Getting With the Program - Carlson Wagonlit Travel

CWTvIsIon Issue 3 - January 20083How can travel managers make the most of these low-cost carriers in their travelprogram?Carefully compare providers. Apart from the choice of routes and schedules, lowcostcarriers can vary widely in terms of the amenities and level of service they offer.It can be a good idea to start small with one or two carriers that fit the company’sneeds. Ideally, those carriers should provide their inventory to a GDS. If not, a travelmanagement company like CWT can provide a Webfare booking interface on acase-by-case basis.Consider moving to a “best buy” policy on routes where price competition isstrong between preferred providers. In Australia and India, the fact that air supplyoutweighs demand makes spot buying a logical, cost-effective approach. In fact, itaccounts for 60 percent of companies’ domestic transactions in Australia.Recommend advance booking and communicate on the potential savings.Studies show that significant savings are possible even if travelers exchange a largeproportion of tickets. Contrary to popular belief, low-cost fares can be more flexiblethan full-service economy as they are often exchangeable and do not carryrestrictions such as a compulsory Saturday-night stay.If no hard mandate is in place, consider providing incentives for employees touse low-cost airlines. For example, with each trip, the traveler could enter a prizedrawing sponsored by the airline. Combined with communications on the financialbenefits for the company, incentives can help boost compliance with travel policy.Exploit potential synergies with an online booking campaign as part of thecompany’s drive to better manage costs.Impressive savings potentialCWT clients who are willing to shift market share in Asia Pacific to low-cost carriers haveidentified impressive savings potential.In Australia, for example, a leading international energy company identified 10 percentsavings (US$100,000 on total national air spend of US$1 million) by switching 30percent of traffic to a low-cost carrier. This involved a best-buy approach on routes whichwould not require any compromise in terms of flight frequency.In India, an international consulting company calculated that it could save 5 percent onair spend by moving some volume to low-cost alternatives and consolidating travel withpreferred airlines. The company had evaluated its domestic air spend at US$8.2 million,having seen its payroll multiply by 100 over the previous three years. As a number oflocal contracts with airlines were expiring, the organization reviewed its strategy both ata national and regional level, including an in-depth analysis of the Indian airline marketand different market share scenarios. This indicated savings of US$400,000.