By consolidating the servicing and fulfillment of 75 percent of his 20,000 travelers through a single European center, BTN's 2003 International Travel Manager of the Year—Keith Mullineux, the U.K.-based European travel manager of General Electric—has pushed the integration of multinational travel programs to new levels.
Yet, that is not all that is remarkable about the GE Europe story: Instead of being located in the United Kingdom, France or any of the company's other principal markets, the traveler service center is in Warsaw, Poland, where labor is far cheaper. Furthermore, Mullineux has revolutionized his travelers' booking behavior by achieving high adoption rates—still a rarity in the European market—of the company's GetThere online reservation tool. On top of all that, Mullineux runs a successful auction process that not only has hotels but also airlines vying to offer the lowest deals to GE for key cities and routes.
Of the many innovative aspects of Mullineux's program, he is likely to be remembered above all for being the first travel manager to push his travel management vendor to set up a multinational online and offline agency service center in lower-wage eastern Europe
(BTN, July 7). The Warsaw eCenter, which is run by GE's appointed worldwide agency Carlson Wagonlit Travel, currently handles bookings for all the company's personnel in Belgium, Denmark, France, Germany, Italy, the Netherlands, Switzerland and the United Kingdom. Austria will be integrated at the end of this month, to be followed in short order by Spain—the last of GE's major markets in Europe—and such smaller countries as Ireland and the Nordic states. GE spends US$70 million on air annually in Europe, and its travelers make 135,000 trips per year.
Mullineux began eyeing Poland as part of a general strategy by GE to move operations, whether in-house or outsourced, to low-cost countries. Much of its back-office work is handled in India and manufacturing has shifted to China. Although India rapidly has developed a name in recent years as a leader in call center services, Mullineux decided it would not be appropriate for handling GE's travel. One reason was that the company's global distribution system, Sabre, is not well established there. The second is that there is little expertise in any European language other than English. GE travelers and travel arrangers are supposed to call Warsaw in English, but each team at the eCenter includes a small number of people who can speak French, German and Italian.
Having rejected India, Mullineux turned his attention to eastern Europe as the next cheapest option. Warsaw actually proved to be more expensive than some other locations in the region, but he considered it worth paying a slight premium because the Polish capital is a relatively cosmopolitan city and there was a better chance of finding recruits with a background in travel. In the end, Mullineux concluded that travel experience was necessary only for those working at the organizer level. The rest were bright graduates to whom Carlson Wagonlit Travel gave intensive training in ticketing and fares.
The inevitable fear of locating a service center in a former Iron Curtain country is that personnel may not understand the concept of customer service in the same way as the West or Asia. By and large, such fears prove unfounded, according to Mullineux. "They have been an absolutely delightful bunch to train," he said. "They are keen, they smile and they want to do well. The only problem was that they are lovely face to face but could be cold on the telephone. We had to take care of that in phase two of our training. It was largely down to a lack of confidence in their knowledge, which we solved through familiarization trips to airports and introducing them to travelers and arrangers to give them broader and deeper experience."
Mullineux also decided to empower employees by letting them deal with simple customer issues. Problems and complaints previously were referred up the chain of command.
Consolidating travel through a single center in a low-cost country was one part of a dual strategy to slash GE's travel process costs. The other was introducing online booking. The results have been impressive, given that adoption rates are never likely to reach the same high levels as the United States, where travel patterns are simpler. Germany is the star performer, with the online channel accounting for 65 percent of bookings "on a good day," Mullineux said. The United Kingdom and France now are hitting 50 percent, and Switzerland is at 30 percent. Mullineux particularly is pleased with Italy—which already has reached 30 percent since it went online at the end of May—since southern European countries generally have shown greater resistance to online innovation.
GE has started to reap the rewards of its online strategy. Agency transaction costs are currently 30 percent lower than they would be without a corporate booking tool, and Mullineux is confident of lifting that figure to 40 percent next year.
Online booking also has brought down the average ticket price by 11 percent as a result of the increased pressure on travelers to choose the lowest logical fare. Mullineux has created a two-stage process that propels travelers toward both the lowest fare and cheapest service option. First, travelers who try to call Carlson Wagonlit by phone are politely but firmly told to book online if it is a simple itinerary. Second, once they go online, a message flashes up saying, "Do you really want to do this?" if they fail to pick the cheapest fare option. Consequently, GE Europe employees select the lowest offered fare on 89 percent of all itineraries.
What is more, those lowest fares are extremely low thanks to the auction system GE has introduced to buy air travel, as well as accommodation. Mullineux said auctions only work if carriers bid flat fares rather than percentage discounts on published fares. "It also works only on high-volume routes where aggressive airline competitors are at each other's throats," he said. "We use it on about 15 of our top city pairs because airlines are not having a good scrap on the other 10."
The implication of operating an auction system is that GE regards air seats as commodities, despite the millions of dollars carriers invest in branding and product differentiation. "Our belief is that they are commodities, and airlines offer near-identical services. We are not willing to pay for the differences," Mullineux said.
He believes hotels need to be treated with a little more circumspection. "You have to cluster them quite carefully to make sure they are of a similar standard and in similar locations, otherwise the suppliers don't respect the auction process," he said.
Receiving the BTN award is the latest milestone for Mullineux's unusual career, which saw him start in travel, leave it and then return in a completely different capacity. His first job, in 1972, was with the U.K. government's Air Travel and Transport Training Board, later absorbed into the Association of British Travel Agents. Mullineux quit ABTA in 1989 to work in sales for an insurance company that subsequently was bought by GE. In the 1990s, he moved across to buying indirect materials, a path that eventually led him to the role of European travel manager.
Asked for the key lessons he has learned during his time in travel management, Mullineux said: "Data is key to managing travel. You have to be able to see the wood for the trees. You also have to stay nimble. What were great ideas 18 years ago have had to change. This industry is changing faster than we are. Look at low-cost carriers not being available on the GDSs. It is important to have the flexibility never to get locked into anything. You have to be tenacious when you go for something but not be afraid to circle back a few months later if it is necessary."