John Arenas named one of the 25 Most Influential Executives In The Business Travel Industry, 2008
JANUARY 20, 2009 — Business Travel News editors again proudly recognize the 25 business and government executives whose decisions held the greatest sway over the business travel industry in the previous year. Editors vetted nominations that were submitted by industry professionals, including members of the BTN editorial board and staff.
The accomplishments and influence of these executives tells the story of the most significant changes in corporate travel last year.
Richard Anderson
CEO
Delta Air Lines
Less than eight months after Delta Air Lines named Richard Anderson CEO, the former head of Northwest Airlines led a merger of the two carriers he’s helmed. In doing so, he formed the largest airline in the world with a network that spans the globe and spurred a reshuffling of airline alliance rosters and concerns among corporate travel buyers that the deal could diminish competition, further reduce declining U.S. capacity and degrade customer service.
The carriers, which continue to integrate operations under the merger announced in April and finalized in October with the U.S. Justice Department’s approval, expect a single operating certificate from the Federal Aviation Administration in late 2009 and a consolidated reservations platform in early 2010.
Any remaining hurdles are “bumps in the road, not even really bumps,” Anderson this month told Business Travel News. “We just have to execute on each challenge just as we have since the early part of 2008, when our board authorized us to go forward with a transaction. We’ve methodically gotten over every hurdle that has been thrown in front of us, so we’ll keep managing the business well and trying to work for our customers, our shareholders and our employees. We’ve given an estimate to Wall Street of $500 million in true cash run-rate benefits in 2009 from the merger and we’re very confident we’re going to be able to meet that number,” he said.
The true impact of the merger on corporate travel has yet to be determined. Opinions diverge on whether buyers will be better served by a financially stable carrier with a streamlined cost structure and a single network -joining Delta’s strongholds in the South, West, Northeast and Mountain regions, Europe and Latin America with Northwest’s positions in the Midwest, Canada and Asia – or hampered by the removal of a competitor and the potential consequent harm to service levels and willingness to negotiate.
Anderson, pointing not only to the merger but also the joint venture between Delta, Northwest and Air France-KLM, said he expects high demand for corporate contracts. “One of the things corporations really want is a simple, single network, so they always know where their travelers are,” he said. “It’s much easier for record-keeping, frequent flyer accumulation and more powerful discounts because you’re putting more volume on one carrier. The problem that carriers had in the past is that they didn’t have a complete network. We have the number-one network, the most complete network. You no longer need to go offline to go to Central or South America. You don’t need to go offline to go to Africa or the Middle East, because with the Delta network combined with the Northwest network and our joint venture with Air France-KLM, we cover the globe.”
Anderson said changing economic conditions alter neither the merger’s rationale nor its objectives.
“It doesn’t change the synergy goals at all,” Anderson said. “In fact, a more difficult environment really causes us to accelerate the benefits of the combination. Our economy is in a very difficult situation. We take that very seriously. As a result, the merger becomes more important. It gives us a lot more flexibility and a lot more opportunity.”
John Arenas
CEO
Worktopia
With the technological canyons that prevented the online booking of meeting space bridged, meetings technology firm Worktopia spent 2008 cementing its niche within the larger sphere of travel and meetings management. In addition to broadening the roster of properties that accept such online bookings and signing key distribution deals with Pegasus International, Travelport GDS and Newmarket International, Worktopia formed a partnership with Sabre to offer the functionality through the GetThere self-booking tool, significantly heightening its visibility in the corporate travel market.
The flurry of deals should help ensure a payoff on Worktopia CEO John Arenas’ bet that the notoriously slippery segment of the corporate meetings market handled by nonprofessional planners and administrative assistants will embrace a streamlined technological application to book simple meetings online.
“There’s been an epiphany among corporations that they want to manage meetings like other travel and procurement processes, and they need a tool to do that,” Arenas said.
Worktopia targets the small corporate meetings of fewer than 100 attendees with simple meeting and guest room, audiovisual and food and beverage needs that mark what Arenas calls an often unmanaged and unmeasured segment, a situation for which there is unmet demand. “We tried for five years just to hook that up,” he said. “There are administrative assistants making these decisions without control.”
Worktopia allows users to search for the live meeting room inventory that participating venues list in its partner global distribution systems, and links to property management systems to book simple meetings either at offered rates or at client-loaded preferred meeting rates when using a corporate edition of the tool. A new wrinkle allows for offline negotiating, Arenas said.
The tool’s capability for restricting searching and booking options, Arenas said, enables corporations to allow nonprofessional planners to continue booking such simple meetings, enhancing efficiency while capturing all relevant spending data. “You must get a handle on the spend. Not being able to say that is a place they don’t want to be,” Arenas said. “Having a very talented negotiator working on a very small deal is not ideal. Saying admins shouldn’t do this is like saying they shouldn’t use GetThere to book travel because someone else is better at negotiating air contracts.”
Gerard Arpey
Chairman, President and CEO
American Airlines
2008 was the year of capacity cuts. Facing growing fuel costs and slumping demand, American Airlines, helmed by CEO Gerard Arpey, was at the forefront of broad capacity pullback and aircraft retirements.
By the time United Airlines and Continental Airlines in June announced plans to cut domestic capacity up to 18 percent and 16 percent, respectively, American already had announced the month before that it would cut mainline domestic capacity by up to 12 percent.
Arpey in an e-mailed statement to BTN said, “Unlike many of our competitors, American has been practicing capacity discipline for quite some time�certainly the last three years or so. Of course, the need to make deeper cuts became painfully obvious in the spring of last year when fuel prices skyrocketed, so we reduced our capacity significantly in the fourth quarter last year�about 12 percent domestically; about 8 percent systemwide. While fuel prices have moderated, the reductions have proven to be a good thing in light of the current economy.”
Other domestic competitors joined the chorus to expand the degree of capacity cuts, as demand continually deteriorated and fuel costs put pressure on airlines. According to OAG data, 10 percent fewer domestic seats will fly in the first quarter of 2009 compared with the same period in 2008. Southwest Airlines CEO Gary Kelly last month observed that “traffic is basically at 1998 levels domestically.”
Arpey this month in a statement said, “Since the final capacity cuts just hit the schedule in November, we have not made any significant additional cuts or changes so far in 2009. Obviously, we are continuing to closely monitor both the economy, as well as demand. That could result in additional cuts, but we have not made any decisions about that at this time.”
