Published: Thursday, 19 August 2021 08:11
What a difference a year makes. The airline’s business travel division has, finally, added Sabre, but is also preparing to add a shopping mall-style loyalty program. Will this complete its corporate-friendly transformation? — Matthew Parsons
Southwest Airlines’ business travel unit completed the holy trinity of global distribution systems by fully adding the Sabre global distribution system last month. It’s significant progress considering its tussle with the technology firm in July last year. But is it enough to shed its low-fare leisure carrier image?
Southwest last month finally began offering serviceable flights within Sabre’s global distribution system, on top of selling through Travelport and Amadeus. This means companies cannot only book the flights via Sabre, they can then also amend or rebook afterwards — something that had been lacking before, and which caused so much friction for travelers that Southwest Business pulled the plug.
Sabre has the biggest share of the market in the U.S., so it was an important final piece of the puzzle.
“We turned our eyes towards Sabre, because they had the presence,” said Dave Harvey, vice president at Southwest Business. “We had the basic booking request in place, since the mid-1990s, but left the servicing side wanting.”
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However, no progress had been made with Sabre by last summer, although the intent was there, and this was at a time when the fledgling division had just notched up one year. But then things accelerated at the end of last year, and a commercial deal was signed on December 31, 2020.
On July 26, the partnership went live, and Harvey predicts it will open the door for more opportunities. “Sabre is innovative, blazing a trail around the future of merchandising and retailing, and artificial intelligence,” he said. Sabre’s certainly been pursuing new avenues of distribution, and revenue. It launched its own storefront concept in March, to help travel agencies provide more information to bookers, and embarked on a long-term partnership with Google.
But Southwest Business now wants to adopt of a marketplace approach, in line with other players in the sector who want to grab more business from small and medium-sized enterprises. For example, it’s just launched Rapid Reward Business for its corporate customers. Normally, loyalty points tend to contribute towards free flights, but Harvey this would be like a shopping mall.
“We’re looking to expand the offerings, so more office supplies, maybe paying for utilities for your offices, things that are really meaningful for these companies,” he said. American Express Global Business Travel has just launched a new expense tool for smaller businesses with a similar proposition, which integrates into Amazon Business. “They do not prioritize a trip to Boston over a new laptop. For them it’s spend,” said Fiona Hastings, Neo1’s general manager.
SAP Concur also added integration into Amazon’s procurement platform this month.
It’s not all about the smaller wins, because Harvey said the division had also managed to grow its government and military contracts through the pandemic, at the expense of legacy carriers which curtailed their networks to save costs.
The federal government is the largest purchaser of air travel in the U.S., and although the volumes have been lower over the past 18 months, it’s at least been consistent revenue. “A lot of it had to do with the new destinations,” Harvey said, and claimed the airline has added 18 new cities, including Chicago O’Hare, Miami, and Houston’s George Bush Intercontinental Airport, in the past year.
“It’s big business, and a big slice that’s just domestic,” he said. “It’s competitive on the pricing, but you also have to have the right schedule. Our point to point network bodes well.” Federal contracts are due to be announced on October 1.
However, with the carrier back to pre-pandemic levels for the leisure sector, Harvey admits there are still hurdles left to fully flex its corporate muscles. The next phase will be to launch a new groups and meetings product. “We tend to be a little bit behind the pack because our offering isn’t as competitive,” he added.
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