As airlines continue to consider where they can cut costs it is clear that they are also looking to maintain and increase profitability by boosting revenues, says Mark Cuschieri, ITM industry affairs chairman.
To achieve this, one of the most widespread product changes to occur in recent times has been the unbundling of products and service elements by the sector. Airlines have been busy unbundling services that traditionally came with the fare, such as baggage checking, advanced seating and on some occasions for all but the most rudimentary of snacks.
The principle of unbundling supports procurements goals of transparency, but the the reality may be different and we need to ask ourselves if as buyers it is something we should just simply become accustomed to it in the future? After all it is in theory an opportunity at last to strip out the payment of unwanted goods and an opportunity to reduce base fares, is it not? However, whilst there appears to be some potential positives from unbundling, you can't help but think that greater consultation could result in a more positive environment for all and that without it the reality may not be all that we would like.
The real question is what the multiple impact of these changes will be on our travel and meeting programmes? Questions relating to travel policy compliance and expense reimbursement cloud the issue. Can travellers confidently pay extra to check bags, change their itineraries or even make or change seat assignments without running afoul of managed travel program parameters?
Do travel buyers even want their travellers spending time comparing pricing options for such service components? Where does it stop - for example, we've already seen the introduction of fees for carry on baggage in the U.S. Will buyers be faced with the reality of seeing their travelers having to pay to check in, to have any seat on a plane and watching in-flight entertainment?
The Institute of Travel & Meetings sought to consider the implications of such product changes on the business travel and meetings buying community. Our research clearly highlighted that unbundling creates issues with the management of transactional and spend data, with processes and overall cost following close behind as the next highest incidence of outcomes. Consider the next time you're attempting to evaluate your Average Air Ticket Price and cost of ancillary services.
One of the most fundamental aspects of any travel programme is the ability to measure its effectiveness but if "you cannot measure it, you cannot manage it". What incenses travel buyers more than anything is the lack of data transparency relating to the price of an air ticket purchased, which can effectively double in price when it comes to totalling the vadd-on. Just as we get our head's around the numerous and somewhat contentious taxes, travel buyers are now hit with the management of these ancillary items.
And this very issue of unbundling highlights a broader issue as travel buyers continue to be plagued by a lack of standardisation and collaboration within the industry supply-chain. In creating the unbundling phenomenon, one assumes that considerable research and impact assessments are undertaken across client bases but, and especially at times of intense economic pressure, the question is whether this is undertaken sufficiently; recent examples have shown that a number of carriers have failed to engage with their clients, travel management companies and technology providers; consider the impact of an organisation's online adoption, when self booking tools cannot fulfil the selection of their "special seat" or additional baggage.
Technology providers have certainly been caught cold by the inconsistent approach and speed in which airlines are dealing with the introduction of such ancillary revenues. Is it no wonder that the vast majority of buyers believe that suppliers in all sectors do not consult sufficiently with their end customers before introducing such changes. Far from providing value to the buyer, ancillary charges often result in additional work from their travel management companies and therefore cost.
There is clear need for better collaboration and supplier engagement. Therefore it is about time that solutions are sought to counter these key and critical issues that end-users face today? ITM recently co-hosted the Unbundling Summit at the Business Travel & Meetings Show on Feb 9th with the Business Travel Coalition (BTC) in recognition that without such collaboration, it is clear that travel buyers and intermediaries will continue to be presented with issues they must deal with. It was a great start but we need to see more of this happening.
The unfortunate outcome of poor collaboration undermines the good work of the supplier community and in particular the airlines, to create choice and a sustainable model. With nearly 50% of buyers disagreeing with the view that airlines are acting positively to consumer wishes, this illustrates that the opportunity to use the existing environment to make positive product changes which are in line with buyer needs is truly at hand. Collaborate, collaborate, collaborate. This is the only way.