An experienced buyer shares knowledge and practical advice for those dreaded RFPs…
Steve McGrane is European director and global category manager for Xchanging procurement services, specialising in travel consultancy, supplier optimisation and process efficiency.
He consults on clients’ travel programmes to identify and bridge spending gaps, provide strategies across their travel programmes, implement change management techniques and optimise booking processes. Here he shares his top tips for airline requests for proposal (RFPs).
“As part of the RFP process, we consult travellers and stakeholders from finance, IT, HR, the booker community and procurement, from PA to VP level, to get a broad view of expectations and priorities,” says McGrane. “The results inform the content of the RFP.”
1. PLANNING IS ESSENTIAL and allows you to gauge timeline expectations – for example, one month for planning, one week for analysis, three weeks for response and one month for negotiations. Due diligence is all.
2. WITH A NEW RFP – or the first one for some years – alert airlines to what you are doing and what the RFP is about, which may not just be price. Other requirements can include consolidation, policy management and value-add – executive cards, upgrades and so on. Establish each carrier’s relationship with the customer and tell them what is working well.
3. TALK TO AIRLINES about rebate structure early in the process, so they know what to expect. As buyers, we want to be able to push business their way and, when we do, be rewarded for it. Most airlines are happy to pay the extra cost of sale.
4. ASK WHAT FARES your organisation has been paying in each class, so that you can get detailed buying patterns and understand your spend. Get card and spend data from your expense management system and/or travel management company [TMC].
5. THE Three WEEKS ALLOTTED for completing the questionnaire allows suppliers to tell you they have something useful that you were not aware of – for example, free accommodation where there is a long layover and late connection.
6. POST-BID ANALYSIS lets you compare existing prices with those proposed, and to find the airlines that cover the majority of your top routes. You want to cover 80 per cent of your spend with your top suppliers – harder than it sounds.
7. DURING NEGOTIATIONS, if, for example, one carrier is 5 per cent more expensive than another on any route, make a table showing their pricing and bidders, giving them their position: you are second on London/New York and fifth on London/Atlanta. In order to make preferred supplier, you will need to offer these fares. And let me know tomorrow: it is better to be fair and targeted, and it is usually a yes/no answer.
8. TRY TO AGREE a two-year contract with a one-year pricing review, to make sure prices do not keep going up or are still market-relevant. Do a benchmarking exercise through an RFI [request for information] to get pricing on a number of routes for a stated value of business.
9. CONTRACTING CAN BE DELAYED by the need for lawyers to check some items. Put in place a letter of intent. This lets you proceed on agreed fares, upfront targets and the processing of everything that does not need investigating by the legal team. Start putting fares into the GDS [global distribution system]. You want to get them into the marketplace, for TMCs to start selling and buyers to book.
10. IN OUR ICE [information, compliance, education] programme, I put together a pack on airline pricing, and what is available and when. I ask HR how they want to position that – what and how you communicate in the UK does not necessarily go down well in the Middle East or China. Tell travellers which airlines are mandated – they alone will be in the TMC’s system and, if you book any other, be prepared to give a reason for that. Decide what you communicate and when
11. GET FEEDBACK FROM BOOKERS AND TRAVELLERS – “I don’t like the terminal”, for example, or, “the service is great” – make that into one body, and send it to the supplier and key stakeholders in a warts-and-all process. I expect 70 per cent of an airline’s sales to be on the route deal, which is the UK average for customers with a mature programme. In the contract, I state that airlines will deliver the number of tickets sold on that deal. This makes sure they’re looking at the data and paying attention to what is being sold, and it keeps deals competitive; if they’re not, I look at whether they’ve raised published fares without telling us, or are limiting availability of the negotiated fare. Then you can say: “This fare is only selling at 10 per cent – what has happened to the other 50 per cent?”
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