TURBULENT Times

The way businesses book and manage air travel spend is in the midst of a revolution, but some things never change, says Gillian Upton

Air travel is the single biggest area of business travel spend for the vast majority of companies so, as Scott Davies, CEO of the Institute of Travel Management, stresses: “It’s extremely important to get it right.”

In a survey of ITM’S 1,200+ buyer members their top priority for 2018 was traveller safety – unsurprisingly – but the biggest jump in the survey, from 7th to 5th position, was the demand for full content access in air spend.

It’s a controversial topic but NDC may well satisfy this need, blended as it is with enhancing the traveller experience. Whether it will lead to more maverick spending though is a moot point as travellers will be faced with a visually tantalising menu of options, from seat type and location to meal options and baggage.

“I’m worried about upselling to a degree,” says Roger Peters, Senior Purchasing Manager UK Travel & Global Hotels, at Cap Gemini. “But it depends on how it’s displayed and what the caps are.”

Nonetheless, a good traveller experience is key to happy and compliant travellers and corporates are trying to achieve that set against tough budgets. However, the change in historically lucrative route deals by some airlines hampers progress.

Route deals from Air France-klm and the Ba/iberia/aa/finnair grouping have been replaced with discounts across all their flights. “It’s a broad regional deal and it provides value,” argues Tom Lattig, Managing Director EMEA Sales at American Airlines. Corporates say that they end up with discounts on flights they don’t want and smaller discounts on flights that they do. Lattig defends this pricing strategy when he says: “Corporates are looking for new places to do business so it doesn’t make sense to offer discounts on specific routes.“

Vanessa Bailey, Director of Client Partnerships at Business Travel Direct, says she has fewer clients on route deals today. “A route deal is the maximum you would pay rather than the minimum,” she says.

ATPI'S Head of Account Management, Karen Abbott, says only 6% of their clients negotiated route deals in 2016. She cites the example of a volume-led, 45% discount with Delta on London-ny being reduced to 12%, so the clients moved away and the airline lost market share. “Normal route deals and bigger discounts are still available with smaller airlines though,” she adds.

Instead, cost-conscious corporates are going for lowest logical fare on the day and fine-tune their one, two or three-year airline deals at regular intervals. “Have the negotiated rate in place as an insurance,” advises Lora Ellis, Associate at consultancy Festive Road.

Spot buying has been particularly worthwhile on transatlantic routes over the last few years as airlines have been releasing less expensive fares nearer to departure in their fight for volume.

Corporates’ travel patterns shape the deals too, says Ellis: “If 95% of your volume is in a hub there is little space to negotiate but if it isn’t then you’ll have more negotiating power.”

Another tactic at buyers’ fingertips is changing thresholds on class of travel in order to save money, on one or both legs of the journey. Thresholds vary enormously, often by industry verticals.

The huge popularity of premium economy cabins has helped stretch budgets, particularly on outbound daytime flights where flatbed seats are less of an issue. It’s allowed corporates to downtrade from business class on one leg and pocket substantial savings.

For those travellers who fly only in economy, premium economy offers “wellbeing without too much cost attached,” observes Bailey.

At Cap Gemini, premium economy is only used when an economy class traveller has a business need. Only VPS can fly business class on flights of six hours or more and they are encouraged to look at hubbing with a stopover say, via Dubai, on a trip to India, “which can save £2,000,” says Peters.

However, there is one line that most corporates won’t cross and that’s downtrading from business class if it’s on a red

eye flight and the traveller is going straight into a client meeting the next day.

Changing to indirect flights is another strategy employed to save money on longhaul flights, as the experience has improved significantly in terms of minimum connecting times (MCTS). “The connection experience is so much more slick,’” says Davies, “particularly at mega-hub airports around the world.”

Also worthwhile is taking advantage of airline corporate loyalty schemes, which nets the corporate a few free flights at the end of the year, although ATPI'S Abbott warns that very often, “some are absolutely impossible to spend and the cash value is really low.”

Technology helps the corporate immeasurably in this spend category as software programmes such as Yapta and Fairfly scour the market for less expensive fares post-booking and right up to day of departure, taking in cancellation penalties and other restrictions.

Business Travel Direct say they tend to find less expensive fares in one out of ten cases – always on long-haul and usually on UK-US routes – and often by as much as hundreds of pounds.

However, Cap Gemini’s Peters says: “Is it really worth doing when you take into account the time and cost of checking that fare again nearer departure?”

What is worth doing is capturing total journey spend: “all the expenses of the trip including the taxi to the meeting and the

meal,” says Marine Bergeron, Director of CWT Solutions Group. “It’s about travelling smarter, maybe not just travelling for one meeting, and to reduce the domestic travelling by using videoconferencing, managing time and evaluating ROI.”

It’s something that Concur has been in the forefront of, to “control spend before it happens” and “to capture 100% of it,” says Daffyd Llewellyn, UK Managing Director, and then to streamline expenses with reports that write themselves.

It is possible today, as is using self-booking tools for more than short-haul point to point journeys. They can now book multi-sector journeys, offering another cost-cutting tool in a corporates’ armoury. TMCS, however, may argue that their creative ticketing consulting offline on multi-sector long-haul flights will be less than paying a lower transaction fee on the same journey.

Cap Gemini’s Peters is in the enviable position of having high online adoption globally of 70% of the company’s total spend of €120million, plus a 93% compliance figure.

How does the company achieve that? By agreements with 26 airlines, utilising a mix of lowest logical fare, route deals and cost parameters set within their booking tool and educating staff to advance book. Some 80% of Cap Gemini’s spend is achieved through lowest logical fares, which are the first fares shown at time of booking.

“We’re a tech-driven company, our policies are clear and travel follows through into our Concur expense system,” he says. “It’s textbook stuff, constantly shifting market share.”

Managing air travel needs has never been so complex but a panoply of tactics can bring a level of control that will go straight to the bottom line.

Changing to indirect flights is one strategy employed to save money on long-haul flights”