Buying Air Direct Is Not A Worthy Wave Of The Future
<B>Buying Air Direct Is Not A Worthy Wave Of The Future</B>
In the past five years, corporate travel managers have had to adjust to indirect dispossession of financial benefits, as airlines rationalized their distribution. Commission caps, then commission reductions, persuaded agencies to impose fees on corporate buyers. Full rebate of commissions--at about 4.5 percent for domestic travel--has not covered fee costs in many situations. Consequently, travel managers look for other avenues to reduce overall air travel cost. One method is to abet airlines in their efforts to reduce distribution costs by committing to a program of direct purchase, thereby reducing airline costs of GDSs about $10 a trip. This ploy would make sense if a true partnership between supplier and airline existed, and if the commodity of air transportation were procured on an isolated basis. Our conviction is that buying direct from airlines may not be as beneficial as it appears. Why?
Airline pricing behavior is hardly sensitive to corporate procurement needs. First, airlines resist fixed fares; secondly, the airlines harshly raise base fares whenever they have the chance, even though their profitability is not threatened.
If this observer's experience in using Web-based airline software to book trips is representative, you never know what you'll get. My first stab resulted in a booking in first class because no coach seats were available. I later canceled when a phone call to reservations revealed that plenty of coach seats were available. Similar experiences with three other airlines scared me because I found that my travel agent could get me seats at the same time on the same airline at lower cost a day or two later. My only favorable experience has been when I used Southwest's booking system. Of course, I now know that I can't get my senior discounts on any Web-based airline software.
Access to airline in-house systems results in biased display. You may have to scroll for three pages before you can compare schedules among airlines.
Airline systems for handling hotel search and requests are not user-friendly and actually end up, in most cases, requiring phone calls to either hotels or airline tour desks. Thus, process costs are apt to increase.
Airlines generally ignore a reality that business trips involve more than airport-to-airport transportation. Until they produce and store corporate trip models for one-click booking after dates have been established, using an airline module is just another separate time-consuming transaction.
Even when an airline has granted fixed fare contracts, this issue of inadequately fulfilled other trip needs persists. When we are trying to move transactions to intranet booking, we must look for ways to consolidate orders and reduce traveler time.
Just as phone conversations with agency counselors eat up any commission revenue, excessive keystrokes to buy trip services from different vendors will discourage travelers from using what are supposed to be time-saving devices.
I say we should bundle trips so travelers can procure them through a system that acknowledges the fact that demand for all business travel services is derived from and interdependent on scheduling and availability. That means links among hotel, airlines and ground transportation companies are essential, and they need to be booked simultaneously.
Having spent many years in airline marketing, I am somewhat skeptical that airlines really want to support corporate client needs. They appear to be far more concerned with beating their competitors than listening to their customers.
<I>Rolfe Shellenberger is a senior consultant for Rochester, Wis.-based Runzheimer International.