Having identified the potential for hundreds of dollars in per-ticket savings, Agilent Technologies is in the midst of implementing ITA Software's new distribution platform. Should the vision of global travel sourcing manager Tim Bone come to fruition, the new model not only would save the company money on the bottom line and make its travelers more productive, but also would herald the beginning of a long-awaited shift in the processing of corporate travel reservations.
With more than three-quarters of its $97 million global T&E spend generated overseas, the Palo Alto, Calif.-based company also is progressing on various travel management initiatives in Asia and Europe. In fact, Bone this week is in Asia to begin implementing call centers and cultivating more progressive travel management practices.
Much of his attention during the past few months has been on the domestic market, as Agilent builds a beta environment with ITA Software
(BTN, June 20). Intended to migrate bookings away from Agilent's existing global distribution system channel, the plan covers point-to-point and one-connection roundtrips on approved carriers—in this case, including United Airlines. Bone said test ticketing through the Outtask Cliqbook online booking tool could begin next month, with early results available in late December.
"It is a lot larger in scope than I would have believed. However, exploring this is the right thing to do," Bone said. "I am in favor of any opportunity that not only lowers the cost to the corporation, but in the true spirit of partnering, lowers some of the associated distribution costs for the airlines."
The project entails close coordination with WorldTravel BTI, Agilent's North American travel management company, which Bone said, "has demonstrated its absolute loyalty to go down this path with us." He credited the mega agency both for helping to push innovation and setting aside the politics of travel distribution.
"For it to work for Tim, it needs to work for Outtask and it needs to work for WorldTravel," said ITA vice president of sales Derek Lewitton. "For it to work for WorldTravel, it means we need to integrate properly with TRX so the mid-office works, and we need their front office to read our XML. All of that has meant a subtle shift in development. Because Tim is such an important leader in this change, and we value his willingness to show the industry a new path, we changed our priorities."
At the same time, Agilent is in the final stages of becoming an ARC-accredited corporate travel department, which, among other things, would facilitate any supplier-direct interaction. Currently, Agilent's domestic corporate travel is booked through WorldTravel or Cliqbook on WorldTravel's ARC number and processed through the Apollo GDS.
Since partnering earlier this year, Agilent and ITA have begun to build the system architecture covering quality control, passenger name record handling, traveler profiles and many other functions. Several challenges remain, including credit card acceptance. Bone also noted implementation costs, but said "they are fractional compared to the savings that the model will bring."
More specifically, an Agilent analysis found that the company's average ticket cost would dip from $609 to $406. Much of that would be achieved by travelers selecting lower airfares because "ITA has opened up a wider range of fares not available through the GDS," Bone explained. As a result, Agilent travelers "won't waste time trying to prove they found a cheaper fare on the Web. I want them to book by the lowest possible fare within their schedule. It may not be on the approved carrier, per se, but I am making the customer happy. We are talking domestic, which is so low-ball anyway."
Though the system will incorporate Agilent's negotiated rates, more than one-half of approved-carrier bookings don't use contracted fares because publicly available fares on the same carrier are cheaper.
"The low-cost carriers have driven us all to them," Bone said. "We are moving away from mandating brand X because with this technology, travelers can choose the airline they want."
Bone acknowledged that content from any of the new distribution system alternatives won't always be as comprehensive as that from a GDS, "but how much of that content do I continually and constantly need? How much am I really paying for? Where can I really streamline those processes? As far as the hotels, cars, profiles and all that other information, it is a work in progress. I cannot say that the [distribution system alternative] is as robust as the GDS, but where were the GDSs when they first rolled out?"
ITA's Lewitton also acknowledged that ITA cannot yet replace the GDS, though more suppliers will be added to the system. "We now have the capacity to book tickets on four carriers," he said. "They are significant carriers for Agilent and will constitute a significant portion of Agilent's market. As we add more carriers, we will address more and more of Agilent's market."
Furthermore, airlines soon may limit the fares and inventory they provide to GDSs, "and that is another reason why you want a [distribution system alternative] in your back pocket," Bone said.
He also noted lower-cost ticket fulfillment and other data efficiencies. "Why not have your data go low-cost when you can?" he asked.
Lewitton explained that ITA and TRX are working on a unified PNR database to facilitate mid-office functions. "We will be there soon," he said.
To be sure, Agilent and other companies considering such a model face an array of challenges, not the least of which is working out the kinks associated with new ticket-fulfillment processes. There also are corollary issues impacting other players in the distribution chain, but Bone is considering the big picture.
"For the TMC, if they are in fear of losing transaction fees, or having them reduced because of this CTD-Outtask model direct to the supplier, well that is a small segment of the business, where Agilent is concerned," he said. "Most of my big business is in Asia/Pacific, Indian and EMEA markets. That is where the TMC will bring value-add."
He also tried to dispel the myth that his company, and those with similar aspirations, are trying to "attack" the GDS. In fact, Agilent still would rely on Apollo to feed data through a switch on the back end.
"You still have the GDS, so what risk are you taking?" he asked. "I do not want to be the type of travel director that just manages by the policy and never stops, never thinks, never tries to change. The whole thing may blow up in my face next Tuesday, and I would not be ashamed. I tried to make something work."
According to Lewitton, many large companies are paying close attention. "Some even have insisted on being second, saying they would prefer to wait to see how everything goes with Agilent," Lewitton said. "Tim has really driven this. He is willing to be first and challenge the status quo that does not work."
Temporarily leaving behind the domestic market, Bone this week is in Asia to begin implementing new travel management models, following a thorough evaluation of the company's global travel program. "When I get back, I would have driven a stake in the ground in China, implemented two call centers in Asia and looked at a new model in India in terms of how we fulfill our travel business," he said. Agilent planned this week to award its Asia/Pacific business to a travel management company, following a recent request for proposals.
The company is switching from on-sites to call centers in Malaysia and Singapore, with similar but more measured plans for Beijing and Shanghai. "Because of the culture in China, they need more face visibility, so we won't be as aggressive to consolidate," Bone said.
In India, Agilent is consolidating to two travel providers—it currently uses American Express, Carlson Wagonlit Travel, WorldTravel and Hogg Robinson—and is assessing a new model, including pre-trip and online reporting, and possibly a Bangalore call center.
"The culture there is almost ready to embrace change," Bone said. "We are also investigating low-cost carriers in the Indian market. They are great airlines that will give the legacy carriers in the market a run for their money."
Meanwhile, in Europe, Agilent in October will move Edinburgh operations to a call center. Bone also is preparing an aggressive Cliqbook rollout in Germany and the United Kingdom.
Bone, in the second year of his term as co-chair of the National Business Travel Association's aviation committee, works with Agilent global travel manager Mark Zeigler to oversee the company's corporate travel program. Spun off from Hewlett-Packard in 1999, Agilent now has 28,000 employees operating at facilities in 30 countries.