Meanwhile, American in August of last year became the first domestic carrier to launch full wireless inflight Internet access, rolling it out across its 15-plane Boeing 767-200 fleet. American adopted the air-to-ground network of inflight connectivity provider Aircell to launch the service.
Other carriers, including Alaska Airlines, Delta Air Lines, Continental, Southwest and Virgin America, are advancing their own plans to bring Wi-Fi to the sky.
“We’ve been encouraged by the results so far, especially in the ‘take rate,’ that is, how many customers choose to log on and use the service,” Arpey said. “It’s a great way for our business customers, especially, to be productive and in-touch during these longer flights.”
Philippe Bruyere
Program Director, Simplifying the Business
International Air Transport Association
The past year saw the paper airline ticket consigned to history and the paper boarding card start a similar journey to oblivion. Having successfully defined a standard for a paper bar-coded boarding pass in 2005, the International Air Transport Association issued a companion standard for a mobile BCBP in October 2008. The response has been rapid, with 13 airlines worldwide already issuing boarding passes by transmitting a bar code to passengers’ mobile devices, including five from the United States: Alaska, American, Continental and merger partners Delta and Northwest.
The IATA executive overseeing the transformation to paperless travel is Philippe Bruyere, director of the association’s Simplifying the Business program, aimed at creating $14 billion of annual efficiencies for the global airline industry through automation of airport services for passengers. Given that IATA carriers lost an estimated $5 billion in 2008, to be followed by a predicted $2.5 billion loss in 2009, the importance of these efficiencies is difficult to exaggerate.
Bruyere has been with IATA since 2003, originally as director for industry financial services. He previously worked for Carlson Wagonlit Travel as well as Credit Suisse Private Banking.
Switching to paper bar-coded boarding passes is an important element of Simplifying the Business because the required machinery and paper stock are cheaper than today’s magnetic stripe technology, and no paper is required at all for mobile BCBPs. “It has been a major success story,” said Bruyere. “It saves time at the airport for passengers and will save the industry up to $1.5 billion per year.”
During 2008, the number of airlines offering paper bar-coded boarding pass rose from 100 to more than 200, and paper BCBPs accounted for 40 percent of all boarding passes. IATA expects paper and mobile BCBPs combined to exceed 60 percent this year, of which it believes 6 percent will be mobile versions. It intends to eliminate magnetic stripe passes completely by the end of 2010. Bruyere considers it too early to forecast the likely eventual split between paper and mobile BCBPs, but he has high hopes for mobile now that a standard has been defined. Work began in 2005 but was delayed by the U.S. Transportation Security Administration’s insistence on inclusion of a digital signature from the airline. This is built into the bar code.
Bruyere also was given the task of eliminating paper tickets in May 2008. He achieved it, although not without controversy, owing to the fact that around 3 percent of booked flights at that time still could not be issued as e-tickets. After protests from travel agents, the global distribution systems created virtual miscellaneous charge orders as a substitute. “Some airlines are still skeptical about them because no value coupon is produced, but we are working on a new virtual MCO with a value coupon which can be lifted,” said Bruyere. “However, the number of cases where an e-ticket cannot be issued is reducing day by day.”
Duncan Bureau
Vice President of Sales and Airline Partnerships
WestJet
In its ongoing bid to offer corporations a viable domestic alternative to dominant north-of-the-border carrier Air Canada, WestJet last year inked a codeshare agreement with Southwest Airlines and increased joint corporate contracting capabilities with carriers in the Oneworld alliance.
With a robust domestic Canadian network, WestJet in recent years has consistently added to its corporate client portfolio. “Anywhere between 40 percent and 45 percent of passengers onboard a WestJet aircraft are traveling for business,” said vice president of sales and airline partnerships Duncan Bureau. “We see more briefcases and more corporations signing up to work with us.”
In the past three years, the carrier has created a corporate program from scratch and gained more than 1,000 companies under contract for its largely domestic services, Bureau said.
“Our corporate contracted book continues to grow week over week. We’re really becoming an attractive option for a lot of corporations, particularly as they see that we can serve a large majority of their domestic needs, and certainly we’re getting there on the international and transborder piece as well.”
Though WestJet noted that it is not officially joining the alliance, it is working to tailor joint corporate agreements and discounts for Canada-based companies with seven Oneworld members, including American Airlines, British Airways, Cathay Pacific, Japan Airlines and Qantas Airways.
Meanwhile, WestJet’s codeshare agreement with Southwest is slated for implementation this year, offering the opportunity to coordinate reciprocal arrangements, including ground handling, corporate account cultivation, frequent flyer programs and purchasing.
“We’ve had a lot of interest from corporate Canada, particularly as it relates to their ability to get access to international carriers and transborder carriers and not be handcuffed to unrealistic marketshare commitment for domestic traffic,” according to Bureau. “Today, you can imagine, some of them are being held to 80 percent domestic marketshare requirements and above in order to get access to transborder and international fares. Our agreement with Oneworld allows them to get immediate access to international and transborder carriers at discounted rates that don’t have to be earned with marketshare commitments in Canada.”
Dennis Cary
Senior Vice President and Chief Marketing and Customer Officer
United Airlines
United Airlines on Feb. 4 last year announced it would begin charging customers $25 to check a second bag. Less than one year later, the fee has become the norm in the domestic travel space, while underpinning an accelerating trend toward a sales model that includes unbundling, merchandizing and a la carte pricing.
Senior vice president and chief marketing and customer officer Dennis Cary has helped move United in a direction to offer more a la carte options by unbundling charges once included in the fare or offering travelers the chance to pay for enhanced services previously unavailable.
In addition to new baggage fees, United last year focused on widening its array of a la carte travel options, from Award Accelerator, which maximizes frequent flyer mile accumulation, and Door-to-Door Baggage shipping in partnership with FedEx, to its Premier Line option that gives non-elite passengers the opportunity to move more quickly through security, and Economy Plus seats, for which customers can pay a fee to upgrade.
Cary said the carrier sees many more opportunities to add enhancements. “On the unbundling side, given that it entails changing long-held practices in the industry and customer expectations, it carries an element of risk, whether it’s competitive matching or ultimately customer response.”
Still, Cary said he expects United to continue to lead on ancillary services and revenue initiatives. “There’s clearly much more we can do there, and we have a pretty full pipeline. Our job is to create the right portfolio of choices for customers and refresh that with things that are relevant. That’s an opportunity that we’ll continue to develop over many years. The opportunities are rich and big, and we’re just getting started.”
