<I>Los Angeles</I> - A year after her "three-part-pricing RFP" hit the streets, Betty Lucero, travel services manager for Times Mirror Supply, last month completed implementation of a unique travel agency contract that includes 12 different transaction fees.
Under the terms of the contract, Times Mirror will pay 75 percent less for tickets booked and ticketed electronically than for those handled under the traditional full-service arrangement with its new agency, American Express, with which it is consolidating nationwide.
The full grid of transaction prices actually offers four categories down the left side (rather the original three parts) and three service configurations across the top, with different per-transaction prices listed for each category (BTN, Feb. 26, 1996). Different prices are given for full-service bookings with a hard copy ticket, full-service bookings with electronic tickets, electronic bookings with hard-copy tickets and electronic bookings with e-tickets. Each of those four categories is then further differentiated by whether the booking comes to Amex's central res center in Phoenix, to an Amex-staffed on-site or to an in-house center staffed by Times Mirror employees.
The brainchild of consultant Bob Langsfeld of Langsfeld, Fazio & Associates of Incline Village, Nev., the complicated RFP was "well worth the effort," Lucero said, because it "finally gave us some usable benchmark data that clearly lay all the costs out on the table. It gives us all the components of a transaction fee and of the labor costs, all the details that help us continue to reduce our administrative costs. And it gives me a vested interest in making this program work."
While declining to quote exact prices in each of the grid's 12 boxes, Lucero said that moving from calling an agent to using an automated booking system will cut the transaction fee by 65 percent, moving from hard copy tickets to electronic ones will cut the fee by 50 percent and using an electronically booked and ticketed combination will save 75 percent in transaction fees alone. In addition, going electronic will eventually cut costs in labor and ancillary services as well. The Los Angeles-based company purchases 35,000 air and rail tickets a year.
Lucero was hired by Times Mirror Supply in 1993 specifically to consolidate travel purchasing for Times Mirror's 21 autonomous companies, who were using more than 100 agencies. In 1994, she brought the number down to two. The current contract consolidates the company's $17 million air-volume account under Amex, with a service configuration that includes three Amex on-sites and three Times Mirror travel departments handling reservations in-house.
Five agencies were invited to bid on the contract, including four mega-agencies and one super-regional, all former or current incumbents. While price was obviously a key concern, the choice also focused on the agencies' ability to help automate the travel program, and on "value of service," which Lucero defined as "its ability to service a multiple-office structure like ours, as well as its overall track record."
The contract also included a "detailed performance evaluation to measure their delivery on specific criteria and our continuous improvement" in providing service to Times Mirror travelers, Lucero said.
With the hard numbers now before her, Lucero is still moving cautiously into an automated environment. She sees 1997 as an "implementation year" more than one of racing toward the savings outlined on the grid, and will wait for the Rome automated booking system being developed by American Express and Microsoft to come out of beta testing before choosing a product. Aside from the transaction-fee savings, there will be no significant savings in administrative costs until usage of automated booking systems reaches about 40 percent. "You can't disintegrate the labor until a good portion of tickets are going through the automated booking system," Lucero noted.
While the agency RFPs included bids on automated booking systems--because Lucero "didn't want to have to do this all over again"--the travel manager said she is "still quite free" to choose any system on the market. But she is "looking at Rome carefully, and will use it to help evaluate the others."
In any event, she said, the culture at Times Mirror will not support a mandate of any single booking system. "My job is to save the operating companies the time of finding and evaluating systems, but the word here is choice."
Still, she acknowledged, with the choice of agency having been made by a committee including CFOs and travel department representatives of all the Times Mirror companies, a degree of up-front buy-in to the program has already has been achieved, and "my prediction is we'll go with one system."
That is not necessarily true on the expense reporting side, however. "Expense reporting is a whole different ball of wax," she said. "Each operating company seems to have different needs, and each will make its own decision."
Lucero does plan to begin encouraging travelers companywide to try e-ticketing this year, and to begin pushing up the percentage of tickets handled electronically from the current 5 percent. She plans to "put e-ticketing in as a default for those airlines that support it well, like American, United, Southwest and Reno Air." The contract mandates Amex track electronic ticket use in monthly reports.
American Express' status as the incumbent agency for the company's Los Angeles Times division probably helped it win the agency bid, Lucero said, although its additional relationship as the company's single corporate-card vendor "was not really an advantage in influencing our decision," she said. What all the megas brought to the table, she said, was an important ability to support both the Sabre and Apollo CRSs, as well as contracts with a wide variety of airline partners nationwide.