Suppliers Are Taking Pains to Make Airline Sourcing Easier

Carriers and consultants are working to relieve some of the pain of the airline request for proposal and contracting process. The Global Business Travel Association launched a modernized air RFP tool kit this summer, aiming to make the RFP process more uniform, ease data comparison for buyers and eventually bring more automation into the equation. Carriers, meanwhile, have been simplifying lengthy legal terms in their contracts.

RFP Tool Kit

GBTA, then known as the National Business Travel Association, developed a modular RFP for hotel programs in 2001 that became an industry standard. That did not happen with the air RFP tool kit it developed in 2008, however, according to Advito global air practice leader Olivier Benoit, a member of the GBTA committee that developed the new air RFP tool kit.

That is partly because large players that manage the hotel RFP process for buyers, such as Lanyon, adopted the hotel RFP tool, cementing its status. RFP-management providers on the air side are more fragmented. Even so, a global standard for air RFPs has been "long overdue," he said. "[The air RFP] is a critical process, but it's painful," he said. "There's an ambitious goal today to simplify this process and make it more effective for all stakeholders in our industry globally, allowing everyone to speak the same language."

The new air RFP tool kit modernizes and globalizes the previous version, making it less United States-centric, factoring in the latest industry trends and updating data-analysis capabilities, he said. It consists of four basic elements:

Project plan & timeline: An Excel workbook designed to help buyers time and plan airline sourcing from start to finish. It includes the planning phase, going to market with the RFP, negotiations and final carrier selection, including steps required for implementation, according to Carlson Wagonlit Travel Air Solutions Group project manager Robyn Gilmartin, a member of the tool kit committee. After plugging in information, buyers can see time lines and estimated dates and can add or subtract time based on the scope of the project. This also lets buyers identify obstacles from the onset, such as European carrier negotiations that overlap the region's August holiday season.

RFP guideline: A Word document providing all the language buyers need in order to launch an RFP project. It allows buyers to customize company backgrounds, sourcing objectives and evaluation criteria. "It's built out for a global project, but you can delete out areas that are not necessarily appropriate for you," Gilmartin said.

Air carrier data pack: An Excel file of detailed instructions for buyers to give to suppliers about data, including spend and origin and destination at the point of sale. This pack applies largely to carriers not already using Prism data.

Proposal template: A document in which carriers can detail their offers to buyers. The idea is that a standard format will make for easier comparisons. Through the document, airlines can outline their pricing proposals, including geographic exclusions; show fees and value-added services beyond fares; and respond to such buyer requirements as data privacy and sustainability.

"We needed a tool that allows airlines to put in the total value of an offer, not just discounts but everything above and beyond that," said Delta Air Lines global corporate sales general manager Chris Jones, also a member of the team behind the new air RFP tool kit.

Buyers or their consultants ultimately are still responsible for comparing proposals.

Since launching the air RFP tool kit at the GBTA convention this summer, the committee has been gathering feedback both from carriers and early adopters. It also has been pushing for buyers and consultants to adopt it, noting they can add their own bells and whistles.

The ultimate goal, after all, is not necessarily having everyone on the same tool but simplifying and assimilating key elements of the RFP process, Benoit said. After air RFPs become more uniform in general, a next step would be for airlines to automate data delivery, he said.

"Advito has its own tool, and we've added value elements into the process that will make ours slightly different from the [GBTA tool kit] format," Benoit said. "It's a 95 percent match, with the 5 percent variation on some critical elements in the pricing tab. We're making sure we push an industry-standard definition of terms [that is] fully aligned with the definition of terms in the GBTA format."

Simplifying Contract Terms

U.S. carriers helped GBTA develop the RFP tool kit, but they also have been simplifying their own contracts, particularly the lengthy legalese.

In October, Delta began offering pared down versions of its global account contracts, calling it "Legal-Easy." By cutting down and simplifying legal terms and conditions, it cut the number of U.S. contract pages from 20 to four. A version for European buyers shrank from 20 to seven pages. "We were looking to cut out a lot of redundant information on the legal side of it and only include things that are necessary," said Delta vice president of sales operations and development Kristen Shovlin. "We've added flexibility because different business units and verticals have different needs, and we can quickly add in any specific needs by company." In addition, Delta reduced the sizes of pricing tables showing buyers what was negotiated and promised.

United Airlines, meanwhile, continues to increase adoption of its Master Corporate Travel Agreement, which it introduced a few years ago. Like Delta, United's agreement chopped down what was about 20 pages on a contract to about two pages, United senior vice president of worldwide sales Dave Hilfman said. "We made that evergreen because once you get the basic legalese down in place, the focus should be on commercial terms and economics," he said. "That can be addressed on a more frequent basis without having to go back and pull the legal department back in, which extends the discussions by many months."

Both United and Delta have been switching to their new agreements as contracts come up for renewal, though some buyers have asked to renew early in order to switch over, Hilfman said. About 75 percent of the organizations in United's portfolio are on the new agreements. A few have stuck with the original form even upon renewal, but such cases are rare, he said.

United also has simplified its tracking and performance measures so companies can better see their contractual obligations. By giving buyers a better window into compliance, the carrier has seen corporate compliance to United improve, Hilfman said.

American Airlines also has reduced its number of contract terms, simplified performance goals for buyers and broadened the range of fares to which corporate discounts apply.