Buyers Implementing Policies To Address Web Fares

To curb controversies engendered by the airlines' continued channeling of discounted fares though Internet-only distributors, corporate travel buyers have begun to address Web fares with policies that take a stand on the issue—by allowing travelers to use Web fares, banning them altogether or by admitting them only when substantial price differentials are at stake.

The problem of leakage—when travelers divert their bookings from the managed travel program into third-party Web sites— can become particularly expensive for large accounts.

Doug Weeks, corporate travel manager at McLean, Va.-based Booz, Allen & Hamilton, said his program is losing nearly 20 percent of its bookings to Internet-only fares. "At this rate, we're diverting $6 million annually to the Web," he said. In addition to inducing companies to miss volume commitments to their suppliers, leakage can result in a variety of other problems as well, including the inability to locate travelers who are on the road and making more arduous the process of changing itineraries.

However troublesome losing bookings to the Web is, it may affect only a minority of corporations. In a straw poll of 17 travel managers at the Association of Corporate Travel Executives Global Conference in Montreal this month, only three said they experienced leakage to Web fares of more than 5 percent of their air spend. Yet, leakage of any amount is a problem, said a global travel manager for a New York-based corporate travel 100 company. "Travelers book on the Web because the lower fares protect the bottom line of their individual budgets," she said, "but by booking outside the agency, they cause reporting problems for the whole corporation."

Building a policy to address Web fares means first researching the potential for savings. Mark Majewski, senior vice president of operations for Atlanta-based WorldTravel BTI, is doing this research right now for New York-based financial giant Deloitte & Touche. "We're comparing Internet fares to GDS fares at random times on various days of the week on the theory that Web fares may generate more or less savings depending on when they are bought," he said. Majewski said the evidence of savings or lack thereof will help him recommend points for Deloitte & Touche's Web fares policy.

Companies that have policies allowing Web fares must somehow get those itineraries into the databases where agency booking information is stored. This often entails a cumbersome process of entering the data manually. Rosemarie Moskow, New Haven, Conn.-based director of e-procurement and corporate travel for SBC Communications, has had a policy in place since mid-2001 that allows travelers to book Web fares. "For purposes of reporting," she said, "travelers who book on third-party Web sites are required to send faxes to our travel managers for manual entry into our database." By next year, Moskow expects to have a Web fare tool that will automate this process.

But for every company that has opened its policy to include Internet-only tickets, another is tightening policy. Linda Heath, travel manager for New York-based American Bible Association, is reversing its policy of allowing third-party Web bookings in cases where savings exceed $200—due to senior management's concern about hitting volume commitments with the airlines. Written policies that direct travelers to steer clear of Web fares send a clear message to those who might otherwise use Internet-only fares, said Angela Naegele, global procurement director for AT&T.

Some companies even have gone so far as to deny travelers reimbursement on Internet-only fares, including Round Rock, Texas-based Dell Computer Corp. "We have a policy of non-reimbursement for employees who purchase tickets outside of the travel program," said Julie Rabern, Dell senior manager of corporate travel.

Other companies allow third-party Internet bookings only in certain cases. Jim Lee, travel manager at New York-based Honeywell Corp., said his two-month-old policy on Web fares allows travelers to purchase discounted tickets on the Internet only in cases where savings exceed $200.

Some companies are considering Internet-only deals on high-dollar fares, said Albert Taras, managing director of Key Biscayne, Fla.-based TCG Consulting. "One Fortune 500 client I'm working with earmarks all tickets over $800 to be compared against Web fares by its agency," he said. Similarly, St. Louis-based mega agency TQ3 Maritz Travel Solutions vice president of consulting Scott Guerrero has heard of companies searching out Web-only discounts on tickets costing more than $500.

Clarence Hubby of Plano, Texas-based Ericsson Inc. expects to have a tool for booking Web fares implemented in two months by his agency, Philadelphia-based Rosenbluth International, which announced a Web fare solution last month.

TQ3 Maritz said demand is high for its Web fare solution, also launched last month. "We find savings on Web fares less than 10 percent of the time," said CIO Richard Spradling, "but the tool is paying for itself with those savings."