Travel buyers frequently talk about the cost of flight disruptions to their companies, but by digging through his company's data, Genentech U.S. travel program senior procurement manager Daryl Keiper can confidently put a price tag on it: $3 million.
At this year's Global Business Travel Association convention in San Diego, Keiper detailed the process that led to that number. He looked at 18 months of data to include some year-over-year comparisons. That period covered $150 million in airline spending, or almost 142,000 tickets. About 14 percent of those flights were disrupted and arrived at least 30 minutes late.
Keiper compiled all the costs associated with those delays over the course of a year. Lost productivity, measured with the conservative estimate of $50 per hour, was the biggest piece, totaling $2.3 million. Other costs included hotels needed for missed connections and cancellations, exchange fees people paid even when waivers were available, and unused tickets that were never exchanged or refunded. It totaled more than $3 million, or about 3 percent of the company's $100 million in annual air spend, Keiper said. "If you use a less conservative number for the productivity piece, you're talking about 5 to 6 percent of our air spend," he said. "It's a significant impact on our business, our people's productivity and the travel experience."
Keiper worked with data management supplier Predict-X to analyze his program. PredictX consolidated expense management data, card data and travel management company data to get a full view of airline spending and then overlaid FlightGlobal performance data covering Genentech's travel, said PredictX North America managing director Tom Tulloch. PredictX and Genentech also brought in additional TMC data, such as unused tickets, to supplement the report.
Additionally, Keiper broke down the data to look at trends among carriers, routes and travelers. He discovered that the routes and carriers that had the highest percentage of disrupted flights were not the company's top carriers or routes, though some routes faced disruptions more than half of the time. One of Genentech's busiest routes, San Francisco to New York, tended to have shorter delays, but those delays were more prevalent at certain times of day.
The 10 travelers most affected faced more than 900 hours of delays cumulatively, Keiper said. The most delayed traveler alone had lost more than 110 hours to flight disruptions. "My first instinct is: Who are these people and what can I do to reach out to them and help to ease that?" he said.
Keiper is exploring ways to apply the data to policies, negotiations and the traveler experience. Genentech will examine how its policy evaluates lowest fares among nonstop flights and connecting flights, Keiper said. He also could indicate to those airlines that have higher disruption percentages why they don't get more business, and perhaps he could use the data as leverage to get more perks like status matches or lounge access across the travel program and for individuals who frequently experience delays. Sharing with travelers which routes or times of day have higher concentrations of delays also could help them choose bookings.
Genentech also is looking into options like automation to improve use of waivers with its TMC and is considering trip monitoring services that move travelers to alternative flights ahead of potential operations mishaps. "We're going to look to see what we can do to enhance the experience for employees," Keiper said. "Do we need to tweak our policy, and what else can we offer to avoid getting into these disruptions?"