Requests for proposals sent by companies to airlines are not becoming any more standardized, despite industry efforts to simplify and bring consistency to the opening phase of contract negotiations. As the marketplace evolves, buyers are making sure their RFPs ask airlines to address flexibility in dealing with new ticketing rules, fare availability, discount applicability, emerging distribution options and a bevy of other concerns that impact their supplier relationships. Meanwhile, corporate RFPs, increasingly but not universally electronic, at many firms are taking new shape as procurement departments get involved and turn the focus from amenities and relationship-based discounting toward bottom-line savings.
Unlike the hotel sector, the airline realm does not have a widely embraced common RFP format, which airlines said poses an ongoing challenge for their corporate salesforces. "Most people still build their own," said Steve Smith, Delta Air Lines managing director of corporate sales. "We don't see too much standardization, though we would love to see it."
Smith said Delta has not seen many companies use the RFP template created by the National Business Travel Association's aviation committee
(BTN, July 29, 2002). "We don't think there is a lot of use," acknowledged Suzanne Fletcher, aviation committee chair. "A lot of people just use it as a guideline. To get to a standard, we'd have to do it in conjunction with the carriers."
Instead, many corporate buyers either construct their own RFP or use models designed by consultants or travel management companies in order to integrate professional analysis and any required data consolidation and transmission.
They also increasingly are using the document to sell themselves to the airlines, according to Bob Brindley, vice president and general manager of Travel Procurement Solutions, a division of WorldTravel BTI. "They want to explain past performance, growth in key markets, share premiums in certain categories and reasons why the carriers should be as aggressive as possible in offering the best bids," he said. "Carriers are getting better at analyzing data, but clients also are being more proactive."
Meanwhile, the variation in RFP formats not only is driven from the buyer side—with diverse travel needs, different priorities and numerous shades of procurement involvement—but also on the supplier side. Despite their advocacy for consistency, carriers interpret data differently, use different terminology and, most importantly, uniquely negotiate prices.
"Carriers want it to be standardized, but to their own specifications," Brindley said. "When we send out a standard form, it is hard to get carriers to correctly fill it out. They want to adjust it to their own liking."
To address differences in airline pricing and streamline the negotiating process, Travel Analytics creates for clients a scenario-based RFP. Dan Pirnat, the Cleveland-based company's director, said airlines "now are mandated to send back multiple bids" based on primary, secondary and tertiary positions in a company's supplier portfolio.
Meanwhile, there are various new elements to address. "One thing we are injecting into RFPs is flexibility on the change fees and the nonrefundable tickets," said John Heilner, vice president of Management Alternatives in Princeton, N.J., "but no one wants to answer that question directly."
More buyers also are asking airlines to spell out which fare buckets would be eligible for discount, a contract point that also many times is dealt with later in the negotiating cycle. "It is something that clients are asking for more these days and each carrier will respond as they deem appropriate," said Monisa Cline, Continental Airlines managing director of national corporate sales.
Individual carriers also will respond differently to inquiries on potential savings levels for cheaper distribution channels, and what buyers may perceive as corresponding discount levels. "We are starting to see more companies request increased discounts for using alternate booking channels," confirmed Delta's Smith.
Many travel managers today want to understand the benefits of direct connections and how airlines contractually define the parameters of alternate booking channels—even if carriers are unwilling to offer specifics on their own savings levels—and how that can translate to improved contract terms.
Some buyers are taking a pragmatic approach to new booking options. "The only big difference I see going forward with my RFP, which I will be doing myself, is the involvement of Web fares," said Kathy Stuart, manager of corporate business operations for Itron, a Spokane, Wash.-based utilities technology company. "If I use them, they at least have to count. The airlines have been pretty good about that, but it's going to get a lot more complex."
Also more complex is monitoring fare class availability and seat inventory as carriers continue to tweak schedules and networks. "Inventory availability is one of the unspoken issues and one that is very difficult to quantify," said Steve Shook, vice president of strategic sourcing at Carlson Wagonlit Travel, referring to service level agreements. "But we make it clear that it is something we want addressed upfront."
Travel Analytics' Pirnat called fare class availability "a hot topic" that requires proactive contract monitoring. "Most of the time, it first is handled as part of the RFP process," he said.
Brindley said a new airline strategy has evolved in the past six months whereby international business class has new, inventory-controlled fare buckets. "A carrier may give a 50 percent discount in D class between London and New York, for example, but half the time those fares are not available," he explained. "It is key to understand exactly which fare buckets will be included in order to analyze the bid."
There are many other issues on the minds of travel managers at companies large and small when they embark on the RFP process. Some are asking for information on such big picture items as carriers' financial stability, international alliances and global data privacy safeguards, as well as smaller-scale issues, such as carrier efforts to minimize the airport "hassle factor" and provide various value-adds, including upgrades and matching frequent flyer status. Many also ask for assurances that their corporate discounts will be loaded into the global distribution system of their choice.
Oftentimes, however, the details sought by travel buyers border on the absurd, according to some. "I have seen some RFPs that are seeking the capacity of the fuel on the airplane and other items that never will make a difference," CWT's Shook said. "That is where you distract the airline from the core pieces of price, service and reach."
Said Continental's Cline: "Travel managers should ask questions that are relevant to the decision-making process. Seventy-five percent of the information that we might be asked to provide won't even get read."
With an eye on efficiency, CWT has taken steps to cut down the size of RFPs and speed up the cycle. The travel management company first suggests clients send to prospective airline partners a request for information, which minimizes the number of elements in the RFP and also prepares the airlines for negotiations with the particular company.
Travel Analytics' Pirnat said most of his firm's clients already have jettisoned requirements for 30-page responses to qualitative aspects of RFPs. "Most major buyers no longer care about the dog and pony show," he said, suggesting airline use of Prism and similar systems "creates more of a fact-based approach by airlines that is pushed onto buyers."
Pirnat, however, suggested emotions still factor into airline contracting and, combined with continued supplier leverage, will prevent a standardized RFP from taking hold. The airlines nevertheless are calling for consistency.
"Maybe we can use NBTA or the Association of Corporate Travel Executives as a sounding board for the issues we are having with the RFP process to at least get together a mix of airline folks, corporations and consultants," Delta's Smith said. "We need someone to stand up and take the lead."