Inside the Mind of a Travel Buyer
What airlines need to know about how companies write their travel policies
Think of business travel and you might imagine first class flights, bottomless champagne and all kinds of razzle-dazzle before considering the 615am all-economy Aer Lingus flight from Gatwick to Dublin.
Business travel sounds more exciting to people who do not actually do it. The actual experience is more grind than glamour.
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As a regular traveller myself one of my Clients, an airline supplier, recently asked me to help them redesign their travel policy. I wanted to make it easy for them to keep costs reasonable. But I also wanted to make life on the road as easy as possible for the team.
Along the way, a lot of issues came up that are more closely related to how people buy travel rather than actually experience it. We also covered some swizzes, swindles and outright scams that travelling employees sometimes find tempting and which employers should know about.
It was a great opportunity to get into the mind of a corporate travel buyer and I thought that you and my other reader would find it interesting.
Welcome back to Airline Revenue Economics – I hope that you had a great summer.
Travel is not a perk
Business travel is not a perk. The chance to see the world and earn some airmiles may be a privilege, but buying an expensive plane ticket and using up days of employees’ time, including their personal time, is not something to be done willy-nilly. Employees travel for a good reason and should not be expected to feel grateful.
Unfortunately at many corporate travel buyers the people who set the policy are not the ones who actually do the flying. They understand costs, budgets and their statutory obligations towards employees. It is easy for them to imagine everyone constantly in the glamorous world of business travel that only rarely exists.
They question the value of letting the good times roll on the company dime and they are right to do so. But it is easy for them to go too far.
If the travel policy is to always fly at the front and stay in the best hotels on whatever schedule the employee desires then no travel policy is necessary.
Unfortunately most budgets cannot offer such largesse and when such a “policy” collides with the flight schedules and hotels actually available at the time of booking travellers may often prefer a little less pizazz.
Travellers new to the game think that visiting a luxurious resort will be amazing. Regular travellers know that they do not want to be the guy who, after a late arrival, drives for two hours each way to reach the Banyan Tree only to actually spend four hours in the bed before leaving.
The best people to judge what is right for travel are the travellers themselves. My top tip is to ensure that the travel policy is approved by the people who do the actual travelling and this was one of the key things I recommended to my Client.
Action for airlines: Corporate sales teams should understand the difference between travel buyers and actual passengers.
When a corporate deal is already in place and up for renewal they should use the airline’s customer research system to engage directly with people who have travelled under a corporate fare. This valuable feedback can be used in meetings with the corporate buyer to demonstrate how the airline is meeting their travel needs.
When the sales team is in the running for a new deal, feedback about schedules, product and reliability from business travellers at “similar companies” can be used in the same way.
Corporate travel buyers are human – most want their travelling employees to have a good experience and will think beyond price with a little prompting. Feedback like this is just the sort of thing they need to start thinking about the value your airline offers rather than just the price.
Choosing the right cabin should depend more on frequency than seniority
At an OEM I am aware of, all travel less than four hours is economy and everything longer is business. This applies to everyone, no matter how senior or junior.
At an airline I know, travel is economy everywhere for non-management staff, business everywhere for managers and first class for the C-suite.
Both are typical of travel policies that have not really been thought through. The first rewards distance flown and is thought to be ‘fair’, the second seniority. In fact, both criteria are arbitrary and both policies are flawed.
A much better guide to the cabin required is how often an employee is actually on the move. Remember that business travel is not a perk. If somebody is on the move for the business there should be a good reason to get on that plane.
A big cause of stress on shorthaul is the airport experience. Running bags through scanners, walking from security to gate and gate to passport control, queuing and then getting to the taxi rank all in a few hours gets old fast.
Giving regular short-haulers a more comfy seat, access to the lounge and a bonus boost towards airline status and points is a small price to pay for them to mitigate the stress of the airport experience. In regions where airports have heavy security theatre, long immigration queues and lots of arm-waving this becomes even more important.
Quite often on shorthaul the extra price for a premium cabin is only a few hundred Dollars more, although there are one or two markets like the middle east where local first class can be five to ten times the price of economy. Since business travel is not a perk, I advised my Client to consider shorthaul upgrades a spending on employee wellbeing.
When it comes to longhaul, your favourite airline revenue economist is suspicious of any reasonably-sized organisation who decides to send people in economy, no matter how junior they might be. Given the time required, if taking a flight is not worth the money for first or business class, or at least premium economy, why is it even being taken at all?
At my first employer the policy was premium economy as a minimum but business whenever possible. It turned out that business was possible most of the time, especially when a one-stop flight saves thousand over the direct route. I still think that this is a good policy today.
