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BTN's 2014 Best Practitioners: Oracle's Visser Applies Ancillary Fee Spending To Airline Market Share Shortfalls

By David Meyer / September 10, 2014 / Contact Reporter
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About two years ago, with airlines having aggressively implemented ancillary airline fees to help restore profitability, Oracle global travel process officer Rita Visser started having serious conversations with her company's contracted airlines about how to obtain proper reporting and receive some credit for such expenses.

"While we will always say we want them to make a profit because we need them, we have to be able to get credit for the money that we give to them," Visser said. "We started in the conversations pushing them toward some transparency, pushing them to understand what data we can get and pushing some of the other data suppliers to say we really need to understand what exactly we're paying them."

In Oracle's case, those other suppliers were TRX (now owned by Concur) and card provider American Express. After long conversations, TRX started to provide some data and Oracle's airlines developed more robust data management processes. At that point, once the data started "to make sense," Visser said it was time to "have a real conversation about it. Of course, the airlines, in true fashion, continued to say, 'We don't really have a model built for that.' "

Hear Rita Visser in her own words:

2014 Best Practitioner Rita Visser

Recognizing she's no mathematician nor specialist in algorithms, she sought a simple solution. Visser told the airlines: "Let's come up with a way that we agree on how much I spent on you that was additional to airfare. Let's find a way to agree within a certain percentage of variation. Then let's just divide that number by the average ticket price. We take that final number, it could be 30, it could be 3,000, and wherever we fall short in the contract, they're applied to some contract measurements. The 30 tickets or the 3,000 tickets are applied appropriately to program marketshare opportunities and then might turn that no to a yes in contract performance."

Visser said she talked to all of the carriers with whom Oracle had spent money on ancillary services, focusing on bags and seat upgrades but not food nor entertainment charges.

Visser, citing a recent conversation with Delta executives, said she told them that as far as she is concerned, "If it's food, drink, Wi-Fi, that isn't a travel cost. It's a travel and expense cost, but it's not the cost of travel. That will go to the meal part of the expense report or the account activity part of the expense report. The fact that they're getting on a plane and you are charging them for a bag or a seat or whatever that is, that's costs that I have to control through you and me."

She said Oracle is asking now for more rich data on those seat upgrades to see if people are really going outside of policy to upgrade themselves at the airport, and if so, she plans to take action.

"We do have some allowances for premium economy seats in our policy depending upon who you are," Visser said. "We have allowances for some of those at-the-airport charges. Interestingly, we see the spend and how it's all tied back to the ticket. We came to that understanding with United, who we started this with. It certainly is the bags and the seat upgrades that we're certainly going after."

While Oracle is getting credit for its ancillary expenditures when there is a market share shortfall, there is no credit otherwise. "This doesn't take us into an overage," explained Visser.

She said there was some hesitancy from some airlines before they agreed to make notations on the bottom of management review reports. "That was the start," Visser said. "United was one of the first to just put it as a footnote. We said, 'At least it's a footnote. We're having the conversation.' "

Eventually that conversation became more formalized. "United has now put it in our contract and is now using that approach with some of their other folks that are really pressing the issue," Visser explained. "Delta is partnering with us. It's not written into the contract yet, but there is an agreement. It's now not only footnoted but also noted in the contract performance, even though it's not written in the contract."

Visser isn't shy about acknowledging Oracle's ancillary airline spending "isn't small. We just want to make sure we get credit for it."

This report originally appeared in the Aug. 25, 2014, edition of Business Travel News.

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