As American Airlines all but dismantles corporate sales, airline industry pundits scrutinized AA’s latest arguments about going small and emphasizing competitiveness via network and loyalty. The strategy illustrates diversification among big airlines that adds to these challenging times for corporate travel buyers.

Chief commercial officer Vasu Raja on March 4 told Wall Street analysts that the airline offered more domestic origin-and-destination pairs than anyone, more unique ones and a “network advantage” in 70 percent of its markets. He cited strength in the U.S. Sun Belt, where population growth and economic expansion outpace those of big coastal metro areas.

He highlighted small and midsized domestic markets while Delta and United are upsizing aircraft — United is swapping in 350 mainline aircraft to replace regional jets in the coming years — and keeping their attention on big gateway cities. 

“It seems clear that American doesn’t think it can compete with Delta and United in a fair fight, so it is going to focus on those places where it can use the network to win in an unfair fight and use AAdvantage to get them locked in if they think about straying,” wrote Brett Snyder of Cranky Flier. Snyder, also a travel agency president, is among AA’s biggest critics.

The carrier’s plan to use 65- to 76-seat regional jets in a dual-class configuration to better serve smaller markets “doesn’t sound like a bad idea,” according to Snyder. “If Delta and United are going to zig, then American may be better off zagging. My two issues here are 1) I don’t think the opportunity is as big as American suggests it is and 2) Business travel is key for this market segment, and American has a self-inflicted disadvantage in competing for that traveler.”

Dispatch 10

J.P. Morgan equities analyst Jamie Baker saw it differently, writing in a research note: “It makes sense if you think about it, as [low-margin airline] penetration in small markets is basically nil. Suffice to say, and despite robust regional franchises at Delta and United, American’s smaller shorter-haul ambitions are emerging as a differentiating factor.”

During a J.P. Morgan conference on March 12, United CEO Scott Kirby remarked on a “divergence” in the behavior of U.S. network carriers “in a way that makes an awful lot of sense for each of them.” It strengthens the industry, according to Kirby, when “instead of just copycatting each other on everything, we’re each pursuing strategies that are best aligned to where our network is.”

That sounds like the big carriers mostly are staying out of each other’s way, which doesn’t help competition. There isn’t enough of that in the government’s eyes, as demonstrated by the Department of Justice’s successful bids to end AA’s alliance with JetBlue and JetBlue’s proposed Spirit merger.

“Your people fly to wherever your people fly, so your choices are not as great as you would think,” said Neil Hammond of GoldSpring Consulting.

“It will continue to get worse for the buyers because fewer options and less competition cause prices to rise naturally,” and that means less leverage, said Data Insights vice president of analytics and consulting Dave Whiteaker. “Do you need all three [network carriers]? Historically, companies work with everybody. Going all in with one or two instead is one way to optimize a program.”

According to one buyer from a large company who did not have authorization to be quoted, AA’s ambition seems to be doubling down on monopoly routes and trying to find more monopoly routes to places like El Paso. “Fine,” they said, “but Southwest will fight to the death. Good luck.”

SAP Concur on Tuesday announced several enhancements. Continuing its evolution, Concur Travel will offer:

  • Thrust Carbon-powered emissions sorting for rail, car rental and flight segments; hotel emissions, certifications and sustainability scores
  • Integration for lodging rates from Amex GBT, BCD Travel, CWT RoomIt, Flight Centre Travel Group and HRS
  • U.K. rail fares and inventory
  • Sharing of booked itineraries in Microsoft Teams chats for collaborative planning
  • Integration of Concur Request for pre-trip approval

Concur also published supportive comments from TMC execs about the new travel booking experience. It has drawn mixed reviews from travel buyers, but that’s an improvement. 

One challenge for customers is that the new experience leaves behind certain features, at least at first. Regarding development prioritization for functions such as Concur Request, SAP Concur Travel president Charlie Sultan in an interview last week said, “Request is important, and we’ve started using generative AI now to provide intelligent cost estimates so that the traveler doesn’t have to figure out how much everything’s going to cost. But the overwhelming volume of Concur transactions doesn’t utilize Request. We’ve tried to [deliver] a meaningful amount of innovation to customers without making them wait for things that not everyone is using.”

SAP Concur also announced new alerts in TripIt Pro related to weather, unrest or outages. A “reimagined” Concur Expense experience includes auto-created reports based on feeds from cards issued on the Mastercard network and notifications when receipts or attendees are missing from claims. As part of a new partnership, Concur is “also working with Mastercard to provide travel and finance managers with the power to set spending controls and restrictions to help encourage expense policy compliance.”

Climate-related disclosure rules around the world are changing, but still coming into force. Regulators in Europe last month agreed to delay until June 2026 Corporate Sustainability Reporting Directive requirements for certain sectors and for companies based outside the region. Meanwhile, under pressure from business groups and Republicans, the U.S. Securities and Exchange Commission dropped from reporting requirements for publicly listed companies the Scope 3 classification of greenhouse gas sources that includes employee commuting and business travel.

What the CSRD changes in Europe mean isn’t entirely clear to industry officials. 

