New savings opportunities can be a rare find in mature
travel programs, so when a technology company promises significant air spend
savings at no additional expense and with minimal modification to travel
procedures, it's worth a look. That's how Bill & Melinda Gates Foundation
senior manager of global travel Pam Massey viewed Yapta's fare-tracking product
for corporate clients.
Launched in 2007 with a focus on the consumer market, Yapta
in May 2012 officially entered the corporate realm with the launch of
its FareIQ product, which monitors corporate air bookings and alerts clients
when a cheaper fare is available. In the idiosyncratic world of airfare
pricing, a ticket that costs $1,500 one day can fall to $500 the next. Even
with airline change fees that can be $200 and the cost of an additional travel
agency transaction, room for savings abounds in the margins.
"There's so much fear to try something new in the
marketplace," said Massey, who Yapta said represents one of 15
managed-travel clients to integrate with FareIQ. "It's human nature. We're
so busy and so tasked and we have so many demands on us, but it's worth a risk if
you can show savings. In most typical corporate environments, everybody has
already squeezed every penny. Why not try another opportunity for savings? You
just have to be ready to do some extra work."
That extra work came in the form of coordination with Yapta
and the foundation's consolidated global travel agency, Carlson Wagonlit
Travel, as well as some manual accounting procedures. FareIQ delivered the
savings, though Massey has conditions regarding automation and cost structures
for Yapta to meet before permanently joining the foundation's program.
The Savings
Opportunity
Before transitioning from a consumer-focused business to an
enterprise software service, Yapta, which counts Concur among its investors,
first tested the waters with "a proof of concept," according to Yapta
CEO James Filsinger. "At that point we looked at 100,000 itineraries
across 20 corporations, and we found that 5.3 percent of them qualified for
savings. We thought that was really good, that there was a business here."
In fact, Filsinger said that during FareIQ's first seven
months of corporate fare-monitoring, around 10 percent of such itineraries were
available for a rebooking at lower cost, "even when you count for change
fees and rebooking fees." That 10 percent generated on average "about
$386 in potential savings opportunities" per applicable itinerary, he
said. "That's real savings, not inclusive of change fees."
Filsinger said that could translate into "almost 4
percent of a corporation's total air spending that has a savings opportunity.
When you say to a corporation, 'I can save you 4 percent on your air spend,'
that gets their attention."
Launching A Pilot
The opportunity caught the attention of the Bill &
Melinda Gates Foundation, which in the first quarter of 2012 began discussions
to incorporate the FareIQ program into its travel program. At the time, Yapta
had not yet worked with Carlson Wagonlit Travel, according to Massey, who said,
"It took three parties to make this work."
Initially, Massey had some concerns regarding Yapta's
data-privacy procedures, but those were allayed: "Were
they going to store our private fares? They don't. They scrape, but they don't
store. I think that's a lot of people's initial hesitancy to try the product."
The TMC at first also was "hesitant and had to do their due diligence as
well," Massey said, but after coordination among the foundation, CWT and
Yapta, a pilot program was launched in October 2012.
Filsinger, who claimed implementation with a corporate
customer can be done "in an afternoon," explained the FareIQ process: As
soon as a corporation issues a ticket, the itinerary information is sent to a
queue within the Sabre global distribution system and pulled into the FareIQ
system for tracking. "We are monitoring that ticket for price fluctuations
24/7. As soon as an itinerary price drops—below the thresholds, the change fees
and booking fees—we send an alert back to the agent" through the client's
preferred method of communication, be that an email, as "remarks in the
itinerary, in the PNR" or through a portal that Yapta makes available to
clients, where they can sort fares "by largest savings, by closest to
departure" or other criteria, said Filsinger.
Once a savings opportunity is identified, it's up to the
client to rebook. Yapta said it is working on a "touchless rebooking"
feature, "so if it meets certain criteria, it will automatically capture
the savings."
In the meantime, rebooking is manual. The foundation checks
fares through "a separate queue that Yapta is feeding to Carlson, and
Carlson monitors that queue," Massey said. "When the opportunity
arises, Carlson gets an alert. At that point, I have an onsite agent team that's
fully dedicated, so they parse out that workload and reach out to arrangers.
Unless the travel arranger says [not to], we re-issue the ticket. The agency
gets another transaction fee, so it's worth their time, and we incur the
savings."
Through the pilot, the foundation has monitored every single
itinerary for reduced fares. FareIQ examines "fares across all fare
classes, including negotiated fares," Filsinger said. "We actually
compare negotiated to negotiated, and negotiated to public, and in some cases
public fares are lower than negotiated fares," he said.
[PROFILE_1]A Few Concerns
Some buyers have expressed concern that rebooking would
disrupt seat assignments or push travelers into a lower-bucket fare with fewer
benefits. Filsinger said the goal is to "minimize traveler disruption. We're
checking the exact same flight and the same cabin class. When you see savings
opportunities, it means the flight has greater availability, so it's not a full
or oversold flight. We've not seen any impact on changed seats or anything like
that, because these booking agents are very efficient at rebooking and grabbing
that same seat."
Sometimes FareIQ will alert to opportunities that would mean
trading down from a refundable to a nonrefundable fare, Filsinger said, noting
that the decision to rebook ultimately rests with the client or agent.
"If you book a refundable ticket 21 days in advance
because you're not sure if you're going to travel or not, we allow for you to
configure it so that for a certain number of days prior to departure we will
begin comparing that ticket to nonrefundable tickets, so that once you know you'll
actually be traveling you can see significant savings," said Filsinger.
Massey grappled with how the foundation should message
savings opportunities to travelers and when to rebook eligible itineraries. "Should
we just do it and say, 'We changed your seat?' We ended up developing some
messaging, and every opportunity that came up, we reached out to the travel
arranger to tell them we found a savings opportunity: 'Is
there any reason why we can't reissue this ticket?' If somebody had used an
upgrade or was in a seat on a really tight flight, they had the opportunity to
say no."
Pricing And
Remittance
Filsinger called FareIQ's pricing a "risk-free
commercial model" in which corporate clients "only pay us when they
see savings." Specifically, Yapta generally takes a 35 percent cut of the
fare savings, though some early adopters received more "favorable pricing,"
according to Filsinger.
As the system is currently deployed at the foundation, the
full refund automatically is remitted back to the form of payment—generally a
corporate card. Yapta collects its fee later through a monthly invoice.
"At the end of the month, they bill us via the agency,"
said Massey. "I would like to see that streamlined so there's a net
savings at the point of sale when they reissue the ticket.
"That's part of our messaging," she continued. "You'll
see a refund, but later you'll see a fee associated with this. That's a
separate piece right now, so they're not surprised a month later when the fee
catches up with them."
Filsinger said Yapta is working to "enable
point-of-sale billing" to address Massey's challenge, and already enables "departmental-level
billing" for corporations that elect to bill in that manner.
In the meantime, Massey said the foundation "had to
develop a manual process for the fees to go to the cost centers incurring the
savings. If you had a large program and you weren't able to manage that manual
process, you'd have to be able to absorb the fees that Yapta is charging during
the pilot process. That was tricky, but we were willing to give that a try and
reconcile that back through the AP process."
Massey still considers her trial of FareIQ a "pilot."
Encouraged by the savings opportunity, she said permanently adding FareIQ would
require automated point-of-sale billing and a smaller savings cut for Yapta.
As Massey sees it, if Yapta addresses those two things, they're
on to something.
This report
originally appeared in the May 2013 issue of Travel Procurement.