The Business Travel Magazine June/July 2019

Air travel / Spend management
Onwards and
UPWARDS
The way corporates negotiate deals and manage air travel
spend is shifting. Gillian Upton takes a look at best practice
For years airline RFP negotiations
have gone in one direction,
rewarding volume on key routes.
It has shaped travel policies, putting
pressure on corporates to ensure
compliance to preferred carriers so that
targets are met and discounts secured.
But in a more dynamic air market, where
fares fluctuate and competitors undercut
each other, an RFP doesn’t necessarily
manage spend the best way. Overlay that
with all the changes in the distribution
landscape – by aggregators, GDSs, NDC and
ONE Order – and clearly there has to be a
better way.
“Many corporates are asking if the RFP
cycle and model continues to make sense in
the light of this evolving environment. They
are now looking at a dynamic pricing model
to best take advantage of maximising their
savings,” says Mark Cuschieri, Executive
Director Global Travel at UBS. For a large
player such as UBS to espouse such views
means that it’s time for a rethink.
A real sea-change could materialise by the
end of 2019, with airlines out of the driving
seat and buyers taking control. Olivier
Benoit, VP & Global Air Practice Leader at
consultant Advito, has tracked eight-year
cycles in the aviation industry and reckons
the current cycle is coming to an end.
“The expectation of global economic
uncertainty in Europe and the slowdown in
the Chinese economy could lead to a lower
GDP growth and airline growth is correlated
to global GDP growth,” he says.
“Secondly, operational costs for the airline
are on the rise due to increased fuel costs so
they will need to increase their revenue and
put up ticket costs and that will negatively
impact demand, so there will be more scope
for corporates to negotiate.”
Corporates could achieve more bang for
their buck. The opportunities are greater on
competitive long-haul routes and results
68 THEBUSINESSTRAVELMAG.COM