Business Travel iQ
Airlines are doing all they can to grab extra pounds from travellers. We're becoming accustomed to paying for what were considered essentials not too long ago, such as our meals or a piece of luggage. US-based firm IdeaWorksCompany, which regularly analyses airline ancillary revenue, has estimated carriers will earn US$28.4 billion from fees in 2014, a staggering 20% increase on 2013.
It's not just in the air where carriers are expanding their product offering. Most have linked up with a car hire provider and/or a hotel bedbank to help with ground arrangements and for holidaymakers, several airlines have their own tour operation. Partnerships have become more common as carriers stripped off non-core operations in areas like catering or at airport services, although some offer free transfer services, airport lounges or even have their own hotels.
Have travel managers considered this bedstock when they enter a negotiation? This isn't new; many carriers have sold hotel chain stakes they held in the early 90s (KLM's in Golden Tulip, Lufthansa's in Kempinski, for example), but others still have ownership or a holding, typically within their home markets. Several of the Gulf carriers have properties in their own states while Icelandair and Japan Airlines are among those that have their own hotel brands. The first of Sir Richard Branson's Virgin Hotels also recently opened in Chicago.
The non-air expansion is starting to spread into key European business travel markets too. Qatar Airways has started what could be a blueprint for its future route expansion. The airline bought its second hotel in the UK this month, the Novotel Edinburgh Park Hotel in Scotland, two weeks after it had started a daily direct service between the Scottish city and Doha. This runs parallel to the carrier's purchase of the Sheraton Skyline hotel at Heathrow Airport in April, less than a month after a second Airbus A380 service started between the London airport and Hamad International. Have the team been looking around Frankfurt or Madrid for airport hotels, or even Amsterdam in time for next month's route launch?
Qatar Airways owns the Novotel Edinburgh ParkAfter all, it's in the interest for airlines to look at keeping hotel costs down themselves. Crew need rooms every day all over the world, so buying their own properties immediately provides them with an in-house preferred supplier. But these hotels are not for crew alone and those other rooms will remain empty if not sold for the night.
These hotels allow the carrier to add yet another revenue stream that goes beyond the air fare. As airlines look to spread themselves across more of the distribution space, managers should be savvier of not only what they can negotiate to include within an air fare but potentially what they can do on the ground too. That could have an impact on the bottom line, whether it's negotiated free in-flight WiFi or airport lounge access. Those part of a larger group like Emirates even have sister event management firms and destination management companies that, if combined with a corporates' events department, could help drive costs when organising an event or meetings.