During times of economic struggle, airlines have to work harder to attract high-yield business travellers. The relationship of airlines to travel management companies (TMCs), technology, corporate buyers and the global distribution systems is changing. For the first time, the traveller is now centre-stage.
Paul Tilstone, managing director of Global Business Travel Association Europe, says "personalisation and customisation of business travel" was the culmination of many recent trends. Travellers, he argues, know which hotel, airline and booking channel they want to use, and resent being dictated to by their employers. "Consumer behaviour is changing," he says, "and travellers expect direct connectivity to inventory using their device of choice." Inventory now includes ancillary services as well as fares and schedules. "Apps, tools, mobile, they are all closely linked," says Tilstone.
In business travel, this means airlines and their distribution partners need to be able to connect to Blackberrys and iPhones, while not overlooking their website and call centres. Paul Saggar, director of technology and product development at travel management company HRG, identifies this fragmentation as a key challenge for the TMCs. "Airlines want to 'own the end-user' but quite often that end-user has been delivered through an intermediary, and seamless connectivity isn't there yet."
He suggests some airlines have been diving into a direct relationship with the traveller without fully understanding the importance of the TMC. Tilstone also suggests airlines might be "creating a rod for their own back" by getting too close to the traveller. "Airlines have to think differently if they have changed the relationship from a contracted price for a flight experience to something more personal," he adds. "They need to consider their overall service proposition and their relationship with the travellers."
An example of how some corporations are coping with fragmentation and customisation is an open travel policy, allowing its travellers more freedom in terms of who they can book with. The potential upside for airlines is this gives them the all-clear to get closer to the traveller. Google, for example, is understood to have developed an in-house product known as Trips, where business travellers have a budget for their itinerary - worked out using a Google algorithm - and can book whatever they want within that budget.
Not all companies have the confidence to take such a radical approach, but Tilstone says it is not only Google which is operating open travel policies. He refers to another technology giant Intel. "It had a go at abandoning policy and let some travellers book what they wanted. It found that the air spend increased by around 10% as a result. Interestingly, hotel spend dropped by a similar amount."
However, some business travellers will always be reluctant. Next-generation software company Rearden Commerce recently discovered two out of three businesses see compliance rates of less than 50% with policy.
Ron DiLeo, executive director of the Association of Corporate Travel Executives, says the future for business travel lies somewhere between the two. "I don't think we'll ever get to a world of totally unmanaged business travel - there has to be some consistency and you can never take your eyes off duty of care - but airlines and TMCs need to embrace the new environment, not feel victimised by it."
He says "more realism" is needed when it comes to rates. "Some travel buyers can deliver the volumes they promise the airlines, while others overcommit. If the airlines dropped the deals which fell short, it'd be good for them because they adjust their yield management accordingly and give better deals to partners who came in on target."
Tilstone says some corporate contracts deliver but these are increasingly targeted to specific pairs used by the business or a division within a corporation. "But it is increasingly challenging for corporate and TMCs to make single airline contracts work," he says.
Saggar says shutting off channels which do not work is not an option the travel management companies have. "We have to work in whatever way our customers want us to, and our customers include airlines as well as corporates. We have invested hugely in developing our own technology platform so we are not reliant on one GDS, or one operating system."
The importance of the individual is not lost on DiLeo, who suggests the next sea-change will be a shift away from the traditional business-travel key performance indicators (KPIs). "Airlines are marketing to travellers and TMCs are marketing the benefits of the travel programme to the employees. I think we will start to see the effectiveness of many relationships in the corporate travel space measured in marketing KPIs. New metrics will have to be introduced to factor in the traveller being at the heart of what airlines are about."
Source: Airline Business
