Profiles In Travel Management: Boeing Swaps In-House Agency For CTD

Company: Boeing
Headquarters: Chicago
2008 U.S. booked air volume: $325.6 million

Boeing Travel Management on Jan. 1 after more than 25 years as an in-house accredited travel agency for the aerospace firm and commercial aircraft manufacturer became an Airlines Reporting Corp.-accredited Corporate Travel Department.

By far the largest company to take on the CTD designation, Boeing was the second-largest corporate spender on U.S. booked air travel in 2008 with a $325.6 million expenditure, excluding joint ventures, according to BTN's 2009 Corporate Travel 100.

It also marks the end of one of the more unique business travel management configurations. Boeing Travel Management, which also served some Boeing subsidiaries, joint ventures, suppliers and other companies, began in the 1980s as an in-house agency of airplane manufacturer McDonnell Douglas, which Boeing would acquire and integrate into its own travel operations in 1997.

In mid-2009, during the development of a five-year business plan, the company decided that the travel management company would begin to discontinue service for non-Boeing-related travel. At that time, the company ended its leisure travel agent services. At the end of November, corporate clients were notified that Boeing Travel Management would become a CTD and no longer service their accounts in 2010.

Until this year, 12 percent of the agency's business came from corporations with no relation to Boeing or its operations. Those accounts, which include companies in the manufacturing and financial services sectors, will be completely transitioned away from Boeing Travel Management by the end of June, according to Boeing director of travel and expense services and former Boeing Travel COO Jim Johnson.

"A lot of work went behind the transition just to make sure it was all done per regulation," said Johnson.

Involved in that analysis were Boeing's finance, procurement and shared services groups.

According to Johnson, the driving factor in scrapping the in-house agency model was the rising costs of maintaining the TMC as a subsidiary of the parent company. As a separate organization, Boeing Travel had its own profit and loss statement and balance sheet, which were just a "few line items on the overall Boeing financial reporting," said Johnson, noting that escalating reporting and compliance costs began to "outweigh the benefits."

The CTD now resides within the shared services group, to which the agency had reported.

The Hazelwood, Mo.-based CTD has two additional offices in the United States, with most of its agents working virtually, according to Johnson, who is based in Seattle with the shared services organization. The CTD also has an office in Shannon, Ireland, which handles most Europe-originating travel, and a local office in Moscow to handle Russia-purchased travel. A Brisbane office manages the Australian point of sale. In Asia, the company last year began contracting with local TMCs to handle the smaller Boeing facilities in the region. Overall, the Chicago-based Boeing has more than 157,000 employees in more than 70 countries.

Since joining Boeing Travel in 2002, Johnson also has been responsible for some expense management services in the shared services group.

Besides reevaluating the agency, Boeing last year was "a lot more internally focused than ever before," as the team worked to further integrate its travel booking and expense reporting processes, Johnson said. "It was understanding productivity both from our side and from the traveler side."

The company in 2009 had domestic online booking adoption of 93 percent of total U.S. transactions. Offline transactions are comprised of last-minute or executive reservations.

During the CTD transition, Johnson wanted to assure travelers that service levels would be maintained and there would be no fundamental changes in their corporate travel experience.

"The most work was done on the communications side to make sure that, first and foremost, our customers were aware of what was going on and understood why and to make sure our travelers knew that it was status quo with really no change at all," said Johnson.

In addition, the company had to communicate with its travel suppliers. Johnson said that no contracts were materially changed or renegotiated as a result of the switch to the CTD.