The dark art of corporate sales agreements between companies and the airlines they buy air travel from is taking on a new twist at Delta Air Lines. Delta has begun to taut its operational reliability as a key figure in corporate sales. Further, the airline is putting its money where its mouth is. According to Business Travel News,
“Delta has introduced the Operational Performance Commitment, which is available to all customers with corporate sales agreements, Delta vice president of global sales Bob Somers said. The agreement, a separate document from corporate sales agreements, offers compensation to accounts if Delta’s controllable on-time and cancellation performance, on an annual basis, as measured by the U.S. Department of Transportation, falls below both United Airlines’ and American Airlines’ performances.”
In short, the airline is so confident in its reliability that it will pay its contracted corporate customers a penalty if its performance falls below that of both American and United. I’m having a hard time seeing Delta writing any checks based on this in the near term. It’s been a minute since I’ve looked at a corporate air travel contract, but they typically contain commitments to allocate a certain percentage of business to the airline. True to form, the article points out that customers must be meeting 95% of their contracted commitment to be eligible for payment.
MJ’s Take
An interesting development. Delta has become well-known for reliable operations compared to the other big global airlines. On the other hand, notably missing from this commitment – Delta’s “partner” Alaska Airlines. In the end, I think this is a pretty smart move by Delta in the corporate travel market. In the near term, I doubt they fall below the operational performance of both American and United. One could speculate that the 95% contracted commitment requirement to be eligible for payment might serve as a bit of a carrot for corporate travel departments to encourage traveler compliance with contracts too.
-MJ, August 4, 2015
[…] Delta’s New Twist on Corporate Sales Agreements […]
[…] on Travel writes that Delta is highlighting its strong operational performance in its corporate sales agreements. […]
And I wonder how much litigation would follow if anyone tried to collect.
I wonder if they are having issues with customers not meeting targets. I would flat out refuse to fly Delta if there was any other viable option. Enforcement of these contracts is usually just a line of text and then preferred carrier is listed first and most fly who they want anyway.
@Nick,
Hard to say on that one. I think all airlines with face that with their corp. deals from time to time.