But this does not mean that everybody will always choose to go business class. Consider a short-ish flight like Dubai to London for example.
Arguably a direct flight in premium economy is “better” for some people than business class with a stop, because by the time you have flown to Doha or Riyadh and then connected you would have been more than halfway to your destination. I advised my Client to give their employees some flexibility within the travel budget for this reason.
As a final point, it is not desirable for longhaul travellers with a shorthaul connection to be placed in economy on the local flight, especially when there is no fare difference.
Action for airlines: Corporate sales teams should attempt to “upsell” the travel buyer on deals requiring both business and economy class fares. Understanding the value proposition of premium cabins like rest, wellbeing, time to work and doing a better job on arrival is essential.
Shorthaul connections to longhaul premium should not be cheaper when booked into economy, although it may be worth filing economy connection fares at the same price point in case premium cabin capacity runs out.
When I was at Qatar Airways we filed special business class fares on shorthaul routes around the middle east that did not feature this cabin. The business class tickets came with a free guaranteed upgrade to first at the time of booking. We did this because the corporate did not want to be seen to be buying first class tickets. Corporate sales managers for airlines should be similarly flexible.
Business buyers & business travellers do not own their points
It is not uncommon for business buyers to attempt to constrain the ability of their employees to earn or use the miles and points an airline rewards for travel.
Some organisations, especially in the public sector, state that their travelling employees may not earn any reward from the airline. Others may try to require that their employees use points earned on business travel to be used on business travel. Both approaches are flawed.
Read the terms of any airline frequent flyer programme and you will discover that the miles and points are owned by the airline and awarded at the airline’s discretion.
The decision to award them or not is not taken by the travel buyer, so employees can safely put their loyalty number in the booking. Aside from the ability to earn points, there are good reasons to do this – airlines may offload people without a loyalty account first in the case of overbooking and if something goes wrong like a flight gets cancelled or a bag lost it might be easier to get help with the account stored than without it.
Since the points are owned by the airline, a business cannot require it’s employees to use the points for it’s own travel either.
The travel policy owner at my Client was most interested and indeed surprised to learn these two things. Fortunately they are a ‘good’ employer who do not try any nonsense regarding points, but the fact that they were unaware was interesting.
I also advised my Client to let employees know that they are not only free to earn points from travel, they actually should.
Action for airlines: Corporate sales teams should resist any attempt to negotiate special fares that do not award miles. Loyalty is a profit making power-house for many airlines and the financial markets look on loyalty as funky fintech rather than boring-old airline ops.
Today’s corporate traveller may be tomorrow’s premium leisure buyer too. The long-term benefits of giving them points could be significant. So even if the only way to win the contract is to offer a discount for no mileage awards, why not give the points anyway.
Many airlines have designed a business travel rewards platform, so SME travel buyers can play the miles and points game too. The Qatar Airways one when I was there was called Qbiz, now Beyond Business.
My own company has an OnBusiness account with BA, Iberia and American Airlines, although using the points has been a problem recently. But that is another story...
Travel swizzes & scams
There is no doubt that most employees are honest when it comes to reclaiming travel expenses. A good travel policy will allow employees to reclaim against reasonable receipts without too many questions.
However just as travel agents sometimes abuse the booking process (leading airlines to use revenue integrity) rogue employees sometimes get a bit naughty with their travel. Some of the more serious things I mentioned to my client include:
1. Booking flexible tickets, getting a receipt to claiming against and cancelling the ticket then buying a cheaper one, possibly one with their points
2. Booking a premium cabin on the company dime, buying their husband or wife an economy ticket and letting their spouse travel in the plush seat paid for by the employer.
These are outright fraud and should be a disciplinary matter.
But there are also some other things that are not quite fraud but are still rather morally dubious, such as:
1. Volunteering for denied boarding and a flight the next day, pocketing a hefty slug of cash and hotel compo from the airline in the process – this might not matter for an employer if the next day is the weekend or a holiday, but if the next day is a working day it could be an issue
2. Booking more expensive flights than necessary just to earn the points – spending a little extra to fly with a preferred carrier or stay in a certain hotel is probably not unreasonable – I advised my Client to let employees know in a friendly way that they can choose their airline within reason, but when good alternatives are significantly (typically several hundred to thousands of Dollars) cheaper these should be used instead.
I advised my Client to be aware of these issues but to trust their employees until a cause for concern arises. Good communication with employees is also important, such as simply pointing out to travellers that they are expected to act in good faith, not give things the company pays for to others and use the company’s resources as if it were their own.
