CO Takes Data Flak - 2001-02-26

<B>CO Takes Data Flak</B>
<I>Aggregation System Angers Buyers, Raises Antitrust Concern</I>

By David Jonas

Continental Airlines is engulfed in controversy over its data aggregation system.

What began as disagreements between the carrier and certain corporations on the requirements of Continental's Corporate Insight system (BTN, Aug. 14, 2000) has escalated into a major argument on data privacy and antitrust concerns.

The National Business Travel Association last week asked the U.S. Department of Justice to investigate whether Continental's requirements cross antitrust lines and provided DOJ with a letter outlining the confidentiality issues raised by many of its direct members.

Meanwhile, other airlines recently contacted corporate customers to reaffirm the confidentiality of their deals.

Continental maintains that Corporate Insight, similar to the corporate client coding system proposed by the International Air Transport Association, raises but does not create data disclosure issues. However, unlike IATA's proposed system, which last week was withdrawn (see story, page 6), Corporate Insight already is in use and will continue to be the principal means of data transfer between corporations, their agencies and Continental.

Though Continental understands "legitimate concerns" raised by numerous buyers, it maintains that a degree of misinformation has fueled suspicion. "The fact is, the data we are getting ultimately at Continental is the same exact data we see today from the agencies," said Dave Hilfman, the carrier's vice president of multinational sales and revenue programs. "We never see the transactional ticket-level detail that everybody is so deeply concerned about."

Those concerns, in part, stem from questions on exactly which data elements Continental sees. The carrier pointed out that some level of data masking occurs even before Albuquerque-based The Prism Group, Continental's third-party contractor for the Corporate Insight system, receives the data feed. While Hilfman acknowledged that masking capabilities vary from agency to agency, he noted that most can and do provide basic masking. He added that in order to keep data import consistent, American Express, for example, automatically masks passenger name, credit card and carrier as part of a standardized export.

A spokesperson for the travel management company confirmed it is "trying to be responsive and look into whether we can screen out data," but added Continental initially "would not allow clients to screen out anything more than the name of the other carriers."

One travel manager, however, speaking to BTN on the condition of anonymity, said American Express couldn't do the masking without "extraordinary cost and effort," though it was not an issue for Carlson.

Another buyer said his company's agency, WorldTravel BTI, also offers the opportunity to mask data. "It may be more work for them. They are not happy about it, but they are complying," he said.

Rosenbluth International also is complying. "We are working with Prism and Continental and the bottom line is that we do not pass on to our clients any cost of masking the data," said Eric Henderson, Rosenbluth's director of supplier relations, North America. "There may be a different way to skin a cat by masking certain information and still give Continental what they need."

Nevertheless, certain data elements are essential for Prism to run O&D trip processing, namely segment revenue and the segments themselves. "But by the time it gets to us, it is in summary level detail," Hilfman reaffirmed. "It says 'Continental' and 'all other.' Some folks still think we see more than that because they are asked to send more than that for the processing. But that is not the case."

After the hand off from the agency, corporate accounts can request additional masking to be performed by Prism to protect against improper data disclosure. However, the idea of giving Prism their data in the first place concerns many buyers.

For that reason, NBTA suggested that Continental modify the data pull. "After all, they are getting the transactional level data, or at least the third party with whom the corporation has no contract is getting the data," said Marianne McInerney, NBTA's executive director.

Continental, however, has begun the process of getting Prism to contract with corporations. In fact, a "good number of accounts" have entered into three-way confidentiality agreements to meet the Corporate Insight requirements and satisfy their legal departments, concerned with Continental receiving too much information on a competitor.

The larger issue, according to many, is that of control and data ownership. "This is a defining moment for the industry," McInerney said. "Data privacy and competition preservation in the marketplace are two of the most important issues in travel management. Any time you tie data to a discount and have access to pricing information not available in the marketplace, there are competitive ramifications."

Despite Continental's firm belief and repeated assertions that clients own their own data, many buyers remain reluctant to change processes, transmit data to any other external parties or provide suppliers with any additional negotiating leverage. In fact, a handful of corporations, including a few larger ones, flat out refused to hand off the data feed from their agencies to Prism, resulting in lost accounts for Continental.

That the data transfer into Corporate Insight is mandatory is a major sticking point. "It is my data and I'll determine who I give it to and how much. I want to control it. Depending on the impact to my program, I'd be one of those companies to say 'No' to Continental," said Colleen Guhin, global travel manager at ON Semiconductor in Phoenix, acknowledging that her answer could be different if Continental was her company's primary supplier.

Even if the system were optional--an idea recommended to Continental by several parties--many accounts would choose not to work in that way, thereby invalidating the benefits of automation, said Monisa Cline, managing director of corporate sales. However, Cline did recognize a level of trepidation among buyers. "Traditionally, travel managers held all the cards in terms of data and the information. We provided the discounts up front, so the carrier was at 100 percent risk," she said. "This is a change; it's a little more cooperative."

Though the carrier remains adamant that data feeds to Prism are prerequisites for new or renewed contracts, companies can still work with the carrier outside of Corporate Insight. While not as attractive, Continental will offer dissenting companies a standard net/net deal with a 7 percent discount roughly equating to commission and override returns.

Clients using Continental's revamped UATP card program (BTN, Aug. 14, 2000) also need not flow data through Corporate Insight since the carrier already collects all the data.

While any carrier's UATP card program doesn't sit well with American Express, or any other corporate card provider, the issue of data control is of paramount concern.

"As agencies have been trying to reinvent themselves and show their value proposition, the thing they cling to is the data," said one travel manager. "They want to maintain that they are the aggregator for the company. Continental, which is doing new things with the data, chips away at the travel management companies' value proposition."

Earlier printed reports stated that American Express dropped Continental as a preferred supplier over data disclosure. Though correct in a sense--Continental confirmed that American Express dropped it as a preferred airline for its internal nontravel-related personnel--both parties said that the overall relationship is as strong as ever.

"They made a stance, but it had nothing to do with the travel side of the house," Hilfman said. "We are still preferred at the highest possible level and are very solid with them."

Regarding Corporate Insight, an American Express spokesperson said, "American Express generally advises corporations to carefully consider any requests from suppliers for information that includes transactional level data. We believe that summary level data is more acceptable."

Despite difficulties perceived by travel managers, Hilfman said Corporate Insight offers an opportunity for agencies, corporations and airlines to develop even closer ties. "This isn't data handling that is outside the ordinary," he said. "But because we require agencies to submit data to us, if there is ever a time that the agency is important to the corporate client, this is it."

Other carriers, meanwhile, are carefully monitoring the situation. Dan Cupertino, head of Delta's national accounts team, e-mailed a letter, which does not name specifically Continental or Prism, to all corporate accounts addressing questions regarding data disclosure to other airlines and third parties. "Some clients told us they are being asked to produce data on the ticket level, that when evaluated with very little effort, can determine the level of discount that another airline is offering a corporation," he said. "We understand that mega-corporations in the Fortune 100 are not in a position to support just one airline. However, my deals and the discount levels I offer are confidential."

Regarding NBTA's request to DOJ, a Continental spokesperson said, "Corporate Insight would be shown to be completely valid from a legal standpoint and we are confident that it would easily pass any scrutiny since it doesn't infringe in any way on any laws.