Orange smiles all round it would seem.
Easyjet has been making some headway in the fight on driving yield on their flights. The average flight is yielding more and the Orange Crew seem to be beating the Blue/Yellow crew in this respect.
From the conference call 10 days ago - EZ was able to report the following:
Ancillaries are up 22%, excluding baggage charges.
Baggage charges are up a whopping 62.3%
Business travel accounts for just over 20% of revenue
It is probably the latter that needs to catch the eye of the other LCCs particularly Ryanair.
The take up of Biz Travel can be attributed (and has been) to the availability in the GDS. And this is an important lesson for any LCC. While the GDSs may be an anathema there is logic to providing a well established and simple tool which the TMCs and their corporate clients have access to.
I have made the point before that TMCs tend to be process driven and often at the expense of increased yield. EZ seems to be confirming this. On the heels of improved yields by Southwest as a result of their reappearance in the GDS,
Lest anyone thinks the Professor has gone soft - I firmly believe that the LCCs need to get in front of the standard sources of booking for the Corporate business. But the value of the GDS needs to be weighed carefully. Unless of course you take the extreme view like LH and start charging for access to content.
Yield can be improved by increasing the footprint in front of the TMCs and the Corporate Travel Depts. (CTD)s. Ignore this group at your peril.
Cheers
Showing posts with label Corporate Travel. Show all posts
Showing posts with label Corporate Travel. Show all posts
29 March 2009
GetThere Sets Out To Help Corps
Sabre's GetThere product group has launched this week the Demand Management Suite.
Effectively it is a package of products and processes that Sabre is standing behind with a money back guarantee. (Heck people will do just about anything for cash flow these days!)
Corporate Travel Management is bearing the brunt of the Recession's impact. Travel budgets have been slashed and now we are seeing the huge impact on the bottom line of airlines and corporate travel agencies world wide.
Sabre's tools, in my opinion will help if adopted in their entirety. However you don't need to drink all the Koolaid in one go. Just following common sense and keeping your policies in check will pay off in dividends of lowering cost and improving efficiency.
However there is still no substitute for the ultimate question that is only now being asked. What is the value of the trip and is the expense justifiable. In a metric based world this is almost impossible. Many moons ago, I led a team at PARS that developed such a tool. However no one was willing to accept a tool that actually assessed the trip in a price performance manner. Our design was based on the concept of a notional value that not only assessed the return on value of the trip as a whole but against different options. Set up took time but once implemented would have provided a key manner to operate a corporate travel budget.
For example if the value was positive it would have to have a value over 100. Thus a simple rule would be to say you can take the trip as long as the value proposition was positive to the company. In a financial belt tightening world the value ratio could be increased so that no one was able to take a trip if the value was less than say 120.
This would move away from a budget based world to a performance based world for corporate travel. While revolutionary still in today's world for travel - it is quite normal behavior for other functions - both revenue and cost - inside a corporation.
Sabre's solution is still based on the more conventional world of budget based rather than value/performance based. But it represents a model that both TMCs and Corporations should take a good look at.
Cutting for cutting sake is a downward spiral that leaves no winners. This is why I believe that we should be talking about Value and Performance not just for Corporations but for all the businesses in Travel.
So what do you think?
Cheers
Effectively it is a package of products and processes that Sabre is standing behind with a money back guarantee. (Heck people will do just about anything for cash flow these days!)
Corporate Travel Management is bearing the brunt of the Recession's impact. Travel budgets have been slashed and now we are seeing the huge impact on the bottom line of airlines and corporate travel agencies world wide.
Sabre's tools, in my opinion will help if adopted in their entirety. However you don't need to drink all the Koolaid in one go. Just following common sense and keeping your policies in check will pay off in dividends of lowering cost and improving efficiency.
However there is still no substitute for the ultimate question that is only now being asked. What is the value of the trip and is the expense justifiable. In a metric based world this is almost impossible. Many moons ago, I led a team at PARS that developed such a tool. However no one was willing to accept a tool that actually assessed the trip in a price performance manner. Our design was based on the concept of a notional value that not only assessed the return on value of the trip as a whole but against different options. Set up took time but once implemented would have provided a key manner to operate a corporate travel budget.
For example if the value was positive it would have to have a value over 100. Thus a simple rule would be to say you can take the trip as long as the value proposition was positive to the company. In a financial belt tightening world the value ratio could be increased so that no one was able to take a trip if the value was less than say 120.
This would move away from a budget based world to a performance based world for corporate travel. While revolutionary still in today's world for travel - it is quite normal behavior for other functions - both revenue and cost - inside a corporation.
Sabre's solution is still based on the more conventional world of budget based rather than value/performance based. But it represents a model that both TMCs and Corporations should take a good look at.
Cutting for cutting sake is a downward spiral that leaves no winners. This is why I believe that we should be talking about Value and Performance not just for Corporations but for all the businesses in Travel.
