A National Business Travel Association (NBTA) survey of 200 companies has revealed some startling responses to the airline`s recent moves toward consolidation and the distribution of fares via the Internet.
While it appears that the US Air and United Airlines deal may be put on the shelf, companies are still concerned about its impact on their travel costs.
70% of NBTA`s survey respondents believe that a US Air/United deal would increase fares and provide less choice. 57% believe the deal could make negotiating more difficult due to increases in carrier markets shares in various regions. 43% reported that such a merger would affect more than 500 business travellers within their company. 58% report that, in terms of costs to their travel budgets, any airline merger within their key corporate markets would increase their costs by a factor of two. “Past mergers have been measured by their impact on the airlines jobs. Out of the 200 companies surveyed, over 35,000 business travellers could be impacted by a US Air/United Airlines Deal. The Department of Justice should begin to look carefully at what impact mergers will have, not only on airline jobs, but on the tens of thousand of business travelers impacted by consolidation,” said Marianne McInerney, Executive Director of NBTA.
The distribution of travel via the Internet has for some sectors of the travel industry provided reductions in distribution costs and access to new distribution channels; however, these benefits have not been passed on to corporate travel managers just yet.
61% of NBTA survey respondents reported that online booking sites like Orbitz, Travelocity and Expedia have increased employee researching and booking airline tickets on the Internet. 82% stated that employees are finding Internet fares that are cheaper than corporate negotiated discounts. This figure is up from 46% last year. This dramatic increase could be due to the airlines provided greater discounts to travellers to get them back in the air again. More importantly, when agents have discovered the lower fares 61% report that the CRS systems either does not display the fare or it appears and then disappears.
“These bookings are normally out of policy and have negatively impacted negotiated rates, which not only impact the corporation but affect the airline`s deal. The bookings of these fares are in part due to employees` frustration at finding cheaper fares on leisure sites. Clearly, there needs to be transparency between what is offered on the Web and what appears on the CRSs.”
Business travel will grow to twice its size in five years. During this growth, corporations will be grappling with several issues. Over 40% of NBTA respondents believe fare and rate management or creating alternatives to traditional ways of fighting cost increases will be a big challenge in the next five years.
“Corporations must make sure that their travel costs are not mismanaged and/or ignored because of the airline`s race to decrease their costs. Corporate travel managers should avoid the current state of benign neglect and move towards allowing their market share to speak to their influence in distribution and consolidation decisions. As was discovered earlier this year, businesses will reduce travel if they feel it is too expensive to go on the road,” said McInerney.