2004: The Year of Unprecedented Industry Evolution

BTN Weekend is returning after a holiday break. Resuming in 2004, we are only halfway through our journey, yet we won’t halt until we experience every year of BTN’s archive timeline. We at BTN hope your current year 2024 has proven to be a remarkable success, and we’re poised for further evolution in 2025. However, let’s take a moment to reflect on the past…

By 2004, the dual influence of the internet and low-cost carriers had turned the industry on its head. Besides the challenges (and opportunities) the World Wide Web introduced, airlines faced their unique difficulties that appeared completely separate from business travel program operations, rooted in their own organizational inefficiencies and ongoing financial distress stemming from the 2001 terrorist incidents in the U.S., a sluggish recovery in business travel due to economic dilemmas in 2003, and, as of 2004, significant fuel price surges.

The Era of Airline Distress

Although it might sound nostalgic to us in 2025, after years of experiencing prices at $80, $90, and even above $100 for a barrel of crude oil (now stabilized around $75 since December), oil prices skyrocketing to $42 per barrel in 2004 from $32 the previous year, and escalating further in 2005 severely impacted the airline sector.

Simultaneously, low-cost carriers—especially Southwest, alongside JetBlue, Frontier, and AirTran—were eagerly taking advantage of the situation to exact revenge on mainline carriers that had previously monopolized market access, receiving preferential airport slots and undermining point-to-point fare structures with their “shuttle” concepts. Now suffering financially, with several like US Airways and United literally undergoing bankruptcy proceedings (or reverting back into them, in US Airways’ case), contending with the Southwest Effect became an agonizing endeavor for traditional hub-and-spoke airlines.

Yet, airline woes had become so routine that travel managers had become somewhat desensitized to the fluctuations—as long as their airlines remained functional, which most did even during bankruptcy. Additionally, corporations were looking towards LCCs to allocate more of their travel volume. After all, why not? The rates were appealing, and the carriers seemed more reliable. Clearly, routes had to be present, but with JetBlue emerging in New York, Southwest in Dallas, and numerous carriers aiming to enhance their traffic from Chicago, the options in that segment were more plentiful than ever.

Southwest recognized the emerging trends and established its inaugural corporate travel sales division, directed by Rob Brown, who continues with Southwest today after a brief stint with the wonderful team at nuTravel Technology Solutions. The LCC also ventured into limited participation with the global distribution system Sabre (JetBlue followed suit) and through a collaboration with technology provider BookingBuilder granted agencies restricted access to its fares, although only agents could process those bookings. They were not accessible through corporate booking tools. Clearly, SWABIZ was not going to relinquish direct bookings so quickly.

Thus, even amidst the turmoil, travel program managers noticed—and embraced—some of the possibilities emerging before them. Not only on the airline front.

Market Rates, Internet Transparency Drive Hotel Rate Benchmarking

The internet revolutionized many aspects, but revealing market hotel rates had a significant influence on managed travel—and the service providers of managed travel. Agencies had always provided negotiated consortia rates to corporate clients. While they would never quite match the rates brokered directly with a hotel by a qualified corporate client, consortia rates were a consistently discounted alternative for secondary and tertiary cities where a firm did not possess sufficient volume to negotiate.

Or did they?

The internet raised serious questions for both purchasers and agencies. As markets demonstrated substantial rate increases in 2004 alongside occupancy, could agencies or their hotel affiliates justify maintaining that fixed consortia rate? The overwhelming consensus by year’s end was a resounding “no.” American Express and Marriott initiated the shift towards what they termed “fluid” rates before swiftly rebranding them as “dynamic.” Hilton and InterContinental followed suit promptly along with more agencies.

One of the major catalysts for this trend was online travel agencies and their deeply discounted merchant rates, which for these entities—Expedia Corporate Travel, Travelocity Business, and Orbitz for Business—transformed into an effective consortia rate. These were never stable, guaranteed rates—but they were economical, and business travelers were inclined to book them despite some imposed restrictions like prepayment and limited cancellation periods. Travel managers recognized their utility for their programs, with several reporting substantial savings as a result.

Precisely quantifying those savings proved to be more challenging. American Express sought to address this issue with a Rate Trax, a benchmarking tool that not only assessed whether the company was receiving its negotiated rate but also compared the booked rate against the lowest rate in the GDS and the AAA rate. While the tool could not visualize those merchant rates or accurately pinpoint the market rate, it was the first tool known to BTN that endeavored to provide such a perspective for travel managers.

