Travel Consultant's New Technology Offers Air Analysis
<B> Travel Consultant's New Technology Offers Air Analysis</B>
By Jay Campbell
<I>Chagrin Falls, Ohio</I> - A travel spinoff that resulted from an AT Kearney consultant's efforts at strategic sourcing is producing the latest in a handful of new tools designed to help corporate travel managers set up airline programs.
Scott Gillespie, principal of Travel Analytics, is looking to test his new program, code named Rumba, with three clients this summer, and expects two of them to buy the product within weeks. The software would be best utilized by accounts with volumes in excess of $15 million or travel agencies that do not yet have such a tool.
The software fits into the strategic sourcing approach, in which Gillespie was a global travel expert at Chicago-based Kearney for more than seven years. It addresses the fourth step of sourcing, the point at which a buyer analyzes his supplier bids.
The Rumba software then completes a start-to-finish process: calculating the airlines' fair market share based on their schedules; evaluating different combinations of carriers; calculating a reasonable market share shift for each supplier; projecting additional share shift in the event of a tightened travel policy; calculating the savings as well as the travel time each carrier consumes; and aggregating savings by business unit or by company in a consortia situation.
After taking into consideration these facts, as well as any soft-dollar offerings, a travel manager then would be free to exploit an "improved negotiating position based on more powerful analysis and speedier bid evaluations." Gillespie said the software can do in a day what normally would take three to four weeks manually. Airlines, he said, are particularly happy about that as they clamor for faster turnaround on requests for proposals.
While acknowledging that most of the mega travel agencies, including the recently announced unit of WTP-BTI Americas (BTN, May 17), offer a similar service, Gillespie said he has some advantages the agencies don't. For one thing, there's no question of conflicts of interest, while agencies "have an inherent bias when it comes to recommending air suppliers."
Gillespie agreed with the folks at WTP-BTI Americas that airlines are getting a lot more serious about compliance, but he was less sure that contracts are getting more complicated.
"I've seen simpler contracts where the major airlines are less detailed about specific city-pair goals and instead are looking at percent of system revenue or North American revenue," he said. "But I suspect the simplicity will change."
Commenting on the product, John Heilner, a Princeton, N.J.-based consultant at Management Alternatives, said that "it sounds a lot like what American Express, Carlson Wagonlit Travel and the others already do. But it's important that it is independent from agencies, especially if you're an ARC-certified corporate travel department. Plus, you have to apply real-world scenarios to it. Theoretically, you can model anything, but not everything is so black and white."
The application is useful for established air programs that are merged with another company, especially when the travel manager is put under strategic sourcing pressure to provide savings projections.
Travel Analytics is developing the software's user interface in order to place it on the customer's desktop. Currently, it is offering analysis as a separate service, including part-time work with one Kearney client that spends $30 million in air.
The system will be offered to companies for an annual license plus fees based on the number of city pairs. He said the software was written in a common desktop database language, but it will require a small amount of training. Experienced travel managers, Gillespie said, will understand very quickly what they need to do.
"The biggest advance is our connections component," he said. "I have taken the raw OAG data and built a connection component."
Since he left Kearney in January, Gillespie has spent half his time on the software and the other half on a Kearney client that he still is supporting. Meanwhile, he recently met with the likes of AMR Corp. on strategic sourcing to explain why American Airlines is often not selected because of objective reasons, not with a bias.