The carrier is finding a definable revenue stream from the initiatives, and is targeting $1 billion in revenue by 2012, Cary said. “We’re certainly well on our way and ahead of schedule in that regard,” he said. “Recognizing that most of these products are much higher margin than the core ticket-selling business, it’s an important part of our business strategy.”
John Chambers
Chairman and CEO
Cisco Systems
Through the years, every technological breakthrough achieved by remote conferencing suppliers has been hailed as, just maybe, the silver bullet to finally persuade corporations to embrace the technology, from high-speed transmission to desktop conferencing to high-definition broadcasts. Each time, corporations toyed and experimented with the technology, before users for the most part eventually chose to get on a plane or hold an offsite meeting instead, cowed by the technology’s cost, transmission difficulty or its impersonal perception.
That, too, may be the fate of Cisco Systems’ two-year-old, life-size, ultra-high-definition TelePresence system, but due in large part to the evangelization of CEO John Chambers, it seems unlikely. In an economic environment where travel and offsite meeting cutbacks are mounting, the latest generation of conferencing tools seems poised to become a more permanent part of the travel management landscape.
“It’s not just the fact that he jumped on the bandwagon or that he came out with the product or that he’s the chief marketer for the product,” said remote conferencing consultant Ann Earon, president of New Jersey-based Telemanagement Resources International. “People take notice when a CEO is so vocal. He went to C-level executives at other companies and said, I’m so convinced about this that I’ll give you two units. That alone had them willing to listen.”
Chambers’ push has proven effective. Cisco sold its 500th TelePresence unit in April 2008, and sales have continued to be strong, said Charles Stucki, vice president and general manager of the Cisco TelePresence systems business unit. “We targeted opinion leaders in certain markets: financial, technology, retail,” Stucki told BTN. “We showed them how to plan for and track travel savings to pay for it.”
Showing the highest-level executives the potential of TelePresence applications has proven fruitful. “The customer excitement and understanding about both the process change and the collaboration that TelePresence enables has been dramatic,” Chambers said in an August 2007 quarterly earnings call. “This is especially true at the CEO level, where CEOs not only grasp the effectiveness from a time and travel cost savings, but almost uniformly, they understand the value of the business transformation to their organizations. This is the first time in my career that I have seen this type of excitement and interest from CEOs for a technology.”
Though it should be noted that Cisco is far from the only provider of telepresence systems – Hewlett-Packard and Polycom, among others, have solutions on the market – Cisco also can point to its own travel program as a case study of the benefits of TelePresence. Chambers in November said Cisco has canceled all offsite, non-customer-facing meetings, and Stucki said the company has deployed 313 units worldwide. “We’re a proof point,” Stucki said. “How we transformed our travel budget helps us sell.”
Janice Chang
Corporate Director of Travel, Meetings and Special Events Planning
Northrop Grumman
A common complaint among both corporate travel buyers and hoteliers is that the annual rate-negotiating cycle, from requests for proposals to rate loading, each year seems to get longer and longer. With an internally developed hotel RFP tool, however, Janice Chang and her team at Los Angeles-based aerospace and defense technology company Northrop Grumman found a way to shorten that timeframe and remove many of the hassles of hotel negotiations. She and her colleagues have been passing along that knowledge so others can do the same.
Chang’s work with her RFP tool earned her the title of BTN’s 2008 Travel Manager of the Year, and since that honor, Chang and her team, who altogether manage about 55,000 travelers and rank 20th on BTN’s 2008 Corporate Travel 100 list, have been in high demand among travel buyers. She since has presented her story to the Los Angeles Business Travel Association and has seen numerous requests for appearances, she said.
“The response has been very positive, and the reaction to our ability to reduce the hotel RFP process to less than six weeks has led to requests by other organizations and publications for presentations and interviews,” Chang said. Interest from travel buyers and hoteliers has sparked internal consideration of selling the tool.
Development began in 2003, and within nine months, Northrop Grumman had created a tool enabling hoteliers to submit RFP responses instantaneously, sort submissions for Northrop travel administrators, customize the National Business Travel Association’s modular hotel RFP and send out submissions for its travel council to consider. Since then, the company completed loading all negotiated rates by Oct. 1, cut its preferred property base to fewer than 1,000, yielded savings with 85 percent of bookings at or under the federal government’s per diem rate and surpassed industry hotel compliance benchmarks with more than 77 percent of hotel reservations booked through its GetThere online booking tool.
Through use of the tool, Chang and her team also can conduct their own rate audits. Rates are running at about an 86 percent accuracy level, she said.
The tool also has allowed Northrop Grumman to reduce the 862 fields in NBTA’s modular hotel RFP to only 80 to 90. Chang and her team also made an alteration to the RFP to add county designations for hotels to adhere to federal per diem rates, a requirement for government contractors. The NBTA hotel committee adopted that as a new field in its modular RFP.
Michael Chertoff
Secretary
U.S. Department of Homeland Security
Millions of travelers come to the United States each year through the Visa Waiver Program, and the U.S. Department of Homeland Security and Secretary Michael Chertoff this summer gave the program a boost via the launch of the online version of the program.
An interim final rule issued June 3 deployed the Electronic System for Travel Authorization, to screen and authorize U.S.-bound travelers prior to boarding transportation to the country. On Aug. 1, the ESTA Web site opened for applications, and as of Jan. 12, all travelers through the Visa Waiver Program are required to obtain authorization through ESTA.
Through the site, travelers can submit information online and, once approved, the clearance is valid for up to two years or until the applicant’s passport expires, whichever comes first. Since its launch, the department reported more than 1.2 million applicants filed requests through the system, with 99.6 percent of those requests approved.
Chertoff said the system “will leverage 21st-century electronic means to obtain basic information about who is traveling to the United States without a visa.”
The program also drew some questions from the business travel industry. The National Business Travel Association, for example, expressed concern about the accommodation of last-minute travelers and the resources available to interview travelers rejected by the system.
In addition, the number of countries participating in the Visa Waiver Program continued to grow in 2008 under Chertoff’s watch. In November, seven countries were added to the program: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, the Slovak Republic and South Korea. Malta also joined the program near the end of the year, bringing the total number of countries participating to 35.
