viable and widely penetrated expense management add-on took time. Claiming “the best products come when you’re working on it with your customers,” Singh said the genesis of the product was at a customer conference when several clients asked if there was a better way to manage receipts and link them to expense reports—effectively digitizing a paper-laden process.

“We told those customers that we could not only link that to the expense report but we can provide an imaging service that you literally can take the receipts, walk up to your fax machine and send it in to this toll-free number,” Singh said.

Following the user conference, Concur’s development team went to work on what would later become its most widely used addition to the Concur tool’s core functionality. “There were a couple of customers who expressed that interest to us at a users’ conference and literally five months later, we delivered that service,” Singh said.

Following the launch, such other expense management providers as Extensity and Necho Systems began offering similar imaging solutions. Yet, Singh notes a key difference between its tools and those subsequently released by competitors.
“Our imaging tool was internally developed,” he said. “The advantage of that is that the cost structure to the customer is cheap. The biggest advantage is that we’re willing to invest aggressively in our service. One of the hard things our competitors deal with is they just don’t have the scale to invest in their core services and expand their product set.”

By the summer of last year, a majority of companies implementing automated expense reporting systems were including digital receipt imaging technology, prompted by the potential to streamline spend management processes and make them as paperless as possible, maximize savings and increase auditing effectiveness in the wake of the 2002 Sarbanes-Oxley Act (BTN, Aug. 15, 2005).

Michael Whitesage
President
Prism Group Inc.
Prism’s airline client wins in 2005—most notably American Airlines—made its data aggregation system the de facto standard for creating and monitoring marketshare-based contracts negotiated between major carriers and their larger corporate clients.

Already in place at four major U.S. carriers and a few international ones before the year began, the industry saw that Prism Group’s corporate client data-processing system was a preferred tool for decision support. Contract monitoring and concerns previously expressed by some corporate travel buyers regarding data privacy and competition had all but faded.

According to Prism president Michael Whitesage, the system also has allowed major carriers to form meaningful relationships with more midmarket corporate buyers. The system has even attracted a smaller domestic carrier, Frontier Airlines, which is seeking growth among its volume-based corporate accounts.
“We have seen the acceptance we have really had all along now become universal acceptance,” Whitesage said. “We finally settled the data issues with customers and it has been a real vindication. Customers are empowered more than ever for direct dealing with airlines and we have enabled that change.”

Since the beginning of 2005, the Prism system became even more important for some airlines as they adapted their airfare structures, and consequently their corporate discount programs.

“Those initiatives were being analyzed using the Prism system, which became the laboratory for the impact on corporate programs to be investigated,” Whitesage said. Prism’s airline customers “were able to respond very rapidly in modifying their contracts. They adapted thousands of contracts within a few months.”

American Airlines’ decision in July to start notifying its corporate and travel agency clients that it would start using Prism’s sales and contract management system solidified Prism as the leader in the space. Though other third parties said they have courted airlines with similar systems since Continental Airlines first implemented Prism’s in 2000, none have penetrated as deeply. With American onboard, Prism now supplies corporate data technology to carriers with more than 65 percent of all domestic seats.

“This is not a sensitivity any longer, and if there is value there, we ought to see what the other guys are looking at,” said AA vice president of global accounts Frank Morogiello, citing Prism’s ability to consolidate data from multiple ticketing sources. “We wanted to make sure it was something the customer would value.”

Prism’s progress overseas also is helping airline alliances coordinate their corporate sales efforts. In 2005 alone, Air France, Austrian Airlines and Qantas Airways each began implementing a variation of the system. In all three cases, those airlines have a U.S. partner already onboard. A handful of other carriers participating in either Star Alliance or SkyTeam also previously signed on with Prism. “Having one system has enabled one contract and one report,” Whitesage explained. “Alliance partners are able to integrate their networks into a virtual alliance carrier and not just staple all these different deals together.”

Richard Wooten
Director of Corporate Travel
Lockheed Martin Corp.
Among the reasons why Business Travel News named Richard Wooten, director of corporate travel at Lockheed Martin Corp., as the 2005 Travel Manager of the Year was the extent of his influence. He wielded it successfully enough in the past year to convince two previously non-participating low-cost carriers to change their approach to corporate discounting and global distribution systems. He also used his technical expertise, spending volume clout and travel management know-how to push his travel management company, TQ3Navigant, to enhance its traveler-tracking capabilities, which it then shared with other clients.

In addition to influencing now-defunct Independence Air’s decision in 2004 to list fares in global distribution systems, Wooten also convinced the carrier to offer his firm corporate discounts on all fares—a prerequisite for Lockheed-approved suppliers. In 2005, Wooten also implemented a similar business model with AirTran, already a global distribution system participant.

In examining airline contracts, Wooten said, “We saw was there was opportunity for some low-cost carriers, specifically in niche markets where we had some non-approved carriers that were doing pretty well,” Wooten said. “We look at air just as if we were purchasing computers or any other commodity. We buy in great volumes and we expect a discount on all fares. That was one of the big hurdles the carrier had to get over. The other piece was, because we have 82 percent self-service, those bookings would have to go through our GDS channel.”

Negotiating with Independence Air took about six months and “quite a bit of convincing.” Wooten said its top executives realized the mutual benefit of agreeing to the terms of Lockheed Martin’s supplier program after he presented a detailed analysis of the initiative to the carrier’s senior management.

“We had many discussions about their opportunity to get to the marketplace and, once they saw the results and the benefits from Lockheed Martin on this, they found that other corporate clients were willing to participate and that expanded their business,” Wooten said. “What they found was a win-win.”

Adding corporate-approved, low-cost carriers to Lockheed Martin’s travel program also increased the company’s leverage with legacy carriers, Wooten said. by:www.btnonline.com

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