So what do you think?
Cheers
11 August 2008
Compliance in an age of austerity - Big Brother would like you to save money
Perhaps I should have titled this piece - "Love in the time of Cholera"
At the recent NBTA conference in Los Angeles there was a lot of talk about how the airlines new “ancillary revenue” programs are upsetting the apple cart of corporate travel management. It has become a hot button because there are now a slew of charges flying around that don’t necessarily fit under the control of the travel management programs that corporations and their respective independent travel agencies (Called TMCs or Travel Management Companies) such as American Express, Carlson Wagon Lit, BCD and the new comers such as Orbitz for Business and Expedia Group’s newly renamed Egencia.
This got me thinking about the whole process of travel in corporations and the impact in an age of austerity and sky high prices for travel services.
The information problem manifests itself in a simple way. You book your ticket. You pay the required upfront fees but when you get to the airport you have to pay extra. Worse the charge that you pay for that first or second bag appears on your credit card bill as “Miscellaneous Charge”. So the trackers back at the HQ office have no idea what the charge was for. Upgrade, meal, bags, change of flights etc etc. The information chain is broken at several points. Firstly there is no consolidated data source that can compare the total cost of the service provided by the airline in a package that can be compared in a matrix. Apple to Apple. Corporate travel policies can be pretty complex, but even a simple one like you get a meal paid for during your trip away from home becomes a nightmare to track and therefore police. Does the airline give you a meal (hell no!) but Continental does. Therefore if you fly CO during a meal flight then you can eliminate a meal from the expense thus saving approx $25 per meal time.
There is a good article on some options covered by such expense management players and trackers as Concur and TRX. Go here to read Scott McCarthy’s Middle Seat article this week. http://online.wsj.com/article/SB121848940345831141.html?mod=djemseat.
But all of these tools are a bit draconian in nature and don’t solve the problem of saving money. The best decision is actually to not fly then you can save the most money. Perhaps the better solution is to create a budget and provide guidelines for how its spent. IE this is your travel budget, it should result in X deliverables (like sales). It should also be trackable accordingly. Many moons ago I led a team who created a solution that basically created a cost benefit analysis for each trip. The government wonks loved it but the corporations hated it because if actually required some one to commit to creating a value for each trip. Something that no one ever wants to have to do.
At the end of the day the company must justify its travel budget and make it perform just like any other asset. Perhaps now is a good time to see such a system in place rather than asking for a huge number of hoops to be jumped. The solution to the problem for many companies is to just cut the trips or issue blanket policies like “No non-essential out of state travel” (This is Washington State’s new travel policy) or “Each trip must have at least 2 layers of management approve it”. That’s an effective thing for a division head to be doing.
I love to tell the story of one of our client’s who was at a cocktail party one day in the early days of the dot com boom. He had a fellow entrepreneur come up to him and said “I love your company. Your website is now our corporate travel management system.” Our client looked incredulous at this statement since they were a pure leisure site. But the entrepreneur was quite effusive. “Our new travel policy saves us money, time and hassle. Already this quarter we have saved over 40% of the previous out of pocket costs, we fired our travel agency and have a much faster turn around on our expense reports.” Our client (and me listening beside him) asked “That’s great Richard, but how do we help you?” To which Richard replied” Our new policy is chose the flight from the top options off the first of your results page. If not then they have to write to me a 4 page memo as to why they have an exception or didn’t choose it. So far I have not received one memo!”
We actually sat down with him and found that his numbers were right. It was quite interesting.
Bottom line – this is a battle for everyone to fight. Responsible parties in companies need to do a better job of managing the budget. A Big Brother policy is not going to help if it causes extra work for the people it is designed to serve. Similarly if you have widespread abuse of a policy – then either the policy is wrong or your people do not have the right attitude.
Cheers
Timothy
At the recent NBTA conference in Los Angeles there was a lot of talk about how the airlines new “ancillary revenue” programs are upsetting the apple cart of corporate travel management. It has become a hot button because there are now a slew of charges flying around that don’t necessarily fit under the control of the travel management programs that corporations and their respective independent travel agencies (Called TMCs or Travel Management Companies) such as American Express, Carlson Wagon Lit, BCD and the new comers such as Orbitz for Business and Expedia Group’s newly renamed Egencia.
This got me thinking about the whole process of travel in corporations and the impact in an age of austerity and sky high prices for travel services.
The information problem manifests itself in a simple way. You book your ticket. You pay the required upfront fees but when you get to the airport you have to pay extra. Worse the charge that you pay for that first or second bag appears on your credit card bill as “Miscellaneous Charge”. So the trackers back at the HQ office have no idea what the charge was for. Upgrade, meal, bags, change of flights etc etc. The information chain is broken at several points. Firstly there is no consolidated data source that can compare the total cost of the service provided by the airline in a package that can be compared in a matrix. Apple to Apple. Corporate travel policies can be pretty complex, but even a simple one like you get a meal paid for during your trip away from home becomes a nightmare to track and therefore police. Does the airline give you a meal (hell no!) but Continental does. Therefore if you fly CO during a meal flight then you can eliminate a meal from the expense thus saving approx $25 per meal time.