Maurice de Rohan
Former Chairman
Disaster Action
The United Kingdom’s Corporate Manslaughter and Corporate Homicide Act, which came into force in April 2008, has had an immediate, pronounced influence on corporate travel far beyond its home country. Although the Act only applies to deaths that occur in the United Kingdom or on British-registered ships or aircraft, it has forced multinational corporations to review whether they meet duty of care obligations toward employees worldwide.
“If a company is adapting its procedures to be compliant with the Corporate Manslaughter Act in the U.K., it can’t not adapt them in other countries as well,” IJet Intelligent Risk Systems COO Martin Pfinsgraff told a Carlson Wagonlit Travel seminar in London last November. “It is causing companies to rethink the whole duty of care issue. It is going to have a tremendous influence-it already has.”
Previously, only individual managers could be prosecuted for gross negligence leading to an employee’s death. The new Act enables prosecution of an organization for gross systemic failures in health and safety management. As a consequence, corporations have conducted wide-ranging reviews of their procedures to ensure they are managing risk diligently. For travel, this typically includes establishing risk assessments for trips and introducing stricter controls governing when employees drive on business.
Although the influence of the Act has been inarguable, attributing responsibility for its genesis to a single individual is almost impossible. However, one person with a good claim to paternity is the late Maurice de Rohan. A highly successful civil engineer who later became Agent-General for South Australia in London, de Rohan’s involvement in corporate accountability arose through tragic circumstances. In 1987, his daughter and son-in-law died in the Zeebrugge ferry disaster off Belgium, which claimed 193 lives. Despite strong evidence of serious failures in duty of care throughout the ferry company, a prosecution against it collapsed. This led de Rohan to accept chairmanship of Disaster Action, which was formed in 1991 to campaign on behalf of the survivors and bereaved of major disasters.
De Rohan died just six days before the United Kingdom’s House of Commons voted to introduce the Act in 2006, but in his introduction to the preceding debate, John Reid, then Home Secretary, paid tribute to the Australian for his role in bringing the legislation before Parliament.
Another admirer of de Rohan is David Bergman, director of the London-based pressure group Centre for Corporate Accountability. “Maurice was a person who, with his significant moral authority and practical understanding, more than anyone forced the government to legislate to create a new offense of corporate manslaughter,” he told BTN. “In creating a new offense that allows organizations to be prosecuted without the need to prosecute a senior manager or director, the new Act will have a significant deterrent effect and increase the likelihood of large organizations being held to account for deaths they cause through serious management failure.”
Sam Gilliland
Chairman and CEO
Sabre Holdings
Sabre Holdings chairman and CEO Sam Gilliland wielded great industry influence in enabling airlines to unbundle pricing and create merchandizing initiatives to add fees and upsell services and in pushing for technology standards for such services. He said the impetus was the environment the industry found itself in at the beginning of last year in which jet fuel prices continued to soar and airlines were unable to raise prices in the traditional way.
“One of our accomplishments that I feel very good about is that we really were the first to accommodate both the direct and indirect distribution needs of the airlines,” Gilliland said. “It’s not just about making those fares available on the airline’s Web site, but it’s also about making sure those same types of products and services can be offered up efficiently on the agent’s desktop.”
Gilliland said Sabre recently conducted research backing up his assessment that consistency across channels and efficient service delivery are critical to this effort.
“What I’m most proud of in this process is that we’ve really thought through the end-to-end process,” he said. “We’re working with airlines not only on the front-end buying process, but also the fulfillment and operational aspects of it across channels.”
While the original launch customer of the Sabre Branded Fares platform was Qantas and the latest airline to sign up is SN Brussels, the most significant U.S. customers to adopt Sabre’s attribute-based shopping capabilities are United and Midwest airlines. “The United capabilities will be available here in the first quarter or early second quarter,” Gilliland said. “Midwest was operational as of August of last year.”
Gilliland expects other carriers to take advantage of these capabilities by year-end but said the company hasn’t announced any others yet. “We’re also enhancing the capabilities that we already have rolled out with some of the existing carriers, with new or additional services that they can offer up,” he said. “This is a different way for airlines to think about their revenue streams. You don’t typically see an airline with a chief merchandizing officer or a head of merchandizing who is part of their management structure. I hope we will find over time much more focus on merchandizing and products. There probably is an opportunity to sell much more inflight, particularly on international flights.”
Gilliland said other examples of airline unbundling and merchandizing opportunities to come include upselling opportunities between categories of seats, travel insurance, “or perhaps Bose headphones being delivered to a seat. There are a lot of things that can be sold that would be appealing at the point of sale that are products of the airlines or can be delivered really well by the airlines.”
Patrick Grady
CEO
Rearden Commerce
Rearden Commerce CEO Patrick Grady found himself in a new role in 2008 as buyer rather than builder of technology companies with the acquisitions of ExpenseWire and Global Ground Automation, giving the Silicon Valley company a broader and more varied presence in the corporate travel industry.
Although the new kid on the block in online booking, Rearden’s approach in using its Personal Assistant online procurement platform to aggregate new spend categories and supplier channels, such as dining reservations, event tickets and off-airport parking reservations, has prompted other online booking providers to follow suit.
In an industry that is characterized by “commodity economics and diminishing returns, it’s very difficult to be in the travel value chain these days,” said Grady. Under Grady’s watch, Rearden’s rise in the corporate travel space bucked that thought and then some.
Grady led the company through a sustained period of “hyper-growth” as it increased its client base from 85 companies at the end of 2006 to more than 4,000 companies by the end of 2008 through organic and acquisitive growth.
The technology buys, distribution network expansion and product innovation, including the planned entry into the small business and consumer markets, followed an additional $100 million in funding the company received in May from such previous investors as American Express and new investor JPMorgan Chase.
The distribution network last year expanded notably with the completion of ExpenseWire distribution deals with Orbitz for Business, TRX and payroll and human resources services provider Paychex, giving Rearden access to more than 500,000 small and midsize businesses. It now has relationships with more than 60 travel management companies, including part-owner American Express Business Travel.
With May’s considerable cash infusion, 80 percent of which was slated for research and development, international and innovation ambitions came to fruition in 2008 with the launch of the Personal Assistant in the United Kingdom and the American Express Anywhere mobile service for Amex card customers and Personal Assistant users.
While Rearden realized many accomplishments in 2008, Grady is far from complacent.
