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Fare Play

With travel prices ticking higher, managing your budget becomes even more important. Start with these tips.

The business traveler is back! As you’ve traveled recently, you’ve likely noticed full planes and longer lines for hotel check-in. The Air Transport Association reports that U.S. air carriers in August flew more passengers and operated more capacity than one year earlier, despite trimming the aggregate number of departures. It’s the same story outside the U.S.: the ATA noted year-to-date 2005 traffic in the Atlantic, Latin American, and Pacific regions is up by roughly 8%, 15%, and 11%, respectively.

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With the surge in demand and increasing fuel costs, prices are on the rise — and are expected to continue rising in the coming months. Carriers and hoteliers see this as the long-awaited swing to the seller’s market.

With the sellers rejoicing, how can the corporate travel buyer best manage his or her budget? Start with counting and comparing.

  • Count the Cost. Identify the balance between cost containment and employee comfort. Greyhound Bus lines offers fantastic rates for moving employees to their business destinations, but may not align with employee expectations.
  • Compare the Travel Policy. Is it a dusty document in the handbook or an actively managed way to ensure the accomplishment of company goals within budgetary guidelines? Many times the policy is adequate in the marketplace, agreed to by all concerned company personnel, but is simply not enforced. Reporting exceptions goes a long way toward compliance.

Not enough information to reduce travel costs? Consider the following time-tested strategies to manage travel under rising prices. (They’re grouped by speed needed for change.)

Quick Changes

  • Expand the requested departure/arrival window. Widening the airline search parameters (i.e., from one hour before and after the requested times to two hours) offers big savings opportunities.
  • Include connections and alternate airports. The value of an employee’s time must be considered (many companies assign a rate to this), but alternate airports (like Long Beach, Burbank, Orange County, or Ontario rather than Los Angeles International) can result in lower fares.
  • Remove savings thresholds from “lowest available fare.” Companies often require alternate travel plans if the savings in fare is more than some specified amount. Lowering this threshold can recapture some of those opportunities.

Slower Changes

  • Downgrade the class of service for international travel. Organizations that fly business class may consider moving to economy travel. While travelers are sure to voice their concerns, some organizations have realized the palatable alternative of requiring all international travel on negotiated carriers (provided the negotiation with the carrier has yielded the required lower pricing).
  • Audit the agents. Employing a third party to audit the effectiveness of the travel counselor’s ability to find and offer the best rates (airline and hotel) for the travel policy often uncovers opportunities for improvement.

Longer-Term Changes

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  • Change tiers of hotel and car suppliers. Moving from full service hotels to limited service, or off-airport rental car companies is a quick cost reduction strategy.

Longest Term Changes

  • Comparative Benchmarking. Showing the cost per mile by business unit to and from the same destinations is an eye opener — we’ve seen these vary as much at 40%. It’s hard to argue that managers cannot find less expensive ways to get from here to there when their counterparts have.
  • Publish the list of top travelers. Many managers are surprised to see this list — both that their subordinates are included and the cost of that travel. Senior managers sometimes also wish to discuss the value of all that concentrated travel.
  • Remove traveler choice. While extreme, companies that must really tighten their travel belts have decided to take matters into their own hands. They’ll get travelers where they need to be when they need to be there, but will figure out the best way for them.

Many of these changes necessitate travel policy or behavioral changes, which require efforts beyond daily responsibilities. Change can be tough. Remember the St. Bernard dogs that were famous for rescuing stranded travelers in the Swiss Alps? They are credited with saving more than 2,000 travelers. However, the once-proud dogs have not been used for this purpose in decades.

The advent of the helicopter and heat sensors, the rising cost of feeding the animals and use of swifter golden retrievers and German shepherds forced those in charge to make a radical change and put the dogs up for sale.

What’s interesting about the decision to sell the dogs was the fact that it took almost 50 years of rarely using the dogs for the Congregation of Canons of the Great Saint Bernard to make the needed change.

As travel prices rise, make your strategic adjustments now. Don’t be caught waiting for the Saint Bernards.

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