form. Consequently, elements such as schedules, onboard service and quality of lounges are just as important, if not more so, as the price alone. To convince an airline that negotiation
The airline
GIANNI LEONE, head of central and west Europe, Alitalia
I BELIEVE IT IS ESSENTIAL for corporate travel buyers to build trusting and open relationships with airlines. Buyers should be transparent on their company’s travel policy and be willing to share high-level market data to allow the partner airline
to fine-tune the offer. I would also advise buyers to be forthright, approachable, available to meet regularly and open to looking at the airline’s whole service offering, not just the price paid. Corporate travel is much more than
simply price. Corporates want their execu- tives to perform to the best of their ability, arriving at meetings refreshed and on top
The TMC
PAUL DEAR, global director of supplier and industry affairs, HRG
THE FIRST POINT I WOULD MAKE is that today’s air travel marketplace is excep- tionally complex and, therefore, poten- tially confusing. From the relative merits of direct and indirect travel, through to unbundling and the differences between each airline’s business class offering, there are many variables. Travel buyers really have to be experts – gathering and as- sessing the right data to understand the market – to get the best deals. There are no strict rules but we tend
to advise clients to consider negotiating rates with airlines when annual spend on a route reaches around £100,000. Nonetheless, when negotiating, the best
BUYINGBUSINESSTRAVEL.COM
approach is certainly to address more than one route. Try to bring your organisation’s entire global air travel spend into one RFP [request for proposal]. That approach is common practice for multinational businesses. Your bargaining position is more powerful if you are talking to airlines about hundreds of millions of pounds’ worth of travel, rather than hundreds of thousands. As negotiations can take six months to
a year, agreements tend to last around two years. Given the time spent negotiating, shorter-term agreements would clearly make little sense. But equally, airlines prefer not to tie themselves into longer- term agreements, as market situations may change. But negotiating rates with airlines is only part of the process. Travel buyers and managers must then take control internally – make sure your travellers comply with your policy to maximise the benefits of the deal you have just struck. Changing travel habits can be diffi-
cult. For example, indirect travel to your ultimate destination is often cheaper than direct, but can bring inconveniences to your travellers. You have to clearly direct your travellers to book the way you want them to, based on your ne- gotiations. This leads to another vital area of a corporate travel buyer’s exper- tise – understanding which products your travellers want to book. Did you
is worthwhile, corporate travel buyers should demonstrate capabilities, includ- ing the ability to enforce their travel policy. That said, most corporates now have a best logical fare policy, which means they can book outside the corporate fare programme and use normal published fares when cost-effective. Where travellers may not want the flexibility of a corporate fare, they may be willing to buy a lower fare to save on costs. On the downside, they then have to adhere to the rules of the published fare and, therefore, do not have the ability to amend bookings. Airlines are generally willing to offer good deals if a route is facing significant competition, in either pricing or schedule, or when launching a new destination to carve market share.
review your travellers’ current buying habits before entering into negotiations? Travel policy will increasingly be driven by travel behaviour. If it’s working, don’t break it. Negotiated client rates are not the only
option. Spot buying can be an effective approach, particularly when requirements are straightforward – if you just want to get there and back – and unbundling comes into play. For example, a traveller taking a short-haul day trip, with no need for hold baggage or any ancillary services, may well be able to source the best fare through spot buying. Travel buyers there- fore face a dilemma – is it worthwhile to negotiate full-fare short-haul services with an airline knowing many travellers will effectively unbundle and use few of the negotiated elements? Again, the travel buyer must be an expert, using business intelligence to know when contracted fares make more sense than spot buying. Airlines will continue to work in part- nership with TMCs [travel management companies] and travel buyers to offer attractive negotiated rates. For the well- informed travel buyer, there are definitely opportunities out there. Airlines may be less willing to negotiate
on routes with low capacity or monopoly/ near-monopoly status, but on routes with high capacity, such as the transatlantic services on which the joint ventures are competing, there are great opportunities.
BBT JULY/AUGUST 2016 39
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