Southwest tries to lure business flyers
Southwest Airlines is ready to make the biggest push for business customers in the company’s history with a distribution deal with Southlake, Texas-based Sabre Corp. that started Monday.
Dallas-based Southwest, which has long been reluctant to share revenue with third-party companies when it sells tickets, went live on Sabre’s global distribution platforms Monday.
That means thousands of business travel planners will see Southwest routes pop up on their screens when booking trips for employees instead of having to compare on Southwest’s own website.
Sabre controls about 75% of the market for the systems that large corporations use to book travel for employees.
It’s a major play for Southwest as it tries to navigate out of the pandemic that has walloped the lucrative business travel customer segment. Business travelers make up about 30% of airline passengers, and business travel tends to be more profitable than leisure travel because tickets are often bought closer to the travel date and those customers pay more for flexible travel options.
But many corporations put travel on hold as the COVID-19 pandemic made it riskier to conduct face-to-face meetings.
“The tenor on business has really changed the last 60 days, where many of them were saying they were going to park it until after Labor Day,” said Dave Harvey, vice president of Southwest Business. “But now they are moving forward so that they are back in the office sooner so they can be ready to go full speed after Labor Day.”
And for all the threats of Zoom calls replacing travel, Harvey and other airline executives are reporting an uptick in business customer sales in recent weeks as the end of summer approaches.
“Now they are saying they want to bring people back to corporate campuses because they are losing culture and innovation,” Harvey said.
Southwest tickets are already available through some smaller distribution systems such as Amadeus. But starting now, those Southwest flights will be in front of thousands more corporate travel bookers with the Sabre system.
It’s like suddenly having your products on Walmart shelves.
In the past, many corporate customers that use popular travel and expense systems have had to look for Southwest tickets through the airline’s own website to compare prices. If they did buy a Southwest ticket, they had to go back and add their Southwest tickets into a system that also tracked hotels, dining and other expenses.
It was a hassle that may have kept business travelers from flying on the country’s largest domestic airline.
“If you look at the 100 largest buyers of travel, for some of them we weren’t on the shelf space at all, or if we were we had a non-routine work process,” Harvey said.
Airlines are already preparing for a fall of uncertainty when leisure travelers, who have buoyed Southwest during the pandemic, go back to work and school. Carriers usually rely more heavily on business travelers between Labor Day and Thanksgiving.
Even though Southwest and Sabre have been talking for years about a partnership, even recently it seemed as if it might not happen.
A year ago, even as airlines were desperate for revenue in the depths of pandemic, Southwest President Tom Nealon said it was ditching efforts to ink a deal with Sabre.
“I’ve worked with Sabre since, I don’t know, 2001 or 2002,” Nealson said. “It’s always a challenge. It’s a good company, but they’re challenging to work with.
“We’ve been working for two years to get a contract, and at some point, you just need to call it and move forward.”
But the two sides came to a surprise deal on the last day of 2020, and now it has gone into effect.
Even though Southwest doesn’t have a business class offering, Harvey said more corporate customers are still buying coach or economy tickets for their employees.
In some ways, Southwest is coming full circle, 50 years after starting as an airline that catered to business customers by flying between Dallas, Houston and San Antonio.
“They love our no change fees, no bag fees, and they love our point-to-point network,” Harvey said. “They don’t want to connect over a hub where they could get stranded.”