effectively a manual process. HRG has been calling for the
adoption of standards for a number of years, according to director Tony Berry. His argument is that HRG needs standards in order to make sure “the tool our agents use and the technology we provide to corporates are fit for purpose”. He also expresses concerns about ancillary services bought outside the fare transaction. However, the “complex but
manageable” current state of play is an opportunity for TMCs who blend data from various sources to give clients the full picture.
Berry also pointed out that
standards were limited, as some airlines choose not to distribute through the GDSs. The kiosk upsell referred to by Talbot would also not fall under the standards in the same way as if purchased with the ticket. The amount of money airlines make from ancillary revenue is growing every quarter. Amadeus recently issued a report, in
conjunction with Ideaworks, which showed that globally, airlines will have raised US$32.5 billion of revenue from ancillary sales in 2011, an astounding increase of 43.8 per cent on 2010. Major US carriers will net US$12.5bn (2010: US$6.7bn); traditional non-US carriers US$10.9bn (2010: US$8.5bn) and low-costs US$4.8bn (US$3.6bn).
Back at Sabre, Terry thinks
ancillaries are effectively keeping the US airlines in the black, or at least making the red ink on their accounts more palatable. “They’ve achieved this despite the scrappy collection of fees,” she said, “but now we are hoping that they will have
The business travel community is slowly coming to terms with the technical, commercial and cultural fallout from mass unbundling
a stronger strategy in place around merchandising their ancillary fees.” Turner reveals some headline figures from internal CWT research about how ancillary charges can add up, identifying a difference between domestic and long-haul. “We looked at London to Manchester,” he says, “and in some cases the total fare, once ancillaries had been factored in, was 850 per cent more than the base fare. For long-haul we looked at London- Dubai and/or New York and found the average was only a 20 per cent increase for economy and 12 per cent for business.”
POLICY PREDICAMENTS A recurring difficulty for all business travel stakeholders is how to deal with travellers who book
outside policy, and ancillaries are compounding what is already a difficult cultural issue. HRG’s Berry explained that “12 per cent of the corporations’ total spend with
airlines is not accounted for”, and the challenge that HRG and other TMCs have is collecting the relevant data. “For the ancillaries purchased en
route, we are reliant on the traveller filing their expense claims, so we are unlikely to ever get to the stage where every ancillary purchase connects into the management information systems,” Berry says. “And without full transparency, it is difficult for corporates to use ancillary data from travellers as part of the negotiations.” The standards should also allow corporations to build rules into their online booking tools, but when travellers are bypassing policy on preferred suppliers, then making them commit to not taking advantage of a free upgrade is tough. Berry adds that “many corporations also don’t want to have stringent policies if this gets in the way of productivity”. Priority boarding may not be relevant at the time of purchase, but if the flight is late or the meeting brought forward, buying this service at the airport could be important for the traveller. One way round this is for corporations to