The National Business Travel Association aviation committee during the NBTA 2008 International Convention and Exposition in Los Angeles plans to unveil its first comprehensive airline request-for-proposals template in a bid to standardize the airline negotiating process.
The RFP sets definitive timelines for the airline bidding process from the request submission to fare loading, limits proposal requests to critical deal-makers and breakers, outlines pricing formats and details the boilerplate legalese.
The aviation committee, co-chaired by FedEx travel manager Susan Mays and AstraZeneca travel manager Doug DeBaltzo, hopes its first request-for-proposals template will become the industry standard for bids, much like NBTA's hotel RFP is for lodging requests.
"We talked to buyers, consultants and airlines. Everyone was doing it differently, everyone had a different timeline, everyone was asking different questions—some valid, some not," DeBaltzo said. "That was one of the major desired outcomes: to standardize that."
Scott Gillespie, TRX vice president of strategic initiatives, who was not involved in the NBTA RFP effort, said, "It's a good step forward. It's helpful to try to codify these documents and take time out of the system of preparing them from scratch. Standardization is generally a good thing. It remains to be seen if the airlines are going to really be able to comply with the pricing matrix, but if they do, it will help reduce buyers' cost to analyze those things."
NBTA in 2002 released a standard request-for-pricing form for airline bids, which gained industry praise, but more dust than bids in the past six years, committee members said. Instead of renovating, the aviation committee rebuilt.
"It didn't have a confidentiality agreement," DeBaltzo said of the former template. "It didn't have an intent-to-bid form. It was very basic—more of a three- or four-page pricing document, versus a true RFP. That's one of the key differences. This RFP starts out with an overview of the company, the scope, a description of the travel program. It goes into proposal guidelines and evaluation criteria. It moves on to the intent-to-bid form, confidentiality disclosures, signature authorization—who's authorized to sign the contract on behalf of the company and/or the airline—who's authorized to utilize the contract, statistical travel data. Some of that was in the old one, but nothing compared to the detail we're asking for today."
The final draft continued to evolve just weeks ahead of the conference start, Mays and DeBaltzo said, and will continue to change at the pace of the airline industry. The committee began developing the RFP in January before major domestic carriers broadly implemented unbundling efforts and Northwest and Delta announced a merger, and before the EU-U.S. Open Skies deal took hold and severe capacity cuts were announced.
"At the time we started it, the industry wasn't as dynamic as it is now, with the fuel pricing, mergers, schedule cutbacks," Mays said. "We think the timing is going to be more important than ever. I personally think that more companies will have to go out for bid, either because of a merger situation or the fact that one of their primary carriers won't be servicing the markets they need."
Among the most recent additions to the final document, according to Mays and DeBaltzo,were pricing sheets the committee formatted to detail the airlines' unbundled pricing initiatives.
Committee members said rapid industry change demands a flexible document. "We did discuss that this could be an annual update, but there's always the opportunity to update this RFP in an ad-hoc basis as a response to ever-changing market conditions," said Jack Lever, aviation committee member and global travel manager at Booz Allen Hamilton. "We could wait a year, but that doesn't help our constituents."
Many carriers have bemoaned the RFP process as inefficient, time-consuming and disparate. "If you're not really evaluating it, it's best to keep it off the RFP," suggested Continental Airlines managing director of multinational sales Kelly Hart, a statement that commanded nods from suppliers during a session at BTN's 2007 Corporate Travel World
(BTNonline, June 11, 2007). Hart said the sheer size of RFP documents and the time it took to field them has grown significantly in recent years, which meant "tens or hundreds of hours for an already stretched staff."
The NBTA aviation committee attempted to remedy carrier concerns with the process, boiling down the points of evaluation to overall savings to the company, ease of transition, coverage, achievability, simplicity of contract implementation and administration and account management, according to a recent draft of the request for proposals.
DeBaltzo said the aviation committee interviewed representatives from Air France, American, Cathay Pacific, Continental, Lufthansa, Star Alliance, Midwest Airlines and Singapore Airlines to help shape the RFP.
"They're very supportive," DeBaltzo said of the airlines. "There were two or three things they mentioned over and over. The first was timeline. They said to give them enough time to respond effectively, and they felt good about this timeline, which is aggressive, yet doable. The second piece was asking the right questions and only relevant questions. The third was providing the right kind of data up front to allow them to assess the program and determine the right pricing, so they felt they could be competitive, but profitable as well."
Though many companies continue to adopt green policies, such concerns rarely drove airline deals, leaving the committee to omit such evaluation criteria. Still, Mays said companies are welcome to modify the template if they evaluate environmental credentials or other criteria unique to their company.
"Some of the green questions were some of the ones that airlines got asked repeatedly," Mays said. "The airlines said: 'If I'm serving your market and I'm giving you the inventory and pricing that you need, those will be the primary drivers of your decision.' "
Though the committee adopted elements palatable to airlines, there remained concerns about how consultants would respond.
DeBaltzo said the committee enlisted advisory groups from the major travel management companies, as well as independent consultants, even enlisting TCG Consulting to help draft the proposal and tap into their database of RFP templates to find the good and the bad.
"One of the thoughts we had up front when putting this together is, how is the consultant going to look at this? Are they going to see this as NBTA taking some of their business?" DeBaltzo said, then dismissed that sentiment.
"This is really the logistics, the nuts and bolts of getting it out the door," DeBaltzo said. "The advisory services value really lies in evaluating the proposal, benchmarking to competitors, knowing what the airlines can and can't offer, and helping solicit those types of services and amenities and pricing packages for clients. It's not really in this. This should be the lowest value-add, but it's also the one that takes the most time. To sit down and compile this from scratch would be monumental."