QUESTION TIME
Chris Pouney, of Severnside Consulting, answers a buyer's query about developing trust with suppliers, in this case sparked by concerns over TMCs marking up net fares
Chris Pouney, Severnside Consulting
Having studied Travel & Tourism at University College Birmingham, Chris joined American Express Business Travel supporting a wide variety of clients in industries as diverse as automotive, retail and entertainment. In 2003 he was appointed travel manager at fi nancial giant Citigroup as fi rst European Travel Manager and later Global Lead for Travel, where he won a number of internal awards for his innovative approach to service delivery. Chris left Citi in 2009 to set up Severnside Consulting Ltd using his considerable expertise to support a variety of organisations. He splits his time between the UK and UAE and is a frequent contributor to industry publications and events.
Q. How can you be sure that your TMC is legitimate and not party to underhand procedures such as marking up net fares? Do all TMCs have the appropriate governance in place or is there a split between those TMCs servicing the large corporates and those that serve SMEs?
A. I sense through this question that a level of distrust between buyer and supplier exists which is always disappointing to hear. At a time when TMCs should have joined the ‘buyer's side of the table’, many argue that they look to maximise their earnings by pretending to service both buyer and supplier. The removal of the fairly simple commission model has led us into the rather murky world of overrides, marketing funds and the dreaded mark-ups*. In certain instances, I don’t see
mark-ups as such an issue. For SMEs, for example, is it so much of an issue if the TMC earns a bit more on those tickets where the corporate has benefitted from their significantly greater negotiating power? Providing they haven’t gone against company policy, then I think this is fine. For larger corporates, where there are dedicated
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staff, and salary and benefits are covered, I can understand the concern. Corporates are paying TMC costs and an agreed level of profit, so why should they make more when issuing certain ticket types? Then we get to the really shady areas, like not
refunding tickets to the client unless asked for; issuing restricted net fare tickets with a massive mark up
when the client thinks he is getting a published fare; or issuing one company’s deal fare to another. But it’s not just airfares causing concern to clients.
Incorrect transaction fees and having dedicated staff charged to two clients are further issues. All in all there are lots of opportunities for some TMCs to increase their earnings and a buyer who doesn’t ‘know where the bodies are buried’ can be viewed by some TMCs as a dream client. Sophisticated buyers recognise the need to develop
“The right to audit and a deal with claw-backs for incorrect charging usually focuses the mind of the TMC”
trust with TMCs but also the need to have checks to ensure that the charging is correct, fair and as per contract. The right to audit or spot-check and a deal with claw-backs for incorrect charging usually focuses the mind of the TMC and can be positioned as a way of reinforcing that the partnership is working. Using a credit card for payment
decreases the possibilities for mark-ups, and ensuring that the transaction fee is an automated rather than manual process reduces the risk for errors, either accidental or otherwise.
In conclusion, we need to somehow break the
cycle and stop our industry from its relentless ‘journey to the bottom’ in terms of cost and quality, and the only way we are going to achieve that is to build trust with our TMCs and empower them to up-skill their operations. TMCs in return need to show they deserve this respect by becoming more transparent in their dealings with customers. *The issue of transparency of TMC fees was discussed in our Debate feature in the March/April issue of The Business Travel Magazine.
14 THE BUSINESS TRAVEL MAGAZINE
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