“We didn’t simply buy these companies,” Grady said of the acquisition strategy. “We plugged them into our platform and made them available to other companies in the travel industry, including competitors. I don’t think we are stopping there. Rearden will be quite acquisitive going forward.”
Kathy Hall-Zientek
Manager of Travel Services
Moog
With growth of the ARC-accredited Corporate Travel Department program flagging and interest of current members in sharing best practices and benchmarking information increasing, a group of CTD travel buyers initiated a grass-roots effort to control the program’s destiny by forming their own association.
At the forefront of the organization and the navigation through the governmental red tape associated with obtaining approval for a legal not-for-profit trade association was Moog manager of travel services Kathy Hall-Zientek, the association’s first chairperson.
Using her previous experience of starting two local chapters for current industry associations in New York, Hall-Zientek and the other 10 members of the steering committee in June officially launched the CTD Association. In November, it held its first educational conference on the back-end of the ARC-sponsored CTD Conference.
Already the association has grown to more than 20 members, and the CTD accreditation program is experiencing a significant growth spurt. According to ARC, just five new CTDs were accredited in 2007. In 2008, that number increased to 19 to reach a total of 233 approved CTD organizations with 147 active accounts.
The association has an organizational board in place, bylaws written and a Web site ready to launch, with CTD preferred supplier and consortium buying programs in the works.
“At that conference, we turned the corner on our ability to carry some clout to be able to take a stance in the travel industry as a very passionate and strong unique group of experts,” said Hall-Zientek.
The idea for the association sprang up at the 2007 CTD conference, where ARC vice president of marketing, sales and customer relations Mike Premo spurred attendees to take promoting the value of a CTD configuration into their own hands. After months of conference calls, in-person meetings and dealings with government agencies, the willpower of fewer than one dozen die-hard CTD travel buyers has given the CTD segment of the travel industry new life.
“We have the ability now to grow the CTD operation and get more locations in the United States through education,” Hall-Zientek said. “We want to become mentors for those who are new in the industry because we saw so many people being intimidated by the CTD concept or not understanding exactly what the CTD concept meant.”
Kip Hawley
Administrator
U.S. Transportation Security Administration
Kip Hawley, administrator of the Transportation Security Administration, has been on BTN’s list of the 25 most influential executives in the business travel industry before for his decisions that sought to improve TSA effectiveness and the checkpoint experience. This time, BTN cites him for launching the Black Diamond program, which has created separate self-selecting airport screening lanes for experienced travelers and families with children.
“It wasn’t my idea, or TSA’s idea. It came through our blog and our focus groups, as part of our efforts to engage the passengers,” Hawley said. “Going into 2008, one of the big challenges that we set for ourselves was to do a better job of engaging with the public. Part of that required training our entire workforce. We finally said there wasn’t any reason not to do it. It has no impact on security while improving everybody’s experience.”
TSA tested the lanes out in February in Salt Lake City and followed that up in Denver. “That’s where the ‘Black Diamond’ came from, the two ski locations. It’s now at about 50 airports with the Black Diamond lines, and we’ve gone with liquid and family lanes at every airport.”
TSA made the option available to airports following the successful tests. “The only rules that we put on it were that it has to be endorsed and requested by the federal security director, the airport and the affected airline, so all three have to want to do it,” according to Hawley. “We didn’t want to say this is a new TSA program because it has to do with things that traditionally are not part of security that really are within the airline’s or airport’s purview.”
Hawley said TSA recommended the program to federal security directors with appropriate airport layouts or who thought their airport authority might be interested, and began putting programs in place one by one. “At some point last spring, it switched from us bringing it up to airports asking us if they could participate,” he said. “I thought that the beauty of the program is that it was market-driven rather than something TSA imposed and that it gave passengers some kind of control in the process.”
The quick rollout of an improved bag design-so laptops don’t have to be removed for screening-and preparing for the 2009 rollout of electronic boarding passes were other measures Hawley took in 2008, “to try to automate from an efficiency point of view and from the experience point of view what is happening at the checkpoint.”
Gary Kelly
CEO
Southwest Airlines
In the midst of last year’s volatile fuel market that took crude oil from peaks near $150 a barrel in the summer to a four-year trough last month, Southwest Airlines found itself in an enviable position. While the rest of the airline industry was taken on what CEO Gary Kelly called a crude oil “roller coaster ride,” the carrier’s aggressive fuel-hedging portfolio gave it a much lower cost of flying throughout 2008.
That allowed Southwest to exist on an entirely different competitive plane than its domestic peers, affording the carrier to resist what Kelly called the “fee frenzy” that roiled the domestic airline industry in 2008, while also allowing the carrier to “keep our fares low” and further penetrate the corporate market.
“The no-frills airline has become the all-frills airline,” Kelly said last month of Southwest’s refusal to match such unbundled pricing initiatives as baggage fees. “We love to zig while everyone else zags.”
Kelly called the no-fees initiative “a larger branding message,” but noted the carrier still would work on initiatives to improve the brand, customer service and offer “new creative ways for more revenue.” Among those, a new frequent flyer program is in the works, and the carrier continues down a path toward inflight Internet access.
Southwest attributes its resistance to the ancillary revenue bonanza in helping it to court corporate travel buyers. Southwest last year posted its largest presence ever on BTN’s Corporate Travel 100 list, which ranks the biggest spenders on U.S. booked corporate air travel.
While its fuel hedges helped Southwest to navigate through a tumultuous year, 2009 offers challenges of its own, as hedging benefits are muted by currently low fuel costs.
Kelly at last month’s Credit Suisse Global Airline Conference in New York said, “We’re out of business at $200 crude oil. $50 crude is a problem, but it just has to be managed.”
Though Kelly said that “fuel hedging has saved us over $4 billion this decade alone,” the carrier “de-hedged” its fuel position last month, with only about 10 percent of its annual fuel consumption hedged in the coming year, significantly down from the more than 60 percent initially slated for 2009.
“Southwest’s fuel hedges, which had been a source of major competitive advantage over the last few years, had quickly become a major drag,” UBS airline analyst Kevin Crissey wrote in a research note last month, noting that Southwest is “financially more like other airlines than it has been for a long time.”
In addition to its famous fuel hedges, Kelly led other bold strategic moves last year by initiating Southwest’s first international partnerships-planned codeshares with Canada’s WestJet and Mexico’s Volaris-and entering new markets, including purchasing bankrupt ATA Airlines to secure a “modest” LaGuardia Airport presence, its first at any of the major New York-area airports.
