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.