The proliferation of new airline fees and surcharges for checked bags, preferred seating, pillows and blankets, soft drinks and fuel is prompting a scramble among travel managers to contain costs, create reimbursement policies and properly identify and report the added expense types.
Budget and policy management of additional airline fees is one of this year's most difficult tasks for travel managers, according to BCD Travel senior vice president of industry relations and global distribution systems Rose Stratford. "Most of the fee activity is related to on-airport actions by the traveler and, therefore, not captured in the traditional reservation records," she stated in BCD's latest client research paper. "Some items, such as the additional baggage fees, are transacted either at the ticket counter or the gate, depending on the availability of overhead baggage space. These transactions are outside of the negotiated discounts and challenge effective data capture for the buyer."
The range of baggage fees--typically $15 for the first checked bag and $25 to $50 for the second checked bag, but also $29, $50, $75, $100 or $150 for overweight or oversized bags--is hard to identify on credit card data. Preferred seating offered online or via self-service check-in can range from $6 to $109 per segment. Inflight food also carries a price; A soda on US Airways now will set you back a couple bucks, while a pillow/blanket package on JetBlue now costs $7.
"If it's not time to rewrite policy, it's certainly time to amend it to address the fees and what is reimbursable, and what is not," said Caldwell Associates vice president Julie Simpson last week during an Egencia-sponsored webcast. Travel managers can set a per diem, allow baggage fees for trips of two days or more or reimburse none of the fees--but at risk of l losing "creature comforts," Simpson added.
Chrysler LLC global travel manager Maurice O'Steen in June told the Chicago Business Travel Association: "We were in the midst of rewriting our global travel policy since our split from Daimler. We started to include some of the fees we've seen recently. As we started to add them, we realized we'd never catch them all. A lot of our managers want direction; they want us to back them up when they say no to traveler checking two bags for a two-night trip. So, we started to provide some examples" without detailing all fees in the policy.
Reed Elsevier global travel manager James Sisco said his firm also was "taking a deep dive look into it. From a holistic view, we ask our travelers to go out to do business, so we will be allowing them to expense fees within reason. The best thing that we're doing is educating everyone with our global travel portal to make travelers aware of what the fees are and where they'll see them." Sisco noted exemptions from bag fees for elite-level frequent travelers: "The road warriors are covered."
During the webcast, Catalent Pharma Solutions global category manager Rene Bates said she has to review the firm's new global travel policy--implemented just one year ago--to address the added airline fees. Veolia Environmental North America strategic sourcing manager Sam Doshi said his organization recently "put together an internal roundtable committee to identify those issues, but haven't issued a policy yet."
On a separate webinar, sponsored by Concur, Shell Oil Company U.S. travel manager Debra Reid "chalked up" the bag fees as a "cost of doing business." Still, she acknowledged an impact on her day job. "I have seen a trend in the past year or so about educating and empowering the traveler," said Reid. "The traveler has to know so much more when arriving at the airport, and that's our job: keeping Web sites updated, staying on top of trends in the market, being able to keep the traveler as educated as possible."
Trouble with Tracking
Meanwhile, some travel managers are resorting to manual and imperfect methods of tracking dollars spent on ancillary services while awaiting a solution that allows them to be charged at the point of sale or breaks the fees out in normal charge card reports. Some airline managers, payment companies and others have acknowledged the need, but so far have not come up with a solution.
McDonald's U.S. travel services manager Faye Neville said her company's internal audit team had asked how it would "be able to tell from Amex card data if a person paid for a bag, upgrade, change fee" or new ticket. "I just don't think [the fees will] come across in a clear manner." As a result, Neville said the short-term solution is for internal audit to ask the traveler to identify what he or she purchased from the airlines directly.
American Express said some customers are "beginning to request new ways" to track the fees, "so we're evaluating the best, most comprehensive ways to create more detailed information" to track them, said Amex global commercial card vice president of interactive product management Jay Cary.
In the meantime, Cary said, Amex is recommending that clients look for "tell-tale signs of nonticket-related fees and charges, such as air transactions without airline ticket numbers, air transactions on the date of travel rather than the date of booking and air transactions under $100."
Chrysler's O'Steen said the company "had to create a new expense category called airline miscellaneous fees" and construct reports to search charges and identify those based on known fee amounts.
According to Reed Elsevier's Sisco, "We will take a more detailed look at our card spend, but it's hard to determine that it's actually a bag spend on the $15 charge."
Verizon Communications senior travel services specialist Debra Goldmansaid, "One way to track [the fees] would be to give them a code when folks are completing an expense voucher. Other than that, it would be extremely difficult. There could be a form that folks need to fill out when they return ... quick surveys, email, etc. I don't know. I think it's real tough. You could do a broad brush ... this many trips were booked after May 15, and people on average had one soft drink and brought one bag."
"The challenge for card companies is setting up a tracking system," said Advito vice president Bob Brindley. "It's a low priority; they're working toward a solution on the hotelside first."
An airline industry initiative at fare clearinghouse ATPCo would allow the fees to be charged at the point of sale, but that would only help travelers who know when they book how many bags or meals they will need. That program is not expected to produce options until at least November, and more likely into next year as global distribution system providers tune up to incorporate it. Plus, travel managers may be skeptical of airline industry solutions.
"So far we're getting very little in terms of requests from customers for more complete data," according to US Airways vice president of sales and marketing Travis Christ. "We still want to find the right solution and we're moving on it, but it appears to be somewhat less urgent that we thought. Maybe we'll have a little breathing room to make sure we get it done right." He had said in June that "we're trying to get a streamlined way to get receipts and customize some of that to consolidate it with data reporting. There's no doubt that it won't be ideal at first."
With such headaches, the fees exacerbate an already difficult situation in which higher airfares have created tremendous budget pressure for buyers.
Buyers including O'Steen and Sisco reported that they have tried to "negotiate away fees," but were told by airlines that they had no way to execute that at airports. "So we got an extra point; that's easy to administer," O'Steen said. Sisco said he too was able to deepen the discount and now just hopes that the "increased discount" averages out with the increased costs.
"Baggage fees are getting a lot of attention, but it's not a lot of money," said Chrysler's O'Steen. "Most business travelers don't take two bags (domestically). But it's the fuel surcharges and the ever-increasing cost of a ticket. We're up over 25 percent on domestic this year, and international is up a lot more than that. We can't do a lot about it."