Susan Lichtenstein
Director of Global Travel, Meetings & Events
Cisco Systems
Cisco Systems director of global travel, meetings & events Susan Lichtenstein’s 2008 Web 2.0 integration into the corporate travel program provided a comprehensive blueprint for melding mainstream technologies with travel management. Lichtenstein said she worked with six buyers in 2008, including government contractors, pharmaceutical firms and retailers, to set up social networking capabilities in other programs and expects more this year.
Although yet to take a critical foothold in managed corporate travel, Lichtenstein’s implementation of social networks, blogs and wiki forums into the communications strategy that accompanied a global travel policy rollout, new preferred supplier programs and global deployment of new travel technologies, including its own TelePresence videoconferencing units, enabled the Cisco travel team to steward a smooth transition for the company’s 66,000 travelers worldwide. It also provided a two-way communications channel increasing traveler buy-in and easing the constant change management process.
“Beforehand, there was some fear of, do we want the travelers involved at that level, and how do we get over that bump in the road?” said Lichtenstein, who said travel buyers “are realizing that through these social networking programs, you run a better program. If you ask the travelers out there what’s going on and whether these are the best partners, and then give them the forum to talk to us and each other, you’ve run a much tighter program and manage a better economic program for your company.”
Wolfgang Mayrhuber
Chairman and CEO
Lufthansa
Lufthansa spent much of 2008 crashing around the Monopoly board of European airlines, seemingly snapping up every carrier that came its way. In addition to acquiring Austrian Airlines and Bmi British Midland, it took a substantial stake in Brussels Airlines with a view to outright purchase and launched serious takeover talks with SAS.
Leading from the front was CEO Wolfgang Mayrhuber, who has had a one-company career. Born in Austria, Mayrhuber joined Lufthansa in 1970 as an engineer and moved steadily upward, taking on the top job in 2003.
Although there have been many predictions since the previous economic downturn of 2001 that European airlines would consolidate, it has been slow to happen, with Air France’s merger with KLM and Lufthansa’s own purchase of Swiss in 2005 as the major exceptions. Last year saw Mayrhuber force a much quicker pace, the opportunity presented by the contrast between the rock-solid balance sheet of Lufthansa and the ill fortunes of weaker carriers buffeted by high oil prices and recession. “Crises are often the starting points for structural changes, and we want to seize the opportunities that will present themselves to us in this situation to ensure long-term consolidation, whilst still maintaining our financial basis,” said Mayrhuber when presenting the airline’s results for the first nine months of 2008. Since he was announcing an operating profit of $984 million, with a forecast for full-year profits of $1.1 billion in a year when airlines globally were tipped to lose $5 billion, his confidence was understandable.
Lufthansa has opted not to rename its acquisitions. Instead, Mayrhuber has spoken of a transformation from a “branded house” to a “house of brands,” or of a European airline system that he also refers to as “the Lufthansa family.” Most of this family are in markets geographically contiguous to Germany. The exception is Bmi, the second-largest carrier at London Heathrow, offering an unprecedented strategic opportunity to expand across the North Atlantic.
The airline’s buying spree also significantly strengthens both the Star Alliance and Lufthansa’s effective control of it. With alliances gradually gaining antitrust immunity at the same time that consolidation within them is increasing, they are starting to prove formidable negotiating entities for corporate clients. The potentially negative implication is that carriers that gobble up marketshare become less competitive, and concerns are emerging about the unprecedented power of the leviathan that Lufthansa is becoming during the Mayrhuber era.
One example this year was the row over the Preferred Fares Program, introduced in Germany, Austria, Switzerland and Liechtenstein. A complex arrangement aimed at reducing Lufthansa’s global distribution system fees, the program in essence presents corporate clients of Amadeus-using travel management companies, as most in those markets do, with a choice between a ?4.90 surcharge per segment, higher fares, moving to a different GDS or booking through the Internet. Many key Lufthansa clients, such as SAP, Deutsche Bank and BMW (on whose board Mayrhuber sits) have protested.
Kevin Mitchell
Chairman
Business Travel Coalition
As an advocate for corporate travel buyer concerns, there are few more tenacious than Kevin Mitchell, chairman of the Pennsylvania-based Business Travel Coalition advocacy group. During 2008, his efforts on behalf of buyers were most evident in Europe. He doggedly fought to prevent what he decried as a last-minute move by the European Commission to water down its revised CRS Code of Conduct, and took on Lufthansa over its Preferred Fares Program, which charges heavily for bookings made through global distribution systems.
Mitchell led the lobbying by corporate client groups over the Code of Conduct since a review was announced in 2002. The European Commission in 2008 finally agreed on a revised code, retaining controls on global distribution systems with parent carriers, but at the last minute the definition of a parent carrier was amended to state, somewhat ambiguously, that it must exercise “decisive influence.”
Mitchell alerted the European Parliament that Amadeus part-owners Lufthansa, Iberia and Air France could argue they lack decisive influence, thus nullifying constraints on them.
“When members of the European Parliament found out they had been hoodwinked, they requested the European Commission to provide an interpretative notice that these airlines are included,” said Mitchell. “It is a matter of holding everyone’s feet to the fire one last time.” The notice was expected as BTN went to press.
Mitchell said his own most decisive influence in 2008 was his campaign against Lufthansa’s Preferred Fares Program, which he regards as “turning distribution into a profit center.” Said Mitchell: “Lufthansa is completely freaking out. Its reaction indicates we are going to win this campaign.”
Back in the United States, targets of Mitchell’s lobbying included aircraft maintenance outsourcing, Federal Aviation Administration slot auctions and the Delta/Northwest merger. He also formed TravelSustainability.com, a grouping of travel industry organizations making the case for coherent U.S. government policy on energy, transportation and the environment.
Mitchell said he involves himself in Europe because the political issues concerning corporate travel have become global. “For example, the Preferred Fares Program is not a German or even European problem, but a global one,” he said. “Should Lufthansa succeed, other network carriers in their homeland strongholds will seek to replicate it. Within five years, the current managed travel model would be dismantled and the airlines would have excessive control over the industry and customer.
“When I get involved in an issue anywhere,” Mitchell said, “I always seek to bring other travel industry groups and associations into ownership of the issue as well as individual corporate buyers and end consumers. When you wrap a press and government affairs strategy around such a powerful coalition, you can get things done.”
