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Chronic flight delays and cancellations this year in the United States have grabbed headlines, but the situation in other regions is not much better. Though official statistics are lacking, available data indicates that poor airline on-time performance is widespread as one-quarter of the flights in Europe and the United States and one-fifth of those in Asia were delayed by at least 15 minutes in recent months. One European buyer is taking matters into his own hands, pushing carriers to report their on-time rates.
Nearly 27 percent of U.S. domestic flights were delayed or cancelled in the first nine months of 2007, marking the worst performance since the government began collecting data in 1995. The economic cost of delays around the country is now $9 billion annually, according to Transportation Secretary Mary Peters. In Europe between 15 September and 15 November, 26 percent of all arrivals were delayed by at least 15 minutes, according to FlightStats, a provider of "unique real-time, historical and predictive flight intelligence tools." In Asia, 20 percent of all arrivals were delayed during the same two-month period, FlightStats said.
"We are thinking of adding a kind of SLA [service level agreement] in our airline contract where we will measure punctuality," said Yves Galimidi, global travel purchaser for Swedish furniture retailer Ikea, speaking last month in Munich during an Association of Corporate Travel Executives conference. "The time you spend aboard an aircraft is nothing compared to the total journey time. We need the airlines to help us develop some fast processes at the airport. We want to see the flights arrive on time, and that could be a great tool when you negotiate."
As Ikea is in the initial stages of the initiative, Galimidi said it is difficult to judge the effectiveness of tracking performance of the company's preferred airlines and comparing it to competitors.
"Data is difficult to obtain and, as far as I know, only available from airlines themselves," Galimidi wrote in an email to The Transnational. "I would therefore only want to focus on our top 10 routes, and agree on this through an SLA before signing an agreement with an airline."
Once Ikea's preferred airlines contribute performance data, Galimidi said he expects other airlines to quickly follow as "they see this as an opportunity to get closer to start a possible cooperation with us, providing of course that they can show better data on punctuality."
Measuring performance and using delays as a negotiation point is part of "the next step in travel management," said Herman Mensink, Prism Group vice president for Europe, the Middle East and Africa, also speaking at the ACTE conference.
"We went from basic travel management a number of years ago to sourcing of our tools for purchasing, and the next major step that the industry needs to take is the move from sourcing to value management," Mensink said. "That is a step many corporations need to take to look at the total value, the total cost."
But focusing on value--and not just price--in airline negotiations currently is a difficult task, since performance data is difficult to aggregate, Mensink noted.
"Realistically, there is a pretty long way for us here in Europe to get to that next level," he continued. "Airlines are internally struggling with this concept. As pressure from the corporates increases and really pushes the airlines to value management, I cannot see any airline not wanting to include that in the contract."
But relying on airlines to report their own data may be dubious at best, and without government-backed statistics, such data may be unreliable. "Unless an airline is required to report such information, they are not likely to give it out," said Mitch Cwanger, senior practice leader for air at American Express Advisory Services.
Even if buyers sought to make performance a negotiation point, airlines would protest and insist that many delays are not their fault, owing to deficient air traffic control systems and bad weather, Cwanger explained.
However, if the experiences of U.S. travel buyers are a guide, performance data could eventually be a key part of airline negotiations in other regions, in addition to other value metrics.
"Clients, from a U.S. perspective, are looking more and more at that type of information when they're making sourcing decisions," Cwanger said. "As you get procurement people more involved with the travel decisions of air, specifically, they want to quantify every item they can." To that end, Cwanger noted that American Express developed a "decision matrix" that for United States points of sale includes on-time departure and arrival statistics, in addition to negotiated price points and soft-dollar perks.
FlightStats uses a variety of sources to gather data on airline performance worldwide, according to vice president of business development Meara McLaughlin. Sources include published flight schedules, government agencies, international aviation authorities, global distribution systems, airport authorities and information provided directly by some airlines.
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