Other benchmarking tools surfaced thereafter. Concur, in collaboration with Runzheimer International, launched a benchmarking service that estimated market pricing and juxtaposed an individual client’s expenditure against that of other companies on air, car, hotel, meals, and per diems.

And what if the data suggests that they ought to modify their agreements? NBTA introduced a new version of its electronic RFP to facilitate mid-year renegotiations in a market that shifted too rapidly for an annual-only process.

Significant M&A Initiates Major Changes

Ultimately, while mergers and acquisitions did not peak in 2004, ownership and alliance alterations in TMCs occurred that would echo for years within the corporate travel industry. Carlson Wagonlit Travel acquired Maritz Corporate Travel—but not Maritz’s meetings and incentive division—solidifying its status as the second-largest travel management company worldwide. American Express retained its first position, yet the CWT-Maritz merger relegated Navigant to No. 3 on the roster.

In acquiring Maritz, CWT detached the company from its alliance with TQ3 Travel Solutions, the Germany-based enterprise travel division of leisure travel giant TUI (CWT had also purchased TQ3’s French partner Protravel Solutions, leading to the loss of that association). TQ3 then swiftly partnered with Navigant, establishing its strongest market presence in the U.S. However, Navigant faced its own challenges, which became evident later that year.

The company had failed to keep pace with the transition to online self-booking or touchless transactions. In its Q3 earnings summary, it reported only 2 percent to 3…

percentage of its total reservations were completed online without an agent. This was in contrast to approximately 30 percent of automated transactions at its competitor American Express. It was a glaring indication that the firm was not keeping pace with the technological advancements and efficiency expectations that the industry was rapidly enforcing.

In just two years, Navigant would also be acquired by Carlson Wagonlit Travel.

TUI planned to divest TQ3 Travel Solutions to a Netherlands-based organization, BCD Holdings, which had previously acquired Atlanta-based WorldTravel BTI. The merger of these entities laid the groundwork for what is now recognized as BCD Travel.

In 2004, another unexpected development emerged: it wasn’t solely Travel Management Companies (TMCs) bidding on one another for collaborative resources, geographic reach, and service offerings. Both Cendant and Sabre Holdings made offers on Maritz Corporate Travel. Neither succeeded in acquiring it. However, the potential for a Global Distribution System (GDS) or an online travel agency purchasing a traditional TMC was becoming a tangible possibility, indicating a significant industry transition. This scenario had already unfolded once when Expedia purchased Metropolitan Travel in Seattle as the cornerstone of Expedia Corporate Travel. What would the future hold?

In the short term, at least, Cendant acquired Orbitz in October 2004, securing a leisure and corporate booking tool to rival Sabre’s Travelocity. It would retain Orbitz (and Galileo, as well) for merely two years before selling both to Blackstone.

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January

Department of Transportation relaxes regulations governing global distribution system partnerships with airlines; the process starts in January 2004, but the complete removal of rules that GDSs have maintained in their relationships with airlines since the 1980s is postponed until July.

American Express and TQ3 Travel Solutions discontinue fixed consortium rates for corporate travel clients, opting instead for variable rates that might change daily. These rates are referred to as “dynamic” and stem from market rate transparency facilitated by online travel booking platforms.

Orbitz for Business’ pre-IPO Securities and Exchange Commissions filing in December provokes complaints from agencies and other stakeholders for incentivizing airlines to refer their corporate clients to Orbitz as their agency of record. Ultimately, these provisions appear unused by airlines, as they seek to avoid alienating their other agency partners.

Firms confront Sarbanes-Oxley Act, which leads corporate travel managers to revise travel policies, reassess reporting practices, and establish internal controls aimed at curbing expense abuses in efforts to ensure compliance with the regulations.

February

TQ3 and Deloitte join forces to launch a corporate travel consulting division known as Advito.

The National Business Travel Association restructures its hotel request for proposal into a modular format, dividing it into evergreen modules and others that can adapt throughout the calendar year, allowing hotel program managers to respond to market dynamics and their evolving program requirements in terms of sourcing accommodation.

Department of Homeland Security’s proposed computer-assisted passenger prescreening system (CAPPS II) developed post-9/11 receives criticism from travel managers due to its lack of privacy and due process for passengers. CAPPS II is ultimately discarded by summer.

Casto Travel reduces expenses significantly by operating a 40-seat call center in the Philippines after an eight-month trial in the region. American Express is the sole other agency catering to North American travelers through more cost-effective offshore locations. Casto leads in an offshoring strategy that will proliferate in 2004 and beyond.

