chapter  16
8 Pages

Sales Contracts

Over the last decade, business travel is estimated to account for about one-half of all US domestic air carriers’ trips and two-thirds of the air carrier industry’s passenger revenues (Bender and Stephenson 1998, Stephenson and Fox 1992). Several initiatives are implemented by commercial air carriers to attract corporate business travelers. A common initiative is to provide incentives to business travelers in the form of ticket discounts and cabin upgrades. A contract is signed between the air carrier and different corporations for this purpose. According to this contract, the air carrier provides a fare discount to the employees of the corporation when they select the air carrier for their travel. In return, the corporation has to guarantee that a portion of its travel is done through the air carrier. Such an agreement helps the corporations reduce their travel expenses and allows the air carrier to increase its travel share in the different markets.