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Travel managers speaking here last week during the Association of Corporate Travel Executives conference expressed dissatisfaction with airline strategies that continue to differentiate fares for a given route based on the point of sale. Given the transparency in pricing brought about by Internet distribution, the common currency established in many parts of Europe, tendencies by some business travelers to cross nearby borders and use out-of-country airports, and the growing use of pan-regional fulfillment centers, these buyers want the flexibility to ticket an itinerary from the cheapest point of sale--or at least see consistency in airline offerings from market to market.
The airlines, however, use their dominance in home markets to extract higher fares, and sophisticated revenue management techniques to set prices as high as other markets will bear. For example, Air France may be able to charge a higher fare for a Paris-New York ticket booked in France than that same ticket booked in London.
"There are route deals or net fares that we negotiated in one country that are only bookable in that same country. They are not available for exactly the same route, exactly the same ticket, if we do not issue the ticket in the same country," said Yves Galimidi, global travel purchaser for Ikea. "This is something I really do not understand."
Travel management companies--ostensibly working toward their clients' best interests while also being the beneficiaries of airline incentives--may find themselves in the middle of a cat-and-mouse game. The rules of that game can be affected by a client's leverage with preferred airlines--its purchasing power and ability to shift share. The outcome could be airline-imposed penalties on travel agencies that do not abide by airline ticketing rules. Because the rules and potential ramifications are not always clear, travel buyers have been asking airlines to explain exactly what is permissible in terms of point-of-origin versus point-of-sale ticketing.
In order to maintain corporate business, proponents of fare parity across Europe suggested airlines eventually will bend, and either allow companies to book via the most advantageous points or find some sort of compromise.
"Increasingly, corporates will require and airlines gradually will offer point-of-origin pricing rather than point-of-sale pricing ... which makes managing corporate airline programs much easier," said Prism Group EMEA vice president Herman Mensink, who moderated a panel here on airline contracting.
"With point-of-origin ticketing, you can align your processes and have central ticketing for a region, which can save a lot of money," said panelist Arnold van Griethuysen, global travel manager for Dutch chemicals company Akzo Nobel and chairman of Cortas, the Dutch business travel association. "It's about transparency. In a common Europe, which we have, you should not protect the local marketplace. It is against all the rules we are aiming for as corporates."
Ikea's Galimidi said technology should allow for more flexible ticketing. "Take Amadeus, or Sabre or Galileo ... you do not have the same content in one country as you do in another country," he said. "I cannot say it is not legal, but I am sure that a TMC with the technology that exists today should be able to let us have access to every European country through one booking tool. Maybe they do not want to do it. The keyword is transparency and I do not think everyone is that transparent. I would love to know, for example, how much a TMC receives for every air booking that is made through a global distribution system."
American Express Business Travel understands the frustration faced by multinational travel managers and has taken steps to address it, according to Bruno Peynichou, the TMC's vice president of global distribution strategy. "What we have obtained from Amadeus, which we are piloting as we speak, is when we have a central call center--like the one in Sofia--we identify where the call is coming from and automatically have the travel counselor from his desktop switch to the relevant pseudo-city," he explained. "If a German caller calls, it will automatically switch to the German pseudo-city with the fare from the German market. And vice versa, if it comes from Spain, etc. So, we'll have the ability to see all those fares, with the point of origin and point of booking, which could be different."
Peynichou acknowledged that airlines dislike that development "because that allows us to benchmark the difference and outline that to the customer."
At the same time, Amex has "day-to-day discussions" with airlines to obtain out-of-country pricing in certain situations. "For our Lille call center, for instance, we'll try to get the same pricing, say, that a Belgian agent has," Peynichou explained. "A lot of our customers depart from Brussels anyhow, and we need that in France to access those rates."
Galimidi suggested that airlines offer "an average price available to all of us." But Lufthansa global key account manager Ronny de Lange countered that request, saying, "I don't think Ikea sells the furniture at the same price in every country."
"You're right, of course," Galimidi responded, "but the price gap is not so huge as what you see with air tickets."
Brussels Airlines in March began a new, uniform pricing concept but has not yet determined its effect, according to head of strategic account management Ingeborg Gillegot. "It was a very big challenge to put the price out of Rome the same as you would pay out of Brussels," she said. "But being small means you can be flexible to change."
Panelists said they appreciated Brussels Airlines' approach, especially when compared with what they described as the more rigid pricing and account management strategies at the larger airlines.
Moreover, airline alliances may not mimic the open-border environment of Europe, according to Huub van Rumund, business travel purchaser for Ocè, a Dutch document management technology and services provider based in Venlo. "Germany is in our backyard, but the alliance says, 'No, you are in Holland, you buy your ticket in Holland, so you have to deal with the Dutch [alliance representative],' " he explained. "Sixty percent of my traffic leaves from Düsseldorf but I can't talk to the guy in Germany because he does not say anything in the Dutch market. It is very hard to work with alliances in that way."
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