Delta Air Lines and JetBlue engage in a power struggle over New York JFK, resulting in lower fares and increased flight availability for corporate travelers, especially on transcontinental routes.

March

Carlson Wagonlit Travel acquires Maritz Corporate Travel (excluding the meetings and incentive aspect of the business), which leaves Germany-based TQ3 Travel Solutions without a North American affiliate. This decision ignites a wave of consolidations and ownership transformations over the following two years, culminating in the establishment of BCD Travel. In the meantime, TQ3 Travel Solutions formed a partnership with Navigant that would endure just over two years.

Visa and Mastercard raise payment rates for issuing banks, greatly enhancing rebate prospects for corporate clients. Ultimately, merchants bear the brunt of these increases through higher fees paid to the credit card companies. Issuers report acquiring business “competing solely on price” and indicate a threefold increase in rebates over the prior decade.

Corporate cardholders and employers gear up to pursue separate class action lawsuits claiming misleading disclosure of currency conversion fees by American Express in one suit, and Visa and Mastercard in others. Amex proposes its own settlement of $66 million and concludes the case in January 2005.

United Airlines and US Airways requested and were granted additional time to finalize restructuring programs and achieve financial stability. United’s bankruptcy judge allowed an extension until May 8 for the official submission of a reorganization plan; a governmental board granted US Airways more time to fulfill loan repayments and seek buyers for specific divisions of its operations. The extra leeway for both airlines is set against a backdrop of a slowing recovery environment for airlines in 2004.

Midrange hotels such as Best Western, Residence Inn, TownePlace Suites, Spring Hill Suites, Hampton Inn, and Holiday Inn begin to offer complimentary high-speed internet, whereas full-service hotels continue to impose charges of over $10 per day to access the internet.

April

Southwest persists in legal action to restrict what it deems ‘unauthorized’ access to its website by external parties. Nevertheless, Galileo and Expedia have devised means to retrieve Southwest fares and flight data as part of their services. Concurrently, the low-cost carrier establishes a corporate sales team for the first occasion in its then 30-year history, which is headed by Rob Brown.

Diners Club, which had encountered years of declining volumes by 2004, collaborates with MasterCard International to forge a partnership that grants Diners Club improved global acceptance among North American cardholders. However, MasterCard will not be acknowledged by merchants that exclusively accept Diners Club. Citibank held ownership of the Diners Club network at the time of this agreement.

The U.S. Transportation Security Administration discloses its intention to commence trials in June involving the contractor selected to oversee a three-month trial of the new Registered Traveler program. Registered Traveler undergoes several changes but still operates today as a public-private collaboration between the TSA and the Registered Traveler Interoperability Consortium. The largest Registered Traveler initiative is Clear, managed by Clear Secure, Inc. at 58 U.S. airports.

The ongoing transformation and rivalry surrounding consortia hotel rates continues to intensify as online agencies advocate their discount merchant structures to corporate travel purchasers. Travelocity Business, Orbitz, and Expedia Corporate Travel all introduce such initiatives.

programs and tackle some of the limiting
terms and conditions of the merchant model to enhance their appeal for business
travel initiatives.

June

Escalating oil prices severely impact airline industry profits,
thwarting expectations for a rebound in the commercial aviation sector in 2004. The price per
barrel of crude peaked at $42 in June; it concluded the year around $38. However, in
2005, it would surge to $53 per barrel. For context, it peaked at $128 in July 2008; by December 2024 it hovered around $74 per barrel.

After the formal conclusion of their merger in May, Air
France-KLM introduced the One Corporate Travel Solution, a unified
sales and account management initiative for multinational corporate clients. The
airlines would not provide genuinely integrated corporate pricing for at least another
year.

American Express Corporate Travel launches hotel
benchmarking as part of its new automated Rate Trax offering, conceived to
confirm that negotiated rates are entered into the GDS while also benchmarking rates
against the best available in the GDS as well as AAA rates. This is the
first tool to introduce hotel rate benchmarking.

Delta Air Lines braces for a potential bankruptcy, engaging
investment firm Blackstone Group and New York law firm Davis, Polk,
and Wardwell to oversee debt restructuring and a potential filing. Delta ultimately
evades bankruptcy in 2004 but filed in September 2005.

Steve Tracas departs US Airways for a new role as
president of Orbitz for Business. He informs BTN that the company is “evaluating
our agreements, the technology requirements, and the influences on customer
service tied to direct dealings with each individual airline.”

