Citigroup recently completed a 10-month global airline bid
across its entire program, delivering what global head of travel Mick Lee
called "very aggressive rates" and increased services thanks to an
experienced team of travel specialists, advanced pre-trip reporting the company
is delivering to airlines and the implementation of improved travel tools,
stricter travel booking requirements and mandates to use Citi's preferred
suppliers. The new two-year airline contracts, which went live on Oct. 1,
followed a comparable overhaul launched in May of the financial services giant's
hotel program.
To steer airline negotiations and contracting, Lee enlisted
an experienced team of travel professionals that she said "established a
great deal of credibility" with airlines, armed herself with real-time
industry benchmarking data through Caldwell Associates and established a global
council of roughly 200 Citi stakeholders to ensure the team was "not
making decisions in a silo" and to satisfy local needs.
"We approached this airline RFP differently to ensure
that we were more inclusive with our travelers and arrangers and with the
airlines in the program," according to Lee. "We proved that we were
already doing what we said we would do relative to delivering marketshare and
reporting and providing access to our team of professionals. We demonstrated
our commitment to long-term partnerships."
Citi began its airline RFP efforts in January, entered
negotiations in the summer, awarded contracts in mid-August and launched the
program this month.
Senior vice president and global corporate card and
commercial airline program manager Anthea Crittle "managed the complex
requirements of airline coverage in more than 80 countries," Lee said,
adding that Mike Arcara and Nicola Hudson, vice presidents and program leads in
New York and London, respectively, joined Crittle near the close of the airline
RFP.
Much like its hotel program overhaul, Lee said the team
pledged to concentrate Citi's spend with suppliers in exchange for meaningful
discounts. In addition to a number of policies tightened in the past
year—including new lowest logical airfare requirements and a seven-day advance
purchase policy, as well as restrictions on allowable classes of service—the
company held 35 traveler seminars last month alone and upgraded and
reprogrammed its online booking tool, which it uses to book more than 70
percent of air volume in major locations.
"For the majority of Citi travelers," Lee said, "the
changes will be minimal because the approach is generally to do the right thing
when traveling on business. For people who do not use Citi's preferred
suppliers or do not go through the approved channels, the impact will be
significant."
Lee noted the team responds quickly when travelers neglect
to follow proper procedure and in some cases withholds expense reimbursement.
As if being a company with a Business Travel News-estimated $150 million in 2009 U.S. booked air
volume, which preserved its use of premium cabins and made enforcement efforts
increasingly stringent, was not enough to entice airlines, Citi also altered
its reporting to give suppliers new levels of visibility.
Considering airlines often rely on post-trip reporting,
which can lag real-time data by weeks, Lee aimed to improve the value
proposition to carriers.
"We are
implementing pre-trip reports to give airlines the tools to allow them to
report back to headquarters and say, ‘we might be giving Citi very aggressive
rates, but they've committed X percent of marketshare and they're delivering
more than they committed,' " Lee said, "or if there's a month where
we're not delivering marketshare, we'll let them know and tell them why."
The goal of the new program was not necessarily to reduce
the number of airlines in Citi's portfolio, but to increase the number of
citypairs under contract. Lee said Citi held a total of 36 contracts prior to
2010, nine of which covered the majority of the company's volume.
"We needed to increase the number of contracts to
provide coverage for the areas of spend we identified that did not have any
discounts at all," Lee said.
Lee said New York-London, which remains Citi's number-one
citypair, is where the team focused first. "Once you get those airlines in
place and know where the pieces of the puzzle are, everything falls nicely into
place."
She would not disclose which airlines ultimately made the
cut, but Lee said, given its dominant route, the new American Airlines-British Airways joint venture would be part of the program. "We are committed to
that relationship," Lee said, "and to the opportunities the alliance
will afford Citi in the future."
Lee would not disclose year-over-year savings or targets,
but said, "There were savings as a result of the negotiations, increased
coverage and travel policy adjustments, as well as from the initial proposals
to the final analysis. We also negotiated enhanced services to ensure we take
care of our most frequent travelers."
Citi required all airlines to load new negotiated fares a
week prior to the Oct. 1 launch date, performed an audit to ensure they were
there and will continue to conduct sporadic airfare audits.
This report appeared
in the Oct. 25 issue of Business Travel News.