According to a Tuesday email from Patrick Diemer, chair of the board of the European Network of Business Travel Associations, the group, also known as BT4Europe, is communicating with European Commission officials to better understand the impact of the delay.

Patrick Diemer, BT4Europe
Patrick Diemer, chair of the board of the European Network of Business Travel Associations (BT4Europe)

“The legislation drafted and decided by the European Commission is the law for the EU and all companies active in the EU, even though these companies might have shareholders and owners outside the EU,” said Diemer during a Clarasight webinar last week. “U.S. companies with European subsidiaries will have to comply with the CSRD. If you’re an active travel manager, you are most likely in a company that is not a small SME, and therefore at some point you are on the hook, so to say. Just this year, there was a delay in the implementation of the CSRD. We desperately tried to find out what this delay meant in practical terms — for some industries, the timeline will be delayed by two years — but the law hasn’t been published yet so … it is a work in progress.”

Diemer said organizations could expect subtle differences in reporting requirements across each EU country. “We will try to lobby to make these differences go away,” he said.

That the U.S. SEC’s rules don’t go as far as those imposed or proposed by authorities in other countries won’t matter much for many companies.

“Regardless of whether it marks a watershed moment or a watered-down rule, companies are now facing a wave of global requirements,” according to KPMG U.S. ESG leader Rob Fisher. “Scope 3 may be out of the SEC’s climate rule but it’s very much in scope for U.S. multinationals and likely many private companies. The SEC’s rule followed actions of the EU, California and the International Sustainability Standards Board, all of which require Scope 3 reporting. Regulatory relief in one jurisdiction does not alter the burden imposed in others.”

Authorities in Singapore last month detailed the country’s forthcoming mandatory climate reporting rules, which are designed “to help companies strengthen capabilities in sustainability and to ride the green transition.” Companies listed on the Singapore Exchange from fiscal year 2026 must report their Scope 3 emissions. For non-listed companies with annual revenue of at least $1 billion and total assets of at least $500 million, that requirement will kick in “no earlier” than fiscal 2029. Entities are exempt if their parent companies already publish climate-related disclosures complying with certain international standards.

Other jurisdictions with similar regulations proposed or in effect include Australia, JapanNew Zealand and the United Kingdom. Climate disclosure bills introduced in the Illinois State General Assembly and New York State Senate currently are in committee.

Reaction: Partnership Travel Consulting’s Andy Menkes states that booking channel policy challenges are decades older than the airlines’ recent distribution initiatives. While they may be “more significant” now, he writes, “I would not give up the fight” and suggests a solution for buyers. Meanwhile, Eric Bailey of Microsoft “can confirm it is possible to reduce carbon in travel” and tClara’s Scott Gillespie notes “valuable insights on change management” in response to Bain & Company’s green initiatives. Lastly, according to SAS travel manager Richard Clowes, the emerging role for TMCs is as the “data provider of the truth – no matter how the transaction is handled.”

Around The Web

Beyond the engineering challenges, the “tougher” barrier to adoption of electric vehicles — one that “may define the limit” of the U.S. market for them — is “much stupider,” writes The Economist

• A day after our coverage of how big travel management companies were thinking about artificial intelligence, McKinsey published research on AI’s impact on customer care. One finding: “Personal touch brought by live phone interactions is still highly valued across generations.”

Go Figures

Corporate hotel rates continue to rise. Tracked by Emburse’s Tripbam, the average rate booked by clients during 2024 has been about $10 higher year over year, or roughly 6 percent. Within the United States, the increase has been about half that. In the 30 days through March 18, the average U.S. booked corporate rate was $203 and the average U.S. market rate was $254.

Tripbam clients since January 2023 have used an increasing proportion of fixed negotiated rates and fewer public rates. Flat rates negotiated in the past few years “are showing more value as compared to public rates, as public rates continue to increase,” according to Tripbam CEO Steve Reynolds. “We’ve seen a nice increase in ‘hotel cluster’ usage in 2023. The primary reason is that as costs increase, companies are more focused on cost savings and willing to move travelers into their preferred hotels. Clusters save a lot more money than just re-shopping at the same hotel.”

Tripbam corporate hotel rate types

In addition to fixed corporate rates, client travelers also use chainwide discounts negotiated by their employers. Those have gradually played a more significant role in Tripbam client programs, accounting for 17 percent of U.S. bookings at the beginning of 2023 and 23 percent during the first quarter of this year. The popularity of dynamic rates offered by properties during the same period remained relatively consistent, ranging between 6 percent and 8 percent of corporate bookings. The usage of agency rates was also stable, contributing between 6 percent and 9 percent to all bookings in most of the past 15 months.

Hotel executives expect more rate gains in the business transient sector. “We had a high single‐digit growth rate in that segment in 2023, and we’re looking at strong mid‐single‐digit rate growth in that segment in 2024,” said Marriott CFO Leeny Oberg during the company’s Feb. 13 call with investors.

Overall business transient revenue in the December quarter and for 2023 “was ahead” of 2019, said Hilton CEO Chris Nassetta on Feb. 7, “but from an occupancy point of view, is still a bit behind.”

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