MYSTERY BUYER YOU'RE NOT PLAYING FARE!
ONE OF BBT’S TRAVEL BUYER READERS HAS A BEE IN HIS BONNET ABOUT GRAPPLING WITH AIRLINES OVER UNRELIABLE TICKET PRICES...
INCONSISTENCIES IN THE MARKETPLACE are, to say the least, irritating, and these are particularly prevalent in airfares. There seem to be numerous fares in each class on key routes – until it comes to booking, when it becomes apparent that many of them are either not avail- able at all, or certainly not in both direc- tions. Although airlines obviously want to maximise their revenues, it means I have to put considerable effort into trying to work out what can be bought and when, so that I can capitalise on fares to maximise my budgets.
The airlines are trying to make money, so it’s in their interest to increase fares
When doing RFPs [requests for proposal],
buyers also spend a lot of time on negotiating class levels – and then when that’s done, it’s a battle to find out when that fare is actu- ally going to be obtainable. Unless you are a particularly perceptive buyer or have an aggressive deal, it can be very hit and miss. Similarly, I find it incredibly inconvenient – and ultimately expensive – that neither hoteliers nor airlines give any notification when they increase published rack rates or fares. This is particularly acute with airlines, which don’t tell me they are going to put them up and I find out much further down the line, when our spend has inexplicably gone up. For example, in the last year, we agreed a discount of 40 per cent off the published fare with one airline. Once we had done that, the carrier raised the tariff by 5 per cent, so the discount was then calculated on the new fare. It’s easy to miss when you are not alerted to the change and when all you’re looking at is your 40 per cent discount, which remains the same. The net effect was the 40 per cent dis-
count we thought we had was actually 35 per cent, and by the time it was calculated six months into the programme, we had spent £300,000 more than we expected to. And that’s unrecoverable. One of my main suppliers increased its published fares by 12 per cent – that was six times what was expected in the marketplace. It is possible to mitigate against this. You can get your TMC [travel management company] to do regular benchmarking to see where there is a change in fares, and you can ask the airlines to supply you with published
28 BBT JULY/AUGUST 2014
figures on a regular basis. But when you’ve got a 100,000 travellers spread over several thousand destinations, you have to select which ones to look at – and in a lot of cases, you might not be looking in the right direc- tion. The airlines are trying to make money, too, so it’s in their interest to increase fares. In addition, it’s not really in a TMC’s interest
to tell you when fares are going up. I asked my TMC if they could get us published fares. Now, I know for a fact they would have those, because they would be doing daily bench- marking of this sort. But the answer I got was a ‘no’, because if they give them to me once, then I’ll expect them to give them to me all time – and they don’t want to be doing that. There has to be a better way for airlines to
make money without treating their custom- ers – and their hard-won deals – in such a cavalier fashion.
FORUM COMMENTS
Doesn't this illustrate that pricing models are changing? Perhaps the answer is to mimic the airlines’ and hotels’ predictive data analysis to forecast what your spend is going to be?
Of course buyers aren’t allowed to share airlines’ pricing data, but when it comes to negotiating, if buyers could find a way to join up their data but hide the identity of the individual company, they’d be in a lot stronger position to negotiate fares.
Understand your data. At the moment, the sellers have the upper hand. Is it time to think differently about procuring travel?
BUYINGBUSINESSTRAVEL.COM
Illustration: Ben Southan
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