<B> WTP Adds Analysis Unit</B>
<I>Tools To Tackle Airline Negotiating Complexity</I>
By Jay Campbell
Exploiting one of the key best practices WorldTravel Partners acquired through its merger with BTI Americas, sister company WorldTravel Technologies is about to introduce a business unit called Travel Procurement Solutions.
Designed to more strategically manage corporate air programs, TPS will help companies achieve maximum savings in an increasingly complex airline negotiating environment through such advanced decision support techniques as computer simulation, cost modeling and process analysis.
"Intellect-based capabilities are overdue for systematic application in travel," said Chris Miller, BTI Americas' former director of air program services who is now TPS vice president of marketing. "Reporting systems and management consulting can only evolve so far. Air programs over the last 18 months have reached a point where companies are running out of places to save."
Travel managers increasingly are forced to reduce the number of carriers with whom they work because suppliers are asking for more than 100 percent of the business, he said. Travel managers are grappling with such questions as whether to support fewer carriers or more, which airlines overlap and which complement each other, what happens if a carrier pulls a contract, and whether to have 100 percent contract coverage or whether 80 percent will suffice.
To answer such queries, TPS has set up simulation technology that meshes historical travel data from all city pairs, information on business plans and airline market data drawn from the Official Airline Guide. TPS will run the OAG data through a complex algorithm to produce a "quality of service" index based on such factors as nonstop versus connection, interlining opportunities, length of flight, type of aircraft, number of first class seats available--all to determine which airline or combination of carriers best fits the buyer's needs.
"It allows you to test fly your solution before you implement contracts," Miller said.
On an international basis, Barry Rogers, TPS senior vice president, said, these services would be built for each region, as for example Europe and the United States, then linked on international flights, then linked further based on alliances. The model would help buyers identify which carriers they should be giving their business on certain routes.
"Yesterday, you'd save more money just by doing another deal, but today we're talking about strategy development, negotiations assistance, implementation, measurement, tracking and ongoing management," Miller said.
Rogers said the new business unit and its products will help companies track whether they're meeting their city-pair targets, or if they are over-committing and could use the excess to support other airlines. Increasingly, airlines are noticing such trends using MIDT data purchased from the GDSs (<I>BTN,</I> March 22).
"This is kind of like yield management for the buyers," said George Odom, manager of travel and corporate meeting services for Ely Lilly in Indianapolis. "In my mind, this is the future of where travel management should go. We need something that takes into account all the parameters."
Miller and Rogers said the offering "gives travel managers the ability to be the architects, with no formal intermediary."
Odom, the customer credited with prodding WTP-BTI to come up with such an offering (<I>BTN,</I> Feb. 22), said he likes the independence from agency analysts. "Yeah, someone could analyze the data, but this will provide a system to manage demand on a more frequent, ongoing basis," he said. "If the model puts out information upon which I can make a decision, then I don't need an analyst."
Odom said such knowledge could help travel managers determine if a flat city-pair deal is worthwhile, or if they should commit to a volume or market share agreement, given the changing business environment.
According to Miller, 80 percent of the travel industry's technology investments have gone to transactional systems that address agent productivity or the point of sale. It's about time corporations begin addressing the direct costs that make up 85 percent of a T&E budget.
Going forward, customers would be given the opportunity to drill down to even more detail--for example, to segment individual and groups of travelers based on their behavior. TPS also will expand to include purchasing of car rental and hotel services.