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Further expanding the reach of its travel program, Microsoft last year implemented its first global airline program, including the ability in key markets to book discounted domestic air tickets outside of the countries where the travel takes place.
"I load my U.S. domestic discount in my key markets in Asia, in Europe, in Latin America," said global travel sourcing head Hernan Fernandez-Pelayo. "And if I have a Singaporean traveler [going to Seattle], Singapore Airlines only flies Singapore-Los Angeles or Singapore-San Francisco. Now my Amex office in Singapore can see in the GDS my domestic discount on domestic U.S. carriers, and I don't have to pay a full-fare ticket from San Francisco to Seattle. So that's saving us a lot of money. I can issue San Francisco-Seattle-San Francisco roundtrip tickets in Singapore using the U.S. discounts."
Fernandez-Pelayo said interline agreements do not have the necessary coverage. While the airlines weren't thrilled about agreeing with the tech giant to include global points of origin in this way, he said, "I was able to get it from almost everyone."
The concept, which is a corporate travel version of what airlines traditionally have called SOTO (sale outside, ticket issued outside), addresses "a big issue with a lot of companies that have global programs because traditionally international discounts are off a simple roundtrip, say from Beijing to Chicago and back. But the reality is a lot go Beijing to Chicago and then they go to Dallas, Austin, New York and then back to Beijing," said TCG Consulting air practice leader Barry Rogers. "So covering that domestic travel from other points of sale can be a pretty big issue.
"The airlines like to keep things simple, and there are different ways to accomplish that task of having those discounts, and one of the ways is SOTO ticketing," Rogers explained. "The challenge is that all those discounts have to be loaded in every GDS in every country. Because of the overhead of that, most airlines really push back pretty heavily on doing that, and I think reasonably so. It's a question of what is it that you really need versus ticketing everything everywhere. One of our strategies is to identify where ticketing point of origin outside of point of sale is taking place, and really focusing on those markets."
Fernandez-Pelayo recognized that concern among airlines and said the company is reasonable about asking carriers to lay the groundwork only where it will be used. "For some airlines, it's easier to load it," he said. "Some others are more reluctant because it's very manual work and based on the technology they use for the fare filing, so for those that have some heavy workload, we decided to go with our top 15 markets. We don't make them load it in 60 markets where we're not going to use it."
Although it's limited to top markets, no longer buying published fares on such trips is, as Fernandez-Pelayo put it, "huge for us." The company, which spent about $750 million on travel and entertainment in its fiscal year ending in June, first globalized its airline program in 2008, he said, and it "generated lots of savings." The air spend in fiscal 2009 dropped 25 percent, to $300 million, partly because of a new economy-class-only policy.
Air Strategy Blends Global Purchasing With Regional Management
Fernandez-Pelayo credited the CWT Solutions Group with helping support the practical elements of the air request for proposals process. For travel management services, Microsoft remains an American Express customer after a recent request for bids for such services in about 60 nations. Microsoft also uses the Amex corporate card.
"We wanted to see what other technology the other TMCs were offering: data capabilities, reporting, mobile technology, etc," he said. "We wanted to see where we were and if we were missing something." Microsoft in the United States uses the new Traversa booking tool from Travelport and uses e-Travel from Amadeus in Europe.
The company also recently consolidated its global car rental relationships, with Avis as the preferred supplier.
Fernandez-Pelayo runs travel procurement and North America travel operations reports to him, but Microsoft employs dedicated travel managers to run operations in Asia-Pacific; Latin America; and Europe, the Middle East and Africa.
"After I finish the deal, they are responsible for delivering," he said. "For both leverage and control, we decided to centralize the spend in corporate, working closely with the regions. We're extremely close with the regions. I would never sign a deal if they weren't comfortable with it."
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