U.K. Firm Advances Its Lead Time For Air Bookings

Persuading travelers to secure lower fares by booking earlier remains a constant opportunity for buyers. One company in the United Kingdom rising to that challenge is British American Tobacco. Twelve months ago, the average lead time its U.K.-based travelers used to buy short-haul tickets was less than three days. In October, the firm tackled the problem by launching a campaign to move 40 percent of its reservations to 21 days or more before departure. The company's travel team, U.K. indirect procurement category manager Tim Morgans and business travel services manager Linda Robertson, calculated this would save the business £375,000 (US$715,000).

The campaign already is well on its way to hitting its target. According to Robertson, "next to nobody was making an advance purchase" this time last year but November saw a 50 percent increase in 21-days-plus bookings, with further monthly improvements since then. This is in spite of BAT not having a mandated travel policy. "It has been a question of changing thought processes," Robertson said. "Effectively, every traveler is a buyer; we don't make the final decision for them."

Early booking is a particularly hot topic in the United Kingdom thanks to the influence of low-cost carriers, which account for around 25 percent of the short-haul market. Their fare structure is based on selling their cheapest bucket of seats first, then moving to gradually more expensive pricing points as each bucket fills up. Following the success of this model, British Airways and Bmi British Midland restructured their economy-class short-haul pricing along similar lines in 2002. Figures from American Express for total sales on London-Amsterdam, for which BA, Bmi and EasyJet, among others, compete, show an almost straight rising trajectory in pricing as date of departure approaches. The BAT travel policy calls for economy class for short-haul trips and business class for long-haul.

Aware that BAT stood to make significant savings by altering traveler behavior, Morgans ran the numbers and calculated the company could trim its $16.65 million U.K.-originating air spend by $2.25 million if it moved 100 percent of its bookings to a minimum of 21 days before departure. Such a target would be unrealistic for almost any organization. Morgans and Robertson analyzed BAT's travel patterns and cultural behavior and consulted airlines about their cycles of availability before settling on 40 percent as an achievable goal in year one.

Once they were confident of their figures, the duo approached the BAT board to obtain endorsement for their campaign. With BAT currently on a board-sponsored productivity drive to reduce costs by £200 million (US$384 million) used globally by 2007, senior management was only too happy to buy into their case.

The next step was to launch a coordinated communications program, targeting department heads, travelers and bookers at BAT to advise them of the benefits of advance ticket purchases. Robertson also instructed the organization's travel management company, BTI UK, to make and ticket reservations as early as possible. BTI became involved as well in providing data for monthly exception reports to department heads. These show which travelers continued to book at short notice and what the savings could have been.

Explaining the potential savings has formed the basis of communications to travelers. "If you give employees an educated reason for what you are doing, you don't get any argument," Robertson said. The travel team also explained it is not only the company, but the travelers who benefit by making this relatively painless behavioral change. "The beauty of it is that we are not asking anyone to change their airline or class of travel," said Morgans. "By adapting their behavior in economy class on short-haul trips, it means we can continue to fly business class for long-haul."

A potential problem with advance purchases is that when employees' travel plans change, they either lose their ticket or have to pay a re-booking premium (EasyJet and Ryanair both charge £30 plus the difference in price with the current fare for amended bookings). However, once again, Morgans and Robertson did their homework and calculated that BAT travelers only change 6 percent of their tickets.

"The net benefit is in our favor," according to Morgans. In any case, he expected the proportion of re-bookings to decline. "People will fight far harder to stop a meeting being canceled if they know their air ticket will be wasted," Morgans said.

Although few companies have conducted concerted campaigns in the same way as BAT, British businesses gradually are getting the message about early booking. "The lead time for bookings is gradually increasing," confirmed Richard Tams, recently appointed U.K. & Ireland head of corporate sales for BA. Tams added that the growth of online booking is helping because self-service lets travelers see for themselves how much can be saved by booking further in advance.

Matthew Davis, director of global consulting for American Express, believes the growing emphasis, following Sarbanes-Oxley, on fiduciary responsibility on both sides of the Atlantic will also contribute to savings initiatives such as early booking.

"We are seeing chief financial officers sending letters about policy compliance which they are asking employees to sign and return," said Davis. "Travel policy is becoming part of financial policy, which is putting an onus on employees to act responsibly."

Travel managers are finding additional messages to communicate about early booking. For Tracey Randell, corporate services and travel manager at Viacom, this includes explaining the way budget airlines operate. "A lot of them think that low-cost carriers' tickets are always cheap. We have to tell them that on the day before departure they can actually be more expensive than traditional airlines," she said.

Yves Galimidi, Belgium-based travel manager for InterIKEA Group, said: "The major difference we have to be aware of is the restrictions on the time between booking and ticketing, which is usually 24 to 72 hours. It means there is a lot more work involved in re-bookings and cancellations."