AAA Corporate Travel Newsletter August 30 th, 2013
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1 AAA Corporate Travel Newsletter August 30 th, 2013 GBTA: Noncompliant Bookings Cost Companies Thousands Per Traveler Annually U.S. business travelers who work for organizations with managed travel programs but book outside of policy on average spent $2,881 more per year than did "in-policy" travelers, according to a survey conducted by Rockbridge Associates for the Global Business Travel Association and Concur. The research was presented during an Aug. 22 webinar hosted by GBTA. Rockbridge in January and February 2013 surveyed 2,415 business travelers and 342 travel managers in the United States, United Kingdom, Canada, France, Germany and Australia. Qualified business travelers had to be employed full-time at a company with at least 10 employees and a mandated or guideline-based travel program, and had to have taken at least one business trip of at least 50 miles in the prior three months and four business trips in the prior year. The study defined "out-of-policy" travelers as those who "did not use the company's preferred reservations tool, chose a higher class or more expensive options that were out of policy for their company." Of the 869 U.S. business travelers surveyed, about 59 percent met this criteria for at least one major expense on their most recent trip, according to the presentation. The study extrapolated the higher spending levels of these travelers especially on hotels across their average travel time during a full year to generate the $2,881 annual figure. Out-of-policy travelers on their most recent trip spent an average of $232 more on lodging than did in-policy travelers, based on an average four-night stay, a full day longer than the average in-policy stay, according to the study. Per night, out-of-policy travelers on their most recent trip on average spent $210, $58 more than in-policy travelers. Extrapolated to a full year, this figure on average would total $2,877 more per out-of-policy traveler than the average in-policy traveler. According to the survey, 14 percent of travelers who booked outside policy on their most recent trip stayed at luxury hotels, while 5 percent of in-policy travelers did so. Conversely, 33 percent of in-policy travelers stayed at what the GBTA presentation called economy hotels, "such as Courtyard or Hampton Inn," while 20 percent of out-of-policy travelers did so. Out-of-policy travelers on average spent $28 more on car rentals on their most recent trip than did in-policy travelers, which would average a total of $314 more per year, according to the research.
2 However, out-of-policy travelers estimated that they spent $2 less on air and/or rail tickets on their most recent trip than did in-policy travelers, or $26 less annually. Yet, out-of-policy travelers more frequently reserved premium-class seats (20 percent in first class and 48 percent in business class) than did their in-policy brethren (6 percent in first class and 26 percent in business class). Data was weighted to reflect similar proportions of domestic and international travel, according to the presentation. GBTA did not explain why in-policy travelers spent marginally more on air and rail tickets, but acknowledged that further research into the matter was needed. "They're behaving almost the same in terms of cost implications," GBTA vice president of research Joe Bates said during the webinar. Out-of-policy travelers tended to be "new recruits," "inexperienced travelers who want to share their adventures," and "enthusiastic travelers who take technology with them," according to the survey. According to the presentation, out-of-policy business travelers (58 percent) are more likely to use mobile apps "related to business travel when they are on the road" than in-policy travelers (37 percent). For this reason, GBTA recommended companies "focus efforts on younger, more tech-savvy travelers" who "are also more likely to use mobile apps for travel," while also looking for solutions that reduce travelers' booking time and increase convenience. Bates said tech-savvy travelers are "also the ones who will tell their buddies, 'I have a new app.' They will help spread the word for the interesting solutions." Last year, GBTA conducted a survey comparing companies with and without a corporate travel program. That research caused some concern because it suggested there were no savings in managing travel. Bates said this year's survey was "completely different" as it included only companies that managed travel programs. Business Travel News, 8/26/2013 AirPlus: Cost Control Is Top Consideration For Travel Programs Cost control unsurprisingly is the most important consideration for corporate travel programs while environmental concerns continue to take a back seat, according to a recent AirPlus survey. Based on a poll of 98 corporate travel buyers in North America between April 23 and May 7, cost control generated an aggregate score of 4.13 on an ascending 1-to-5 scale measuring the influence of various program and policy concerns. Forty percent of respondents indicated that cost control is a "significant" influence and another 40 percent described it as a "heavy" influence. At 3.84 on the 5-point scale, travel safety/security ranked as the second-greatest concern influencing travel programs. It was followed by supplier management and technology integration/data capture, both at 3.42.
3 Green/environmental issues ranked last, with an average score of Employee retention/traveler centricity and virtual travel alternatives also received relatively low scores, 2.81 and 2.51, respectively. Among AirPlus survey respondents including 47 percent from organizations with annual travel spending above $10 million and 20 percent above $50 million nearly 45 percent indicated that travel management within their organizations reports to finance. Thirty-two percent identified the procurement department. "No matter what department is responsible for the travel category, the priorities of travel management remain the same: controlling costs and ensuring traveler safety and security," according to the AirPlus report. Meanwhile, when asked about how the level of "internal" scrutiny on travel management practices changed in the past 12 months, 55 percent reported an increase and 44 percent indicated no change. Business Travel News, 8/28/2013 AA, JetBlue, Virgin add new partnerships American Airlines has started a new code-share partnership to South America, while JetBlue links up with British Airways and Virgin America starts interlining with a Russian carrier. American Airlines customers can now book code-share flights on Brazilian carrier TAM Airlines, based in Sao Paulo, and AAdvantage members can earn miles on TAM-operated flights. The two airlines have started code-sharing on each other s flights between the U.S. and Brazil, and AA s code has also gone onto TAM flights from Sao Paulo and Rio de Janeiro to eight other cities in Brazil. TAM s code goes onto American service from Miami, New York and Orlando to 25 U.S. cities. American said the partnership will complement its own new service from Miami to Curitiba and Porto Alegre, Brazil, starting November 18 and its new Los Angeles-Sao Paulo flights that are slated to launch December 16. TAM is expected to join American s Oneworld global alliance next year. JetBlue Airways has added British Airways as its newest interline partner. Travelers can now book interline travel to London and beyond with connections at New York JFK, Boston Logan, Orlando and Washington Dulles. JetBlue-BA interline tickets can be booked and purchased through British Airways. The interline pact initially covers 18 daily BA transatlantic flights and more than 50 JetBlue domestic routes. Customers will be able to enjoy access to a variety of British Airways destinations beyond London, including Europe, Africa, the Middle East and India, as well as non-stop access to Paris Orly from New York, JetBlue said. At JFK, BA operates out of Terminal 7 and JetBlue is based at Terminal 5. Virgin America passengers have a new international option as a result of the carrier s interline partnership with Russia s Transaero Airlines. Customers can now book a single ticket from Virgin America s U.S. cities to Moscow via connections to Transaero at Los Angeles or New York. The special pro-rate agreement signed between the Russian and U.S. carrier allows passengers to buy tickets for the flights of these two airlines on certain routes at special competitive prices, the companies said.
