Ancillary Impasse - Business Travel News

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Ancillary Impasse

April 11, 2011 - 09:20 PM ET

By Jay Boehmer

A Global Business Travel Association task force aiming to spearhead an industry solution for reporting ancillary airline data appears rudderless in the wake of its influential co-chair's departure.

Last month's exit from the task force of United Airlines director of global accounts Cyndi Hunter is just one in a number of setbacks the industry has faced in defining and implementing solutions that many hope eventually will enable corporate travel buyers to book, track and report on ancillary airline fees.

Among other efforts underway, the International Air Transport Association's electronic miscellaneous document solution has yet to be embraced in the agency channel by a U.S. carrier, and ATPCo's optional-services fare-filing system has witnessed no growth in participation since its implementation more than a year ago. Still, advocates of those solutions remain optimistic about eventual adoption.

"It's still very early in the process," Concur senior director of analytics and travel vendor relations Ellen Trotochaud last month said during a PhoCusWright webcast. "I use this analogy: If you think of e-tickets, it took the industry about 13 years for e-tickets to become really fully accepted and automated. We might not see 13 years go by, but I think there are a lot of stakeholders in the ancillary fee environment that have to do work to accommodate these standards. So, first there are some standards that have been recommended, whether you're looking at the ATPCo codes, which are probably the most widely accepted, or IATA codes, and using ARC's EMD process. There are some standards that are beginning to be defined."

When the National Business Travel Association, now GBTA, in July 2010 announced the Airline Ancillary Product Global Task Force, its most pressing goal was to "develop a best-practices proposal about the improvement of airline data submission to credit card companies. Improvement in this critical area would result in enhanced corporate reporting on ancillary fees, regardless of purchase point."

Now, those efforts appear stalled by Hunter's departure, according to a March 24 email she sent to dozens of industry participants, including task force members. She thanked members for their "energy, enthusiasm and support to provide guidance for one of our key product deliverables: the ancillary credit card data reporting initiative."

However, the email cited difficulties in delivering such a solution. "After significant research and review, we now realize that the project is more complex than expected and will take additional time to develop," according to Hunter. "GBTA will continue to evaluate the benefits of maintaining a separate task force moving forward, recognizing that this core project will no longer be part of the primary platform."

Several task force members and sources close to the association speaking on the condition of anonymity were unsure about the task force's direction.

GBTA declined a request to interview executive director and COO Mike McCormick about the task force. "One of the goals of the task force is to help educate the managed corporate travel community," according to a written GBTA statement. "GBTA thanks Cyndi Hunter for her contributions as a volunteer leader in this unique task force. Jim McMullen, GBTA vice president, now provides the primary leadership and communication for this team."

But sources said enhanced reporting requires buy-in, development and dollars from a number of industry constituents, including airlines, credit card processors and charge card companies.

Remarks last month at GBTA's Strategic Travel Symposium illustrated not just Hunter's leadership, but also the difficulty in working toward an industry solution.

"Repeating what I learned from Cyndi Hunter, it's not just the carriers deciding, ‘We're going to feed,' " said Concur executive vice president of supplier management and advertising Mike Koetting. "It does require Visa, Amex, Discover to agree, as well as the several thousand banks who are processors of those feeds. So you need system changes in those thousands of banks in the middle to take the data from carriers in that way."

MasterCard vice president of corporate card product management and task force member Sandy Gennrich told conference attendees, "I've been working with Cyndi and the GBTA task force. It is extremely complex. We need the airline to pass the information to their processor or their acquiring bank, which has to pass it off to their credit card processing vendor whether Amex, Visa, MasterCard, etc."

Full-time jobs and other distractions slowed the group's efforts. One source close to the task force cited the Continental-United merger as "a major diversion."

Meanwhile, sources said United would continue to work with charge card providers and other industry constituents to enhance reporting on ancillary airline fees. Through those efforts, the parties would seek "to come up with a working protocol or proposal" that could be mimicked on a broader level, a person close to those efforts said.

Though Hunter and United Airlines did not immediately return requests to detail those efforts, Hunter's email indicated she would "look forward to continuing some of these initiatives on a commercial level."

Whether or not the task force maintains its mission to "facilitate a solutions-oriented approach" for ancillary charge card reporting, GBTA's McCormick during the March conference reaffirmed the need for a solution. "The industry needs this. It's a challenge, and I hear the complexity, but I feel like it could be tackled. It should be tackled."

Stopgaps Emerge

More than three years have elapsed since United became the first major U.S. carrier to announce that it would begin charging passengers $25 to check a second piece of luggage. Since then, a number of other airlines have hopped on the unbundling bandwagon and introduced a multitude of new fees. While broadly adopted solutions that enable corporate clients to book, track and negotiate for ancillary airline services remain elusive, workarounds have emerged.

Among those, Continental Airlines has developed a way to track some corporate ancillary purchases by matching corporate identifiers with travelers' frequent flyer numbers, according to buyers. On the expense-reporting side, Concur has developed a workaround that can help companies identify whether that $15 airline charge was for an in-policy bag or out-of-policy drink on the plane.