Congress refuses to grant additional aid to a struggling airline
sector. The former House transportation aviation subcommittee chairman John Mica
(R-Fla.) remarked that Congress had already provided “significant aid” to
airlines since the 2001 terrorist incidents, including over $20 billion in
cash, loan assurances, direct reimbursements, and tax vacations.

Buyers flock to online reverse auctions for card programs,
often selecting the one that gives the largest rebate—as card brands and banks
continue to raise their offers to draw in corporate accounts.

July

Concerns regarding hotel room availability resurface as occupancy
levels rise to those seen in 2000. Buyers once more resort to paying last room
availability premiums.

Southwest asserts dominance across an otherwise
ailing airline sector, launching a systemwide fare discount that prompts
financially troubled mainline carriers to lower already diminished airfares.
Other low-cost carriers followed suit, pushing traditional airlines already
under stress from surging fuel prices closer to the edge.

August

Co-founder of TRX Jon Farrier takes the helm as CEO at an
emerging firm GDSX, established by former TRX employees Becky and Bill Strahan.
The company is equipped with a new generation of technology and a fresh business
model as it unveils its midoffice product Compleat, which remains
available today—now within the Concur portfolio.

American Express, long seen as the industry’s sole provider
of both charge cards and corporate travel management solutions, capitalizes on both
facets to merge travel booking and card payment data into consolidated
reports for shared customers.

Travelocity for Business overhauls its offerings, incorporating
some capabilities from GetThere and upgrading its fulfillment centers with
computer-integrated telephony and a new agent interface. At the same time, it secures a small
portion of a significant account, CitiGroup.

National Business Travel Association hotel committee
takes measures to remedy hotel rate loading errors within the corporate travel
supplier community. It states it will publish in September a detailed timeline that buyers
can utilize to ensure hotels stay on schedule as frustrations with rate loading escalate
and travel managers impose penalties on or cease dealings with properties that do not
accurately load rates.

Concur and Runzheimer International unveil an
expense benchmarking tool that assesses expenses against prevailing market rates and
the spending patterns of other companies on air, car, hotel, meals, and per diems. In October, Concur aims this service at U.S.
Bank corporate payment clients as an added-value offering.

Buyers report broadening their hotel program partnerships in key
markets as occupancy increases and small and midsize hotels re-enter the corporate
discussion with competitive pricing and amenity offerings; meanwhile, RFP tech providers Lanyon and RFP Express each improve
their tools with features that monitor supplier response times.

GDS deregulation, finalized in July, heightens the enthusiasm for
change and a demand for direct connect technologies from both buyers and
airlines. Expressions like “striving to maintain relevance” litter the discussions
and speculations about “how long can the GDS endure?” A considerable period, my friend… a considerable period.

Northwest Airlines sparks the first conflict in a
deregulated GDS landscape, imposing a fee on travel agent bookings made
through those systems. Other airlines did not support them, and Northwest
officials ultimately retreated, alleviating agencies of any charges accrued during the two
days the initiative was active. Eleven years later, Lufthansa would impose
a GDS fee, and they would not retreat.

September

IHG removes 3,500 hotel listings from Expedia.com and its corporate travel branch Expedia Corporate Travel, citing three main
concerns: lack of transparency concerning fee presentations to customers, absence of
automation (it was still reliant on fax communications) for confirming reservations, and the propensity
for the site to incorrectly label hotels as ‘sold out’ when they were not. This marked the
first instance of a major hotel corporation withholding content from an online TMC.

Sabre implements monthly fees for agencies regarding ARC card settlement. This strategy is intended to entice more customers to utilize Sabre’s Card
Services settlement option that was introduced in April.

US Airways initiates a second court-supervised
restructuring with bleak survival prospects. Concurrently, Delta Air
Lines CEO Gerald Grinstein urgently collaborated with the carrier’s pilots union
to postpone a Chapter 11 filing. United Airlines starts to run out of time
to present its reorganization plan to the court after 21 months of bankruptcy
proceedings and extensions.

Hilton Hotels Corp. and Carlson Hotels Worldwide are the first notable hotel corporations to announce online check-in. Of course,
there is no existing mobile key, so travelers still must retrieve that at the front desk.

The U.S. General Services Administration rolls out its
first comprehensive travel management system, including pre-trip authorization,
online booking, expense reporting, and travel management company integration, under its ETravel program. By September, 6 government agencies had formalized
contracts with vendors chosen by GSA. The program strategy and implementation was
overseen by Tim Burke.