4 Executive Travel, 8/25/2013 Airline Updates In its latest expansion plans for international service out of Seattle-Tacoma International Airport, Delta said it will begin daily non-stops next spring to both Seoul Incheon and Hong Kong. Delta already flies from SEA to Shanghai, Beijing and Tokyo. Subject to government approvals, the Korean service is set to begin June 2, 2014 and the Hong Kong flights on June 16. All BusinessElite seats on the new routes will recline to a fully flat position, Delta said, with the Seoul flights using a 210-seat ER and the Hong Kong service using a 234-seat Airbus A United Airlines plans to replace the s currently operating on its Australian routes with 777s next spring, according to press reports from Sydney. United flies from San Francisco and Los Angeles to Sydney and Melbourne. Starting in April 2014, the 374-passenger 747s will be replaced with 269-seat, three-class 777s that have eight first class suites, 40 seats in business class and 221 in economy; 117 of the latter will be extra-legroom Economy Plus seats. The 777s also will have individual video screens at all seats in every class, which the 747s don t offer. Spirit Airlines said it will add seasonal service later this year from Minneapolis-St. Paul to four new cities. Effective November 7, Spirit will begin seasonal flights from MSP to Los Angeles, Orlando, Phoenix and Tampa. It currently operates year-round service from MSP to Chicago, Dallas/Ft. Worth and Las Vegas, as well as summer seasonal flights to Denver and winter seasonal service resuming November 7 to Ft. Lauderdale and Ft. Myers. Executive Travel, 8/25/2013 Report finds airlines could do more to keep customers loyal A new study of airline passenger behavior and preferences finds that travelers aren t as loyal to their preferred airlines as they could be and it suggests that carriers should do more to customize and personalize their interactions with frequent flyer program members. The Travel, Hospitality and Leisure division of the consulting firm Deloitte surveyed more than 2,500 U.S. air travelers about their loyalties to specific carriers, and concluded that perhaps at no time in recent memory is brand loyalty under such duress. The survey found that about two-thirds of all the respondents were at least open to switching to a competing (airline) loyalty program even after achieving highest status level, Deloitte said. It noted that high-frequency business travelers stood out from the crowd (which also included high-frequency leisure travelers and low-frequency business and leisure travelers) by placing much more importance on an airline s loyalty program rating it even more significant to them than safety considerations.
5 For high frequency business travelers, the range of an airline s route network was the most important consideration, followed by its loyalty program; safety ranked third. For the other traveler segments, an airline s loyalty program ranked 18th or 19th out of 26 attributes. More than one-third of high-frequency business travelers belong to four or more airline frequent flyer programs, the study found. For some travelers, membership in a specific airline s loyalty program isn t necessarily a matter of choice, but rather a reflection of that airline s dominance of service in the person s home airport, Deloitte noted. In any case, Deloitte said its survey findings suggest that airline loyalty programs fail to inspire brand loyalty with a large number of travelers, particularly within the highly coveted business traveler and high-frequency groups. In follow-up focus groups it conducted, Deloitte said, participants overwhelmingly...reflected the sentiment that airline loyalty programs were too commoditized. As one focus group participant succinctly said, I don t want something everyone else is getting; give me something for me. The different traveler segments in the survey did not always agree on what was most important about a frequent flyer program. For the low-frequency flyers, ease of redeeming points was ranked the number one attribute; but for high frequency business travelers in the survey, having more opportunities to earn miles or points was ranked first. Likewise, 47 percent of business travelers and 68 percent of high-frequency business travelers viewed access to airport lounges as important or very important compared to only 40 percent of all survey respondents, Deloitte said. The company concluded that airlines are making a mistake when their frequent flyer program presents a one size fits all approach to members, with everyone getting the same benefits and the same earning capabilities. Loyalty membership databases are overflowing with information about customer demographics, travel preferences and profitability, Deloitte observed. Airlines should consider whether there is value in taking a data-driven view of the experience attributes and engagement preferences most important to each customer segment, and then evaluate the resources and infrastructure required to deliver. The study offered some specific examples of how airlines could leverage their customer data to create targeted offerings for loyalty program members: Airlines could analyze the destinations that high-frequency travelers visit most often, and offer them special discounts for hotels and restaurants at those destinations. Study which customers usually buy a glass of wine or cocktail with an in-flight food purchase, and offer them a free drink the next time they buy an in-flight meal. Airlines should show a greater willingness to forgive lapses in loyalty program membership participation, Deloitte said. Airlines should think twice before a high priority customer has to start all over again to regain status. Executive Travel, 8/25/2013
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