April 2011 Ancillary FeesParticipants at a BTN conference in December noted that some airlines can track ancillary spend. Whether they will give clients the information is another matter, noted Rearden Commerce senior vice president of travel services Tony D'Astolfo, but representatives from some large corporations confirmed that some airlines are doing just that. GlaxoSmithKline director of corporate services procurement Janan Johnson said carriers are tracking the data "using your contract number." Lockheed Martin Aeronautics director of global travel Richard Wooten cited an unnamed airline that "showed a breakout of the baggage fees. We're starting to get some influence on them, and it's a tiny bit more transparent."

Oracle global travel operations manager Rita Visser and eBay travel manager Laura Hodgkinson during a January GBTA webinar praised Continental for its enhanced data. "Continental has the ability to, down to our ticket level, help us know and understand what's being charged on bag fees," Visser said. "Most of it comes in around the ticket designator, from what I understand. So, if Rita Visser is traveling on a Continental ticket designator, they're able to tie that Oracle ticket to an ancillary fee that I charged while checking in at the counter. They tie my original ticket to fees that go in and around that trip. They're able to break it down by bag fees as well as inflight services."

Meanwhile, expense-reporting solutions also have emerged. Still awaiting more robust data from charge card providers, "Concur has wanted to get that started with our customers by providing some reporting on ancillary fees given what we have today," said Concur's Trotochaud during the PhoCusWright webcast. "Today, Concur does allow you in the expense module to identify the charges coming in through an airline-based merchant and you can even designate what fees might be considered ancillary versus ones that you might want to tie to the ticket."

Still, Trotochaud noted that Concur's solution lacks automation, requiring some traveler intervention to categorize expenses. "As the industry is able to provide more detail about those transactions, then this process will become more and more automated, and we'll be able to have a much broader view about the spend that is happening throughout the lifecycle of the trip," she said.

Whether provided by airlines, expense reporting companies, payment providers or travel management companies, nascent reporting solutions have helped better arm corporate travel buyers with data for negotiations, though buyers continue to struggle with leveraging that spend for discounts. Nearly 36 percent of 138 corporate travel buyers polled in February and March by BTN attempted to reduce or eliminate checked-bag fees in 2010. About 14 percent of those said such negotiations were successful.

One negotiating avenue to reducing baggage fees has been through frequent flyer status designations, even though travel buyers with Citi and Lockheed Martin in December during the Travel Management 2011 conference in New York—staged by BTN parent Business Travel Media Group—noted carriers have become less generous in granting loyalty program elite status.

Regarding renegotiations with two major U.S. airlines, Oracle's Visser during a January GBTA webinar said, "We do see a number of $100,000-plus in ancillary revenue going to them, and $100,000 means quarterly. We continue to bring it up with them. We continue to have conversations. I honestly don't think the airlines themselves know enough about what it's going to be long-term. They're enjoying the cash in their pockets now, but knowing that we as an industry are asking questions about that cash in their pocket and that the government is asking questions about that cash in their pocket, they're trying to get their arms around what they do with this and what their customers need to see."

— Jay Campbell contributed to this report.


Electronic Miscellaneous Document 101

What It Is: The electronic miscellaneous document—EMD for short—is the International Air Transport Association's standardized e-document to track the sale of optional services by airlines and travel agencies. Often likened to an e-ticket for ancillary services, EMD has been characterized as a linchpin in enabling airlines and agencies to sell and travel buyers to account for ancillary services.

Launched: EMD was established by the International Air Transport Association and approved by its board as a standard in December 2009.

Status: EMD still awaits U.S. carrier participation, a crucial step to bringing usage to the marketplace. ARC, the U.S. travel agency settlement plan, launched EMD capabilities last year, but at press time had yet to enlist a carrier to participate. ARC's Shelly Younger expected the first participant by the end of the year. Sabre, for example, expects to launch EMD with an undisclosed international carrier in conjunction with ARC and a couple of other bank settlement plans "in the coming weeks," said Sabre Travel Network senior director of airline merchandising Shelly Terry. Amadeus, meanwhile, claims to have implemented EMD for five airlines in 2010, with "24 airlines in the pipeline for 2011."

Next Steps: IATA is targeting 40 airlines to enable EMD in the global distribution systems and bank settlement plans, which include ARC, by the end of the year, with "100 percent industry capability by end 2012" and "100 percent usage in IATA BSPs by end 2013."


ATPCo Optional Services 101

What It Is: The Airline Tariff Publishing Company is the U.S. airline industry's standard for filing airfares. Global distribution systems and other subscribers pull fare information from ATPCo, whose Optional Services fare-filing categories provide airlines a mechanism to publish pricing for a la carte airline goods and services, from baggage fees to seat assignments and almost anything else the airlines can dream up.

Launched: November 2008

Status: After initial tests of that included 27 of the 460 carriers that file fare data with ATPCo, 21 airlines have gone live with filing optional services, according to director of customer marketing Jay Brawley.

Next Steps: Though the number of carriers filing ancillary services through the system has not grown in the past year, Brawley does expect participation to expand in 2011. Meanwhile, an ATPCo working group hopes to reduce to two weeks from 30 days the time needed to develop a new optional service and publish it in fare filings.

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