DuPont Airfares Beat Web's

DuPont Airfares Beat Web's

By Jay Campbell

Wilmington, Del. - Negotiated corporate airfares are most often lower than what's available through the two largest online travel agencies, Integrated Technology Research Corp. found last month in a study commissioned by DuPont de Nemours and Co. manager of global business travel Joyce Bembry.

"We believe, based on our data of actual travel patterns, that a managed program is better," said Bembry. "If, in fact, the Internet was better, we would have changed direction. We went into this with no preconceived notions."

DuPont initiated the study in April before implementing a new tiered pricing structure that charges individual travelers for their use of travel management services. A week after the new policy took effect, Bembry circulated the study's results and "got favorable replies," particularly from budget managers.

Comparing more than 100 itineraries, ITR found that negotiated airfares produced by Rosenbluth International, DuPont's travel management company, for the "traveler convenient" option averaged 18 percent and 21 percent lower, respectively, than did those displayed by Travelocity and Expedia. When seeking the "lowest usable" fares, Rosenbluth averaged 7 percent lower than Travelocity and 1 percent lower than Expedia.

Traveler convenient fares are fully flexible and refundable, unrestricted and nonstop, while lowest usable fares can include connections and restrictions. About 75 percent of DuPont travel falls under the "convenient" category.

With 90 percent confidence, ITR concluded that "convenient" Rosenbluth fares were 12 percent to 24 percent lower and "lowest" fares were 0.5 percent to 14 percent lower than those found on Travelocity. Expedia performed better on the lowest fares, with a range between 3 percent lower and 6 percent higher than Rosenbluth, but it was clobbered on convenient fares at 16 percent to 26 percent higher than Rosenbluth.

DuPont owes the difference to its contracted supplier discounts. "For a large company with a managed travel program, the Internet gets to be noise," said Bembry. "When they read things in the press, travelers take away that we should be looking there for our fares. But most articles don't make a great distinction between managed and non-managed business travel."

DuPont's new policy grew out of a five-year-old management fee structure with Rosenbluth and the proliferation of net-net fares, which soon would have dwindled commissions below the cost of services. "We had been using commissionable fares to pay the Rosenbluth fees," said Bembry. "But these costs have to be at the business unit level, since we have a lot of contractors and joint ventures, etc. The cleanest way to do it is to get it to the individual and charge it to the corporate card."

Bembry said there is a lower fee for bookings made through Rosenbluth's XOL booking system. "You'd think it would drive more usage but it's not working yet," she said. "The system is good and I believe we'll save money, but it's not all that easy or convenient, not like an Internet site. There are a lot of biases that can make it slower."

Having recently finished the project of consolidating Asian travel management, Bembry now is considering how to increase online booking utilization. She said the ITR study could help, and suggested that other travel managers take a look.

According to the study, Rosenbluth found a lower "convenient" fare than Travelocity 75 percent of the time and an equivalent fare (within 3 percent) 20 percent of the time (see chart). The same figures were 74 percent and 25 percent, respectively, when compared with Expedia.

Among the low-fare options, Rosenbluth found a lower fare than Travelocity 41 percent of the time and an equivalent fare 34 percent, compared with Expedia, which had 37 percent lower and 37 percent equivalent fares.

The online sites outperformed Rosenbluth about 25 percent of the time when seeking lowest-fare options, which DuPont said could be the result of Rosenbluth sometimes choosing preferred suppliers over the best fare. Of course, that helps earn corporate discounts in the first place.

ITR director of travel industry programs Greg Moore, who served as DuPont's travel manager in the 1980s, chose the sample of itineraries based on typical DuPont city pairs.

Some, but not all, were primary routes, "because I specifically excluded city pairs where there weren't any choices involved. I figured, 'Why compare those because everything is the same?' "

Bembry then recruited volunteers who, over the span of a week, called Rosenbluth for fares. Each itinerary queried at Rosenbluth was, during the same part of the day, checked on the Web sites by Moore. He then compared the means and tested confidence intervals, determining that slightly more than 100 itineraries was statistically significant.

"Corporate fares accounted for a major portion of the difference," said Moore. "A lot of times, Rosenbluth probably found the same fare I did but applied the discount."

A smaller company with less negotiating leverage, he said, may find different results. "Most of the time, DuPont's discounts were good enough to offset any specials I ran across, but for other clients that may not be the case," he said.

Asked whether she thought Expedia and Travelocity would ever grow big enough to earn comparable discounts from the airlines, Rosenbluth chief travel scientist Danamichele O'Brien was doubtful.

"It's still the airlines choosing what inventory to pipe," O'Brien said. "The key is that Expedia and Travelocity have not established a loyal customer base that will give them the juice to leverage with the airlines, nor will the airlines allow that to happen.