October

Transportation Security Administration requires that
domestic carriers submit all passenger name record information for the month of June
2024 to test its proposed Secure Flight initiative designed to
cross-reference airline passenger names against names on terrorist watch lists. This move
raises concerns over privacy, yet the program was officially launched in 2009 and
continues to operate similarly today. It now includes international
flights into the U.S. as well.

Cendant Corp consented to a $1.25 billion acquisition of Orbitz.
Already in possession of the Apollo/Galileo GDS, Cendant through the Orbitz deal
integrated an alternative to its chief competitor Sabre’s Travelocity
offering. Cendantwould acquire Worldspan in 2006, merge it with Apollo/Galileo and transform into Travelport.

US Airways finalizes a restructuring that eliminated several corporate sales roles while emphasizing newer distribution models, analytics support, and growth prospects. It also shifts direction toward simplified fare systems and a point-to-point network.

Delta, on the other hand, concludes an agreement with pilots but has a “matter of weeks” to establish a new contract to prevent pilot shortages and its own bankruptcy.

Northwest Airlines CEO Richard Anderson steps down; Doug Steenland assumes the CEO role.

Hilton Hotels Corp. initiates a program offering individual guests at all 2,200+ locations the option to log into an online folio retrieval system to ensure accurate and comprehensive expense reporting.

Hilton and InterContinental hotels both declare they will discontinue fixed TMC pricing. Fixed consortia rates converted to dynamic rates on Jan. 1, 2005.

Southwest Airlines authorizes an external entity for the first time to automate interactions with its website, creating an unprecedented opportunity for agencies to access the LCC’s fares. BookingBuilder supplied the software, but it operates solely on agency desktops and not online booking systems.

United announces it will reduce domestic capacity by 12 percent over the next 6 months and enhance international capacity by 14 percent, resulting in an overall reduction of 3 percent. This strategy optimizes revenue from high-yield international routes and diminishes exposure to the impact of LCCs in specific domestic markets.

Escalating fuel costs prompt airlines to raise fares and implement additional capacity reductions across U.S. carriers. Soaring fuel expenses and significant debt burdens threaten to pull more airlines, both large and small, into bankruptcy.

Starwood enhances hotel room descriptions for content featured in global distribution systems, addressing feedback from business travel buyers who noted that such descriptions used jargon and codes unfamiliar to corporate travelers doing self-bookings.

November

Despite notable partnerships and acquisitions in 2004, earnings reports from publicly traded TMC Navigant indicate weaknesses in its business model and technological sophistication. The most astonishing revelation was that the company processed only between 2 percent and 3 percent of its total transactions online. In contrast, American Express, the only other publicly traded U.S.-based TMC at that period, reported online transactions at approximately 30 percent.

Department of Homeland Security enacts a requirement for residents of Visa Waiver nations to possess machine-readable passports for entry into the U.S. The mandate was originally set for Oct. 2023 but was postponed to provide countries more time to facilitate and issue the new documents.

Sabre follows Amadeus in introducing menu pricing for GDS contracts following the U.S. Department of Transportation’s move to deregulate the GDS sector. Conversely, small LCC Independence Air began joining Cendant’s Apollo/Galileo system. Like JetBlue and Southwest using Sabre, Independence opted for Galileo’s most basic participation level.

Southwest Airlines CEO Gary Kelly informs BTN that the airline is awaiting to gauge the severity of the market conditions for mainline carriers—amidst domestic capacity and network reductions—before Southwest makes final decisions regarding its 10 percent capacity increase and 29 fleet additions for 2025.

December

Hilton and Marriott pre-loaded negotiated rates for 2005 prior to finalizing negotiations, raising concerns for buyers about the likelihood of incorrect rate applications. This was particularly frustrating in a market where hotels were suggesting rate hikes of 5 percent.

A BTN survey indicated that merely 17.5 percent of travel managers were employed by companies that had subscribed to an automated expense reporting system. Another 17.5 percent utilized internally developed automated systems, per the survey.

Continental Airlines’ CEO Gordon Bethune—the longest-serving airline CEO in the industry at that time—handed the reins of leadership to Larry Kellner. Continental was among the rare mainline U.S. airlines not burdened by financial troubles in 2004. Kellner remained in the position for 5 years.

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Elizabeth West is the editorial director of the BTN Group. She has covered the business travel and meetings sectors for 24 years. Beth served as editor-in-chief of Meeting News from 2006 to 2008 and director of content solutions for ProMedia Travel from 2008 to 2011, when ProMedia was acquired by Northstar Travel Media and merged with BTN. She became editor-in-chief of BTN in 2015 and editorial director of the BTN Group in 2019. 

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