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The National Business Travel Association's aviation committee here last week at the annual convention debuted its standardized airline request for proposals template, aiming to streamline the arduous negotiating cycle with a concise document that targets only relevant areas and evolves with market conditions.
The airline contracting process long has been a laborious exercise for many buyers and carrier sales teams, especially for sprawling managed travel programs touching multiple continents. "There is an awful lot that goes into sourcing airline contracts, particularly if it is being done on a multinational or global basis, particularly if it involves multiple carriers participating in a single proposal and specifically if it involves alliance bids," said TCG Consulting air practice director Barry Rogers, an architect of the NBTA RFP. "There really are an awful lot of unrealistic expectations that an RFP can be done in two or three months."
To update a previous NBTA standard air contracting document, which focused primarily on pricing rather than providing a comprehensive template, the committee reviewed numerous RFPs used by TCG clients; spoke with travel buyers from such global companies as AstraZeneca Pharmaceuticals, Booz Allen, Chrysler, EDS, Macy's and Reed Elsevier; and collected input from various airlines and industry consultants.
A key component of the RFP is a timeline that helps buyers estimate how long the process should take based on a number of parameters, including the number of countries covered by the buyer's program, whether the buyer has asked new airlines to bid and the request for formal alliance proposals.
"Just getting through the legal documents could be months," said Kelly Hart, Continental Airlines managing director of global accounts. "And the safety and health information can be complicated. If you don't allow time for that kind of stuff, you won't get the best bid."
Specific items in the RFP include an overview of the company (scope and structure of travel program, a copy of the travel policy and a breakdown of subsidiaries); an intent to bid form; a standard confidential disclosure agreement; historical travel data (including spend data by country, airfares, city pairs, class of service, etc.); and a signature authorization form. "Sometimes it turns out that things put on the table were not authorized by the airline," Rogers explained.
In addition to detailed pricing proposals by class of service, point of sale and point of origin (including marketshare requirements, fixed fares, tiered discounts, back-end rebates, standard agency commissions if relevant, and codeshare and connection pricing) the document also asks bidding airlines to provide a profile of their operations; all applicable ticketing restrictions, fees and surcharges; and answers to a number of qualitative, non-financial questions, including descriptions of account management processes and travelers' rights.
Also, the RFP asks "an open-ended environmental question rather than asking 147 specific questions that may or may not be responded to," Rogers added.
Indeed, the relevance of questions was a critical determination in constructing the RFP. "From the airline perspective, there is a great deal of frustration," said committee co-chair Douglas DeBaltzo, who serves as travel category manager for AstraZeneca. "Customers are asking a number of different questions, some of which they evaluate and some of which they don't. We tried to get our arms around asking the right questions."
One item that drew comments from attendees was the list of fees, which has been top of mind for many travel managers as airlines add charges for checked baggage, preferred seating and other services.
"Is there an assumption that fees laid out in the RFP, once submitted, will be the fees for that company, whether or not those fees increase in the general marketplace?" asked one convention attendee.
"Wishful thinking," Rogers responded. "The intent was for there to be a statement of the fees as they are or for the foreseeable future. Everything is negotiable. Trying to lock in those fees is certainly something that can be put on the table; whether or not that is successful is a different question."
Another area of concern among delegates was fuel surcharges, which can vary significantly by airline, route and class of service, change almost weekly and are not covered by the standard template.
"From the committee's perspective, the real reason that is not addressed in the first version is because it is so fluid," DeBaltzo said. "We'll be sure it is in future documentation. Maybe it would be a separate module or some kind of "what if" scenario. It is not something we can do overnight."
"The real question should be, 'How are fuel surcharges included in the fare?' " said Continental's Hart. "Sometimes they are wrapped into the base fare, sometimes as a tax and sometimes they show up differently in online booking tools."
According to aviation committee members, additional revisions will include more details on ticket taxes and possible automation--potentially "a standard interface" to the Prism Group, TRX Inc. and other data processing companies that airlines use to collect and analyze corporate travel data.
Some airline executives attending the NBTA conference welcomed the availability of the new RFP template. "Anything that can standardize and streamline the process--which can be a bit labor intensive--is a good thing," said United Airlines senior vice president of worldwide sale Jeff Foland. "At the end of the day, it is going to go back to: Does a one-size-fits-all template really apply and work across various segments of accounts with different degrees of complexity? Some are of a global nature; some aren't. Some are more alliance-focused; some are more individual airline-focused. But once again, anything that allows [buyers] to compare across airlines and get to the value above and beyond just network and price ... that is a good thing."
Related Resource (NBTA members only): NBTA Air RFP
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