TRAVEL BUYERS HAVE TO BE TRAINED NEGOTIATORS TOO

I was at an ITM meeting last week and one of the topics that came up was air fares or, more specifically, how buyers can and need to negotiate their way around them. We discussed how, before business travel buyers even attempt to start negotiations with airlines, they have to dig deeper to find out what makes up that fare. Some airlines, for instance, include ancillary fees and fuel surcharges in the fare. Others don’t.

Travel managers have to know what the ancillary fees are (seat allocation, baggage allowance, and so on) so they can unravel the real cost of the ticket. Only then, are they in a position to start negotiating with the airlines. And negotiate they must given that, at around half of the total travel budget, air represents the largest spending category in nearly all travel programmes.

CWT – the UK’s largest travel management company – understands this and agrees. This week, the company announced its new report, Mastering the Maze: a Practical Guide to Air and Ground Savings, which takes travel managers on a tour of savings opportunities in 20 different areas, including negotiating fuel surcharges and ancillary fees. Well worth downloading.

Being transparent when it comes to real cost and added costs is a win win situation between buyers and suppliers – it encourages loyalty among buyers and, by staying loyal, buyers will be better placed to achieve a volume discount. What’s not to like?

Posted by David Chapple, event director of the Business Travel Show. You can get in touch at david@businesstravelshow.com or on Twitter @btshowlondon

UNBUNDLING DEMYSTIFIED

Unbundling was a dirty word that first reared its head in the travel market a few years ago and the public’s disdain toward suppliers offering unbundled prices peaked when Ryanair suggested it was planning to ‘charge a pound to spend a penny’. It’s since become part and parcel of how we buy travel and, when the game is played well, travellers and travel managers can use unbundling to their advantage, paying for only what they need and saving money as a result. 

In the trade, unbundling is more commonly referred to as ancillary fees. And though we may be more used to their existence, controlling, navigating and tracking them can still be a mystifying experience for many travel managers. According to recent research by the GBTA just 21 percent (21%) of travel managers are tracking ancillary fees while those fees account for over eight per cent of total travel spend.

Believing that ancillary fees have a significant impact on travel budgets and policies and, with better insight into how these fees work, travel managers can make more informed choices, the GBTA has now released the ‘2012 Ancillary Fee Handbook, Who Charges What, When & Where’.

The study categorizes virtually all the ancillary fees that business travellers can incur through airline, hotel and car rental travel. It also provides a rating system that evaluates each fee on three essential characteristics:

1. How common it is for a business traveller to incur the fee?
2. How transparent it is to travellers and planners?
3. How easy it is for travel managers to track the fee once it has been incurred?

You can download it here: http://hub.gbta.org/resources2/view/profile/id/21535. Travel managers across the globe can now breathe a collected sigh of relief. 

Posted by Daniela Reck - daniela.reck@centaur.co.uk 

True value comes from honesty and transparency

A recent report by Ideaworks and Amadeus of 47 airlines worldwide reported an increase in ancillary revenue of 96 per cent on 2008 to €15 billion. Let me write that again - €15 billion. That’s a lot of money. It’s a good thing for the airlines because ancillary charging is viewed as a financial necessity, especially following the economic downturn. But it worries me what airline passengers may think as their opinions of ancillary charging – or unbundling as it’s also known – have been well documented in recent years.

Why they feel so negatively towards unbundling is interesting because, on the face of it, unbundling is a good thing for passengers too. It allows them to customise their journeys and pay for only the things they want. Be clever, and unmanaged travellers can even save money thanks to unbundling. Sadly, unbundling doesn’t currently have the same appeal for managed business travel as GDS technology doesn’t give buyers access to unbundling options.

So if it’s not price, and it’s not the increase in choice, what is it that passengers find so distasteful? Well, in my opinion, it’s our very natural fear of being taken for fools, of being cheated and ripped off. When unbundling first launched through the budget airlines, it was almost instantly referred to in the media as ‘hidden costs’ or ‘hidden charges’ and the press took it upon themselves to take up the mantle of consumer champion fighting for a cause most of us were unaware even existed.

It’s this word ‘hidden’ that’s key. Hide things from people – or just as bad, make claims that don’t stand up - and you cause a consumer revolution. I’m not talking about just airlines here. This goes for every industry, from hotels and holidays, to entertainment and exhibition organisers. Customers aren’t stupid and it’s suicidal of any business to treat them as such. Be transparent and honest and customers will feel they are being treated fairly, even if the end price, product and service are the same. And happy customers will, of course, reward you with loyalty, fairness and word of mouth recommendations in return.

Posted by David Chapple, event director, Business Travel & Meetings Show