Buyers Assess Costs, Lessons From The Ashes

Almost all restrictions on air travel in Europe were lifted today, leaving travel managers attempting to clear a huge backlog of displaced travelers and starting to count the cost of the chaos caused by the Eyjafjallajokull volcano eruption in Iceland. In a poll of travel buyer members released yesterday by the Association of Corporate Travel Executives, 71 percent said the crisis caused a major economic hit to their travel spend for 2010. As well as facing a bill for canceled conferences, extended hotel visits, alternative transport arrangements and overtime services from travel management companies, buyers are pondering the lessons learned, such as how to communicate in a crisis.

Although flying restrictions have been lifted, air traffic agency Eurocontrol reported that only 75 percent of scheduled flights are operating today, owing to numerous logistical problems, such as aircraft being out of position. European governments lifted their flying bans after an 80 percent reduction in the intensity of ash emissions from Eyjafjallajokull and a change in wind direction, as well as safety authorities opting to take a less cautious approach following intense lobbying from airlines.

Travel management companies have reasserted their importance to corporate clients during the crisis by tracking and assisting distressed travelers. "One of my larger accounts put the same volume of calls through its TMC in 72 hours as it normally does in a month," said Tom Stone, director of U.K.-based consultancy Sirius. "Some TMC staff have been working 18-hour shifts."

Clients inevitably will face a bill for TMC services rendered, but how large it will be remains to be seen. Brian Donnelly, EMEA regional director for the travel management company FCm, said his company would show flexibility. "We will have to take a view after the event because right now we are firefighting, but it would not be justifiable for us to charge four or five times over for something that is not the client's fault, and it would even be difficult for us to calculate," he said.

While noting that his company's emergency operation is "not a free service," Carlson Wagonlit Travel EMEA vice president for traveler and transaction services Emmanuel Guirado said, "Our sales and account management teams are looking at this. We have a large number of different contracts with clients, but our first priority is to help customers."

Another major cost is the cancellation of meetings caused by the travel disruption. Eventia, a U.K.-based organization for the events industry, estimated today that two-thirds of meetings scheduled for this week have been called off. Almost all meetings that have been cancelled are well within the period when companies are contractually obliged to pay full costs to venues. Meeting organizers told BTN they are attempting either to negotiate partial refunds or to shift to alternative dates for a reduced fee. "Extraordinary levels of negotiations are taking place to mitigate any cancellation charges," said Trevor Elswood, group managing director for the hotel booking and event management group BSI.

Eventia reported that many of its hotel members are offering to waive meeting cancellation charges if clients rebook within 12 months. It also said hotels are charging stranded guests the same rate for additional nights as for their original scheduled stay to avoid accusations of profiteering.

Travel managers also have had to authorize expenditures on alternative transport modes, such as ferries, trains, private jet charters and even transatlantic cruise liners, to repatriate travelers. The United Kingdom and Ireland's Institute of Travel & Meetings reported yesterday significant confusion among buyers and travelers about compensation from airlines under European Union rules. In essence, airlines are obliged to provide reimbursement or re-routing, as well as food, drink and accommodation. However, they do not have to pay compensation because the cancellations were beyond their control.

In terms of duty of care, traveler-tracking systems offered by TMCs and others appear to have coped well in the crisis. Instead, the main problem has not been locating travelers, but providing help because of the large numbers affected. Microsoft EMEA travel manager Julia Heesterman told BTN she has been greatly assisted by a system she has been piloting from the Danish-Australian company ConTgo, which enables travel teams to communicate with travelers via SMS text.

"We sent out simple messages asking travelers if they were at home, in transit or needed help," said Heesterman. "It enabled us to filter out those who didn't need assistance very quickly, and it was much more concise than e-mail. Often we asked questions that required only one-word answers, which gave us much more control and focus. It made a world of difference to us."

Another user of ConTgo, Kaleva Travel, one of Finland's largest TMCs, said the tool had been essential for organizing bus and flight charters. "We wouldn't have been able to do this otherwise because the decision time for passengers was so short," said chief executive officer Mika Kiljunen, himself stranded in France.

Asked what lessons have been learned over the past week, Kiljunen said, "We will have to consider whether we make it compulsory that we do not accept a booking without a mobile number."

One reason alternative forms of communication have proved necessary is that not all the travel needs that emerged during the crisis can be handled through global distribution systems. Many travelers, for example, have been repatriated by bus, with Kaleva chartering journeys from Helsinki to as far afield as London and Madrid. This has been another lesson learned for director of travel management consultancy 3Sixty Chris Reynolds. "I see a potential for coach suppliers to have a greater importance in the crisis management process and to be held on a retainer," he said.

Reynolds also pointed to the crisis as another reason for travel managers to take control of non-travel alternatives, such as videoconferencing. Carlson Wagonlit confirmed it has seen a spike in videoconferencing bookings by customers, and added that meetings organizers have made last-minute arrangements to stream live conference sessions for the benefit of delegates prevented from attending.

Reynolds believes the immense disruption caused by the volcanic eruption—which may yet be repeated, vulcanologists warned—will redouble the efforts of some organizations to eliminate unnecessary travel. "I have a client with 300 travelers who have been stranded overseas," said Reynolds. "I am likely to sit down with him next week and look at what all those people were doing on their trips and whether it was necessary. Some people who were marooned and missed their kids' birthdays may think differently in the future too. This is an opportunity to consider the big picture."