With travel buyers and airlines alike facing a double-blind situation with corporate air programs, many are in no rush to move forward with the request-for-proposals process, even those with contracts set to expire.
Airlines Advocate for Testing Programs
Several major airlines have called on governments to establish a joint
coronavirus testing program to allow travel to resume between the U.S. and
Europe, which still is largely restricted.
British Airways owner International Airlines Group, American Airlines,
United Airlines and Lufthansa are among the carriers to sign a letter to U.S.
Vice President Mike Pence and European home affairs commissioner Ylva Johansson
asking for their respective governments to consider the use of testing to allow
passengers to begin making transatlantic trips.
The companies argue that travel between Europe and the U.S. is vital to the
global economy and will play an important role in their own recovery.
Meanwhile, Germany independently has offered one model for such a program. Starting August 7, Germany will
require travelers arriving from all countries it considers Covid-19 hot spots to be tested upon arrival in the country. The tests are free to citizens and non-citizens alike and results are available in 48 hours. As such, infection-free travelers need
wait only two days in quarantine—rather than the standard two weeks—before resuming
Many buyers at the moment are assessing their own programs and determining what travel will be essential when global restrictions are eased while budgeting against the financial health of their own companies. Airlines, many of which are running at 25 percent or below their usual capacities, are watching different demand scenarios to determine how, where and when they will add back capacity. As such, major airlines generally are just offering contract extensions to corporate customers with looming expiration dates rather than beginning the RFP process in a sea of unknowns.
Carriers are going so far as to approach clients directly with offers to extend current contracts for a year. With performance targets looming for most clients, buyers may be largely happy to accept such offers. On the flip side, airlines know they aren’t going to be offering the same frequencies and routes that were available when the business was contracted, so an extension gives both parties some time to reevaluate. Even buyers with requirements to go out to bid when contracts expire have reported flexibility in procurement departments as the market uncertainty created by Covid-19 continues.
Buyers with smaller programs are getting similar offers. Several U.S.
domestic airlines have extended eligibility and discount tiers for midmarket
programs into 2021, waiving minimum spending amounts for this year.
Keep Communication Open
That doesn’t mean buyers have nothing to discuss with their airline partners at the moment. Buyers looking to build or rebuilding an air travel program will require constant discussions and negotiations with suppliers to protect their top routes from volatile or uncompetitive pricing. That said, a traditional RFP process might not be the best platform for those discussions.
Many buyers have amassed a large value of airline refunds and vouchers due to postponed or cancelled business travel. They may need to negotiate around how those funds and vouchers can be used, name changes, expiration dates, blackout dates and the like. Buyers also can push to end fuel surcharges or third-party distribution fees.
Airlines have proactively communicated about enhanced cleaning and
sanitization efforts. Buyers will need to understand mask rules for airlines
and advise their travelers. Each airline seems to be pursuing a unique strategy
for social distancing onboard the aircraft. Delta, JetBlue and Southwest, for
example, have committed to keeping middle seats open, though the expiration
date on those commitments vary. Some airlines now allow travelers to rebook a
different flight if load factors reach a certain threshold. Other areas to
consider are boarding and deplaning tactics, baggage handling and how well the
airline manages passenger flow at ticketing and gate areas and anywhere airline employees
need to interact with passengers. American Airlines, for example, has integrated touchless check-in even for travelers checking baggage. These are the types of journey details that will affect the business travel experience.
Buyers will need to understand their potential airline partners’ strategies and whether they align with corporate requirements. If not, buyers may need to look at policy parameters and whether upgrades to premium economy or even business class accomplish their travel goals and whether lounge access is preferable to gateside scenarios. If so, the buyer’s leverage with the airline also gets an upgrade.
As corporate travel likely will be a key revenue source for airlines in the recovery, airlines should be amenable to contract discussions on many fronts. Even so, some buyers voiced concern about pursuing negotiations with too heavy a hand, considering the toll the crisis has taken on airlines and the importance of long-term viability for quality partnerships and service.
Airlines, like all providers, will need to be held accountable for their agreements. Travel managers should consider post-trip surveys on their preferred carriers’ hygienic protocols. If an airline isn’t meeting the standards, a travel manager can suppress them on the online booking tool and/or bring it to the table during partnership discussions.
Time for a New Kind of Partner?
Particularly for senior executive travel, the concept of charters and private aviation may become more attractive for companies that can justify the expense. Some private charter companies have reported a surge in inquiries since Covid-19 began—that accounts for both leisure and business travel inquiries. Such companies tout personalization and service, but most critical right now is a more exclusive environment that promotes sanitization and social distancing. In addition, they say, their routes are not defined by commercial demand, but rather by the client, which can save connections (read: infection vector) and time, and boost productivity.