Diarmuid O’Scannlain
Circuit Judge
U.S. Ninth Circuit Court of Appeals
The opinion that reversed the decision in the United States of America v. Michael Timothy Arnold case authored by Circuit Judge Diarmuid O’Scannlain gave customs officials at U.S. border crossings the authority to search and seize travelers’ laptops without reasonable suspicion, raising data privacy issues and causing corporations and business travelers to rethink carrying laptops through U.S. airports. The federal appeals court decision also drew the ire of several industry groups, including its most outspoken critic, the Association of Corporate Travel Executives.
The April 21 decision in the U.S. Ninth Circuit Court of Appeals by a three-judge panel ruled that Arnold’s argument that “laptop computers are fundamentally different from traditional closed containers,” and instead are akin to “homes” and the “human mind” is not a correct interpretation of the law and laptops are not equivalent to those private domains.
Effectively, U.S. airports are “functional borders” and according to an earlier U.S. Supreme Court ruling, the United States has the “inherent sovereign authority to protect its territorial integrity” and “is entitled to require that whoever seeks entry must establish the right to enter and to bring into the country whatever he may carry.”
Therefore, reasonable suspicion is not needed for customs officials to search a laptop or other personal electronic storage devices at borders, and laptop searches are no different from luggage searches. In O’Scannlain’s opinion, laptops are outside of the reasonable search and seizure protections granted under the Fourth Amendment.
Unless the Supreme Court decides to hear and overturn the ruling, it will remain the law of the land, leaving many business travelers and corporations wary of carrying their laptops across U.S. borders.
Guillaume Pepy
Chairman
SNCF, Eurostar
When Californians voted in November 2008 to build a high-speed rail line between Los Angeles and San Francisco, their governor was right behind them. “All over the world we see high-speed rails that go 200 to 300 miles an hour,” Gov. Arnold Schwarzenegger said. “We should do the same thing in this country, especially in this state.”
Schwarzenegger spoke from experience. He had visited France to ride the new TGV Est line from Paris to Strasbourg, which travels at an average of 200 mph. High-speed rail is becoming ubiquitous in northwestern Europe, nowhere more so than in France, where national rail company SNCF has 455 TGVs Train – Grande Vitesse, literally “high-speed train” -operating more than 800 services every day. In addition, there are various multinational rail networks, including the Channel Tunnel service Eurostar.
Arguably the greatest cheerleader for high-speed rail is the chairman of both SNCF and Eurostar, Guillaume Pepy. An executive with SNCF since 1990, many in the industry credit Pepy with turning a state monopoly into a customer-friendly business. One example in 2008 was the introduction of e-ticketing, to be followed this year by ticketing on mobile phones.
Pepy also has driven greater cooperation among Europe’s high-speed rail services with the formation of an alliance called Railteam. This is proving slow to forge airline alliance-style cooperation, but it is working hard on coordinating timetables and tariffs.
In the meantime, the individual networks go from strength to strength. TGV Est, launched in late 2007, carried 11 million passengers in 2008. Eurostar, under the leadership of chief executive Richard Brown, now commands 72 percent marketshare on Paris-London and 70 percent on Brussels-London, a journey of only one hour and 55 minutes since the last stretch of high-speed line opened in the United Kingdom in November 2007. At the same time, Eurostar shifted its London terminus from Waterloo in the south of the city center to St. Pancras in the north. In consequence, through ticket sales from eastern England doubled in 2008. However, not everything went Eurostar’s way: A fire in the Channel Tunnel in September means it will run at 93 percent capacity until late February.
Pepy himself is firmly convinced high-speed rail has transformed business travel in Europe. “Its most important impact on business travel is that it has shrunk Europe-it has changed the geography,” he said. “Destinations not on the network now seem far away.” Almost 50 percent of trips booked by travel management companies in France are rail,” said Pepy. “In France, business travelers think train before they think plane.”
Michael Reynolds
Acting Assistant Secretary
U.S. Department of Transportation
Acting Assistant Secretary of Transportation Michael Reynolds’ decision to approve the SkyTeam antitrust immunity application led two other airline alliances to subsequently file antitrust applications.
While DOT had received many previous requests for antitrust immunity, this one was different.
“This was the first time we had two major U.S. air carriers involved-Northwest and Delta,” Reynolds said. “This was before they had announced that they would pursue a merger. You had two major U.S. air carriers in addition to two major foreign air carriers-Air France and KLM.”
Essentially, Reynolds said, the proposal was to bring two existing immunized alliances together. Unlike the first time that the alliance partners had sought antitrust immunity in 2005, the second application contained extensive details about the joint venture. Reynolds’ team, including Todd Homan, director of the office of Aviation Analysis, and DOT’s general counsel’s office, asked for further information and considered pleas from interested parties before issuing a show cause order giving tentative approval on April 9, 2008, and then the final order on May 22.
While overlapping networks create potential conflicts of economic incentives, Reynolds said SkyTeam aligned them in the four-way joint venture to “increase the likelihood that new public benefits would be realized over what is possible with the two existing alliances. We thought the proposed alliances would likely result in the introduction of new capacity and the greater availability of discount fares across the entire joint network. They were able to demonstrate the savings by coming to a common bottom line and greater efficiencies on their transatlantic venture and pass those on to the traveling public.”
The final order gives them 18 months, or until Thanksgiving, to implement the joint venture or the immunity could expire.
Reynolds said that the most compelling argument against the antitrust immunity request came from American Airlines, which he noted now has submitted an application for antitrust immunity for several Oneworld carriers, including a core joint venture with British Airways and Iberia. Similarly, there is a pending antitrust immunization application from the Star Alliance, which is looking to add Continental. That involves a core joint venture with United, Air Canada and Lufthansa.
“In November, we said the Star Alliance application essentially was complete and invited comment. After we say an application is essentially complete, we have six months to come to a decision, so by this May we have to come to a decision in the Star case. We have collected and gone through the comments. The next step in the process is the order to show cause.”
In the Oneworld case, on Dec. 16 DOT went out with a request for more information from the parties. Once Oneworld responds, DOT will evaluate whether the record is essentially complete.
Randy Smith
Vice President of Sales and Distribution
Midwest Airlines
Midwest Airlines in August last year began selling through the Sabre global distribution system two different seating options in the same cabin, giving travelers the option to purchase its higher-tier Signature seat, which features more legroom than the carrier’s Saver seat. Though the booking enhancement seemed simple enough, Midwest’s effort, helmed by vice president of sales and distribution Randy Smith and director of distribution and e-commerce Carol Reda, was the culmination of a marketing plan dating back years and diligent cooperation with Sabre that exceeded 12 months.