There is a good article on some options covered by such expense management players and trackers as Concur and TRX. Go here to read Scott McCarthy’s Middle Seat article this week. http://online.wsj.com/article/SB121848940345831141.html?mod=djemseat.
But all of these tools are a bit draconian in nature and don’t solve the problem of saving money. The best decision is actually to not fly then you can save the most money. Perhaps the better solution is to create a budget and provide guidelines for how its spent. IE this is your travel budget, it should result in X deliverables (like sales). It should also be trackable accordingly. Many moons ago I led a team who created a solution that basically created a cost benefit analysis for each trip. The government wonks loved it but the corporations hated it because if actually required some one to commit to creating a value for each trip. Something that no one ever wants to have to do.
At the end of the day the company must justify its travel budget and make it perform just like any other asset. Perhaps now is a good time to see such a system in place rather than asking for a huge number of hoops to be jumped. The solution to the problem for many companies is to just cut the trips or issue blanket policies like “No non-essential out of state travel” (This is Washington State’s new travel policy) or “Each trip must have at least 2 layers of management approve it”. That’s an effective thing for a division head to be doing.
I love to tell the story of one of our client’s who was at a cocktail party one day in the early days of the dot com boom. He had a fellow entrepreneur come up to him and said “I love your company. Your website is now our corporate travel management system.” Our client looked incredulous at this statement since they were a pure leisure site. But the entrepreneur was quite effusive. “Our new travel policy saves us money, time and hassle. Already this quarter we have saved over 40% of the previous out of pocket costs, we fired our travel agency and have a much faster turn around on our expense reports.” Our client (and me listening beside him) asked “That’s great Richard, but how do we help you?” To which Richard replied” Our new policy is chose the flight from the top options off the first of your results page. If not then they have to write to me a 4 page memo as to why they have an exception or didn’t choose it. So far I have not received one memo!”
We actually sat down with him and found that his numbers were right. It was quite interesting.
Bottom line – this is a battle for everyone to fight. Responsible parties in companies need to do a better job of managing the budget. A Big Brother policy is not going to help if it causes extra work for the people it is designed to serve. Similarly if you have widespread abuse of a policy – then either the policy is wrong or your people do not have the right attitude.
Cheers
Timothy
23 July 2008
How the Recession is Biting - Part 1 Corporates
Dearly Beloved,
I have been writing about the impact of the downturn on the supply side of the equation for quite some time. So I thought I would look at the other side of the fence for a while and see how it is impacting the market from the users perspective. As you could call me an unmanaged traveler - I don't work directly for a large corporation - however I do work as a consultant for corporations and government entities who have differing levels of a corporate travel policy. These range from the ultra strict to the "do what you have to."
In this first piece - I was writing my own extensive story and looking to report on some real world examples. In fact I was about half way through writing the dang thing. However I had today's Travel Weekly newsletter cross my desk. In this edition a long article addressing the subject came from Nadine Godwin - probably one of the more senior industry writers going back many years and a former TW Editor. Her perspective and article could not be bettered so I encourage you to go and read it. You will need to sign up but it is worth the weight.
Also my old friend Steven Schoen the Travel Manager for Siemens and probably one of the real experts of this space has bared his soul on what can be done. So read the side bar story as well.
http://www.travelweekly.com/article.aspx?id=176914
In a follow up article I will talk about the impact on the leisure side of the house.
Cheers
Timothy
I have been writing about the impact of the downturn on the supply side of the equation for quite some time. So I thought I would look at the other side of the fence for a while and see how it is impacting the market from the users perspective. As you could call me an unmanaged traveler - I don't work directly for a large corporation - however I do work as a consultant for corporations and government entities who have differing levels of a corporate travel policy. These range from the ultra strict to the "do what you have to."
In this first piece - I was writing my own extensive story and looking to report on some real world examples. In fact I was about half way through writing the dang thing. However I had today's Travel Weekly newsletter cross my desk. In this edition a long article addressing the subject came from Nadine Godwin - probably one of the more senior industry writers going back many years and a former TW Editor. Her perspective and article could not be bettered so I encourage you to go and read it. You will need to sign up but it is worth the weight.
Also my old friend Steven Schoen the Travel Manager for Siemens and probably one of the real experts of this space has bared his soul on what can be done. So read the side bar story as well.
http://www.travelweekly.com/article.aspx?id=176914
In a follow up article I will talk about the impact on the leisure side of the house.
Cheers
Timothy
Subscribe to:
Posts (Atom)