Despite talk of shifts to traveler centricity, cost remains
king in corporate airline agreements, although some in the industry hope to
speed up that shift.
In an Association of Corporate Travel Executives survey of
212 buyers around the world over the summer, 87 percent said discounts were a
top priority in airline agreement, and nearly three-quarters said discounts
would become even more important over the following two years. That was nearly
50 percentage points more than the next priority, reducing the price of
ancillaries. Only 26 percent said traveler comfort packages were a priority.
Key performance indicators in airline agreements tell a
similar story. Seventy-four percent of buyers use the net effect of the
discount rate to measure their airline agreements. Less than half, however,
said they used the value of travel benefits or traveler satisfaction as a KPI.
Even so, the survey did indicate that traveler centricity
could play a bigger role in the future; 56 percent of buyers expected traveler
comfort to become a bigger factor in airline agreements. Turkish Airlines
corporate sales and marketing manager Preeti Kherah, speaking at the ACTE
Global Summit in October, noted a similar trend.
"Companies slowly but steadily are starting to focus on
making sure the traveler has a good experience, as well, driving away from the
cost element and making sure they're taking care of the corporate traveler,"
she said. "Change is coming, especially in Europe, very slowly."
Employee Recruitment
& Retention
PwC is among the companies on that journey, senior director
of travel and meetings Lori O'Connell said. Over recent years, the company has
done a wide-scale survey of 15,000 of its U.K, U.S. and Canadian travelers to
understand the most important factors that influence the travel experience. Three
stood out, she said: speed, ease and personalization. At the same time, PwC was
working with a university on a study examining Millennials' expectations, and work-life
balance proved to be one of the biggest drivers of employee retention.
"That was the big light bulb to really get the
attention of other departments that might not have been working with us as
closely before," O'Connell said. "There's an enormous war for talent
right now, and companies cannot hire enough professionals to meet their growth
objectives, so they're looking for anything to create differentiation
there."
In consideration of that data, the company has sought to
"change focus on cost to balance between cost and experience" and has
sought to understand how speed and ease on the travel side translates into
productivity, she said. Carriers have helped by beginning to provide detailed
reporting on upgrades, baggage fees and other ancillary costs, which PwC can
supplement with industry estimates of how U.S. Department of Homeland Security's Trusted Traveler Programs
or in-flight Wi-Fi can boost productivity and give savings in the way of time. "We're
making progress," O'Connell said. "We're not there yet, but we can
continue to work very closely with our airline partners to develop some better KPIs."
Flight Times
Manon Luiting came onboard as travel manager at
Netherlands-based Damen Shipyards about 18 months ago. The company had not had
a travel management function before, so costs were a natural place to focus at
first. However, she also engaged travelers and discovered that ensuring that
long-haul flights' longest portions occur overnight and that travelers do not
arrive late at night were key.
"If we get denied savings from our [travel management
company] when someone does not accept an offer, we check back to what the offer
was and check with the traveler," she said. "If it's more important
to have a better flight or arrival time, then that is the main focus, not the
cost savings."
Pushing the pendulum away from cost-centric negotiations to
traveler-focused KPIs, however, will take more than buyers grappling with their
own programs, Festive Road managing partner Caroline Strachan said. There is an
opportunity, however, for buyers and suppliers to work together on that
journey. "The airlines want to decommoditize the buy, and [travel] buyers
don't want to be commodity buyers," Strachan said, "so why don't we
do something about it?"