Bernard Harrop
Bernard Harrop, formerly an executive with American Express and British Airways and now managing director of IG Management, in October moderated a panel discussion on green travel procurement. He continued that discussion this week with The Transnational, and also weighed in on duty of care, regulatory developments and other multinational travel management issues. An excerpt follows.
Who should the onus be on to jumpstart green travel procurement?
Everybody should be involved. No one person holds the key to this. This is now moving away from the kind of political and emotional, do you believe/do you not believe situation about the environment. It is a business issue, just like any other business issue, like an online booking tool or an expense management tool. Unless you do something about this, and say either "yes" or "no," it can materially impact your business. Therefore, that applies to a corporate, a travel management company, a supplier and anyone else in the chain. There is responsibility at every point, starting with the airlines. They are attempting to get more fuel-efficient and environmentally friendly airplanes, but at the same time, the government is starting to tax them. The tax feeds through the chain to the corporation, and of course to the consumer. So everyone is involved. Here in the U.K., the chancellor [Gordon Brown] has just doubled the air passenger duty. That is an unbudgeted cost for corporations in 2007. So what do corporates do? The net result, just like any other cost increase, is that they have to try to cut other costs to address it. One thing they are looking at is how to reduce travel, for two reasons: one, to address the environmental issue, and two, to save money by avoiding the tax. This is a business issue, and not enough people are treating it as a business issue. If [they] do nothing, it will cost corporates money.
For those corporations that have not yet included environmental considerations in their business travel purchasing programs, where should they begin?
You see all these daily headlines in Europe on pollution and CO2, and you can get confused or cynical. Corporates are finding it hard to understand the reality. What can I do today without spending £100,000 on a consultancy? There are a number of things. First is to understand the company's view and the company's motivation. That varies. From there, there are three things a corporate can do. Eliminating unnecessary travel. How many travel policies say to fly British Airways or fly Lufthansa, or fly economy, and how many ask for the reason for travel and for sign-off? A few do, of course, but maybe more of that is required, to determine if the journey is really necessary. Another way of cutting is through teleconferencing. So the starting point is asking if you can cut out some of this travel--maybe by only 5 percent, it does not have to be 50 percent--and the second part is, "How can I travel smarter?" The statistics vary, but International Air Transport Association statistics show that traveling by air is three to four times more [in terms of emissions] than traveling by rail. The third part is to compensate, or offset. The key for corporations is to engage the travelers and get them involved. When you sit down with the travelers and look at policy, you can actually come up with quite a long list of active things that are not painful, not costly, can actually save the company money and reduce the emissions. And the start point for any program is to measure where you are today. Once you know where you are, you can then track your progress. The corporates need to work with somebody on reporting. I am working with a company now and we have developed an automated point-of-sale data capture. You can give a travel manager a record on a daily basis of the emissions from the day before.
In terms of duty of care, another area that you have explored is the lost productivity from frequent travel. What have you found and how can corporations address the issue?
We have taken [business psychology firm] Robinson Cooper's standard asset audit tool and added a series of questions on frequent travelers. Anecdotally, most people would accept that those who travel frequently--particularly those who have been traveling frequently for a long time--suffer stress in many ways, with health consequences. So what is the impact on business from people who travel frequently? The objective is to put a number on that, in order to go back to a corporation and say, "Hang on a minute. You are pushing people hard, putting them in economy [class] on flights from London to the west coast of America, for example, or to Australia, or to Hong Kong, because you are saving £1,000. But behind the scenes, the company is actually losing more than that through lost productivity and poor performance." We came up with a figure around 9 or 10 percent in productivity terms, based on the surveys we received from Association of Corporate Travel Executives members. That is based on proper medical, statistical analysis and accepted practices for measuring the impact of stress, not just a number out of the sky. Distance [of flights] is important, but you should take into account other things, like time zone. It is about looking at the travel policy from a slightly different perspective to try to take pressure off the employees. Duty of careis a big issue. In Europe, especially, company laws are changing, making companies responsible for their employees. Often, companies give the option of a company car for your job, or you can have a private car. If I work for a company for 10 years and have a corporate car, has anyone ever checked that I still have a valid driver's license? Most people don't check. Secondly, if I take an allowance rather than a company car, and use my own car, does anyone know what kind of car I have? Is it new or old? Do they know what the environmental performance is? Do they know if it is safe? If I have an accident in my own personal car, what is the company's responsibility? One could argue the company is negligent because they have not checked if I am driving safely while on company business. These are real issues that are starting to emerge. If a person from the U.K. has flown from London to the west coast of the United States, and then gets into an American car--which is probably twice as big as he is used to at home and obviously drives on the other side--and he is jet-lagged, he is in no state at all [to drive it], is he? When people travel, try to give them a car that is familiar to them. If in the U.K. it is all manual [transmissions], when they go to another part of the world, why not give them a [rental] car that is manual? Or vice versa, if Americans are used to automatic.
What are the latest regulatory developments in Europe that impact travel management--at IATA and in regard to global distribution system deregulation?
Most of the change that was going to happen has happened. The fundamental problem with IATA is that it is still a one-sided agreement. In Europe, the travel management organizations are still pushing the European Commission very strongly to try to get a better-balanced contract. It is still very much in favor of the airlines, even though things like operations and tickets across borders, etc., have all been improved dramatically. That is one area that will continue through 2007. The other, of course, is GDSs. We still have not got a decision from the Commission on deregulation. The market is almost moving to a position where the Commission probably has nothing to do with things like access to content, etc.
Are there other multinational travel management issues that you think deserve more attention?
I am not sure enough TMCs are really taking advantage of the opportunities that electronic ticketing and electronic servicing can give to corporations. They are still hooked up on call centers, and multinational centers and bricks and mortar by country. One criticism is that they are not moving fast enough to take advantage of some of the changes--the IATA changes for example, and the opportunity for electronic ticketing and more flexible ticketing. If I was in the United States, for example, and I wanted to avoid the $2 GDS fee, I'd make the booking in the U.K. That is not illegal. We are on a global stage now, and if one country has a set of rules and costs that are not acceptable to another country, then find a solution. The airlines are trying to keep country-by-country ticketing, or booking at least, because it impacts on how they operate. If all of a sudden all British Airways bookings were done at the New York point of sale, it would cause problems. But if that is right for client, why can't they do it? I am not suggesting it can be done overnight, but there is not enough pressure from the corporates, or enough understanding by the corporates about some of the things that can be done. Given the changes that have taken place over the last two or three years, more thought should be given, and more effort should be put in by TMCs to increase their flexibility.