Midwest also helped lay the global distribution system framework for other carriers to advance their own merchandizing options through the global distribution systems.
“Since the history of the global distribution systems began, it has not been possible to have two different seating configurations in one cabin,” according to Smith. “It was like patting your stomach and rubbing your head, and you couldn’t do both things on the same platform. The marketing wasn’t driving the innovation, and the technology was the barrier.”
Overcoming that technological barrier, Reda said teams from Midwest and Sabre logged “tens of thousands of hours” in the course of more than a year to lay the foundation, write the code, stress-test and eventually roll out the capabilities.
Though the utility of selling two types of seats in one cabin appears limited for other carriers, Sabre vice president of product marketing Kyle Moore last month said it sets the stage for a number of other selling opportunities through the GDS. For example, United last month announced plans to upsell economy customers to Premium Economy seats, using some of the pipes laid by Midwest.
“We built the solution initially for Midwest so it could be further leveraged by additional carriers as they came into the fray, and United is the first to elect to do that,” Moore said. “The first carrier you do, the implementation is long and arduous. The next one is less so, and the next one is less so, until you get to the point where it really does just become configurations and flip-of-the-switch stuff. Midwest really helped pave the way for a new technology that can be leveraged across the industry.”
Megan Stowe
Global Strategic Sourcing Mobility Manager
Intel
Megan Stowe’s willingness to challenge conventional travel management wisdom-particularly the decision to allow U.S. travelers to bypass preferred booking channels in booking air travel-earned her the title of BTN’s 2008 International Travel Manager of the Year, as did her willingness to pass that wisdom beyond the walls of Intel to her colleagues in travel management.
The U.K.-based Stowe and her team decided to test a long-standing complaint of business travelers: They are able to find better prices directly from supplier Web sites than they are through preferred company booking tools. After a three-month trial period, Stowe and her team discovered that while travelers who booked independently were paying 30 percent more for hotels and 50 percent more for car rentals, they also were paying 10 percent less for domestic airfares.
As a result, Intel changed its policy to allow some U.S. travelers to book air tickets directly through supplier Web sites, even though the corporate booking tool and travel management company remain its preferred booking channels. Stowe also reported that the policy change did not negatively impact Intel’s ability to meet booking volumes, as only a small number of travelers willingly booked outside preferred channels.
Though the decision is not without its detractors, it’s the latest of several examples of bold thinking on the part of Stowe and her team. Under Stowe’s watch, Intel’s travel program also underwent a rigorous assessment to determine whether outsourcing was a viable solution, which it was not. In her previous role of handling Intel’s travel in the Asia/Pacific region-where travel management is less consolidated and mature than in Europe-she also consolidated TMCs across the region, initiated regional supplier deals an established an all-coach-class policy.
Meanwhile, buyers in both North America and Europe acknowledge her willingness to benchmark and share the experiences of her work. “We try to share the results of what we do,” Stowe said. “It can only make our industry stronger.”
Robert Sturgell
Acting Administrator
Federal Aviation Administration
Federal Aviation Administration acting administrator Robert Sturgell last year advanced components of the Next Generation Air Transportation System-a portfolio of initiatives that aim to modernize the national airspace through capacity and efficiency gains.
Under Sturgell’s leadership, FAA last year gave the green light to nationwide deployment of a system that tracks aircraft by satellite rather than ground-based radar. Still in its early days, Sturgell said the system enhances safety while expanding airspace capacity and airline efficiency. Though much work needs to be done before a full rollout – and costs may prove prohibitive for some carriers – FAA last year made strides toward making the system a reality. FAA initially rolled out the system in Alaska, followed by a trial with UPS, which equipped more than 100 aircraft. FAA has worked to further expand the program to South Florida in partnership with low-altitude helicopter operations, with plans to expand the program to other regions and commercial airline services. “We’ve got some key areas that will shape up over the next couple of years,” Sturgell said. “The Gulf of Mexico is a big target for that. It’s not just the low-altitude helicopter operations. There’s a lot of traffic between the U.S. and South America and Mexico, and then between Florida and the western U.S. Using the high-altitude structure will help with traditional service. That’s going to play out there, as well as in Philadelphia and Louisville, and hopefully New York will be the follow-on target.”
Sturgell also led FAA in developing a host of other initiatives to develop NextGen, including new navigational performance requirements, which have opened airspace, new aircraft approach procedures, which have decreased fuel burn, and a number of capacity increases on the ground and in the air. For example, FAA made strides last year to modernize airspace in several major markets, including New York, Chicago and Houston, while opening new runways in Chicago, Washington, D.C., and Seattle.
Anre Williams
President, Global Commercial Card and Services
American Express
Sitting at the helm of American Express’ corporate card business, Anre Williams in 2008 oversaw two key investments that earned him a spot on BTN’s Top 25: making a partial investment in expense reporting tool supplier Concur, and purchasing one of American Express’ largest competitors, which tightened the corporate card supplier field and gave the company access to a crop of new clients as well as new technology for its existing clients.
While the financial services industry was rife with mergers and acquisition activity last year, none shook up the landscape as much as American Express’ $1.1 billion acquisition of GE Money’s Corporate Payment Services. The move shifted GE and more than 300 large corporate clients who were using the Visa and MasterCard networks through GE onto American Express’ platform, though existing agreements still were honored. American Express already has begun issuing plastic to the new accounts and should complete the conversion by March, Williams said.
The benefits of the acquisition went beyond the elimination of a competitor and the gain of new accounts, Williams said. American Express also is integrating the technology GE had developed for its clients.
“We had a lot of respect for GE’s commercial card team, particularly with the purchasing card product and the e-payment technology,” Williams said. “When the opportunity came to buy them, we acted on it right away.”
A few months after the GE acquisition, American Express announced another major investment: a 13 percent ownership in expense management supplier Concur for $251 million. The investment initiated an exclusive marketing alliance between the two companies.
“Instead of building our own expense management system or trying to buy another company, we can partner with Concur,” Williams said.
When the deal was announced in July, more than 50 percent of Concur’s clients used American Express corporate cards. Though both companies continue to support other vendors, the marketing alliance between the two leading suppliers in their fields gave further strength to their