Action for airlines: None in this case.
Where saving money leads to mistakes
Some companies do not pay for business or first on long flights, but will allow employees to arrive a day early. I advised my Client against this.
For sales teams this is a terrible idea – by the time your sales team have met the customer, there is a good chance that your competitor has already sealed the deal and is flying off, seated comfortably in a flat-bed, to steal your next customer.
Even for non-sales teams this is incredibly wasteful of time. Remember that business travel is not a perk and there should be good reasons for an employee to get on a plane.
Action for airlines: Remind travel buyers of the value of employees’ time, possibly couched in a discussion of how the airline’s schedules are convenient for the corporate’s travel needs.
Who should pay
A tricky question that all corporate travel policy writers need to answer is who should book and pay for plane tickets. There are three options:
1. All tickets are booked through a corporate travel agent, so the company pays up front
2. Employees buy their own tickets, either directly from an airline or their own travel agent
3. Employees choose whether to buy themselves and reclaim on expenses or use the corporate travel agent.
Travel agents can do a lot of great things. Want a complex itinerary, a ticket on “tricky” airlines issued by Hahn Air or a back-end rebate? The corporate travel agent is your friend.
But agents also charge a fee, increasing the cost of travel, and can be much harder to deal with than airlines. If an employee wants to upgrade a cabin or two at their own expense or change to another flight during the busy part of the booking window this can be easier and faster when done with the airline than an agent.
I advised my Client, who is a mid-sized company and not a giant, that they should have an agent so employees do not need to worry about carrying travel expenses on their personal credit cards. But I also advised them that for employees who book reasonable flights within policy, if they want to do so directly with the airline that should be their decision.
When I travel for work I normally give my Clients an all-inclusive price that includes all travel. The downside is that I need to wait and carry expensive plane tickets until the invoice is paid and I get the money. But the upside is that it gives me freedom to book what works for me.
Different flight times work for different people
Give me the choice between flying the night before or taking the 615am departure I will personally always take the option to fly the night before. I have also been known to take late flights back arriving 10pm or later as I am a bit of a night owl.
But some other people love that 615am flight because they are morning larks or like to spend the night at home with their family.
A good travel policy will allow employees to set their flight schedule to what works best for them. As always, travel for work is not a perk and it’s hassles are enough without inconvenient starts or returns.
The currency conundrum
Any organisation with serious business travel will inevitably need to process receipts where the traveller pays in one currency yet needs to be reimbursed in another. Some expense management systems impose all sorts of rigmarole, with fixed exchange rates based on the time of claiming the item or without the standard 2.99%-ish credit card FX fee.
I advised my Client to treat these cases simply and let employees enter amounts in their own currency, based on whatever is on their credit card bill or whatever rate they got at a currency exchange.
Advice for airlines: Almost all airlines force passengers to pay for tickets in the currency of a flight’s origin. This is so it can be added to the local sales team’s budget. The workaround is simple, to call your own country’s ticket sales line and buy in your own currency, but can be time consuming or inconvenient.
In the interest of good customer service I would recommend all airlines to allow people to buy tickets in any currency they deal in.
Now something completely different: an airline hymn
Last week the BBC, the UK’s state broadcaster, came to my family’s local church St George’s Jesmond to record Songs of Praise, a well-established Sunday-night staple. We spent two and a half hours singing ten hymns again and again while being stared at by cameras so they could get the footage they need. It is a great thing to have “done”.
One of the hymns was Hills of the North Rejoice, which is one of my favourites. Not only does it have a hammering tune, I think is a great airline hymn because it speaks of linking the regions of the world. Here are the words:
Hills of the North, rejoice,
Echoing songs arise,
Hail with united voice
Him who made earth and skies:
He comes in righteousness and love,
He brings salvation from above.
Isles of the Southern seas,
Sing to the listening earth,
Carry on every breeze
Hope of a world’s new birth:
In Christ shall all be made anew,
His word is sure, his promise true.
Lands of the East, arise,
He is your brightest morn,
Greet him with joyous eyes,
Praise shall his path adorn:
The God whom you have longed to know
In Christ draws near, and calls you now.
Shores of the utmost West,
Lands of the setting sun,
Welcome the heavenly guest
In whom the dawn has come:
He brings a never-ending light
Who triumphed o’er our darkest night.
Shout, as you journey on,
Songs be in every mouth,
Lo, from the North they come,
From East and West and South:
In Jesus all shall find their rest
In him the sons of earth be blest.
Hills of the North – for me that’s the highlands of Scotland, main airport Inverness, where I spent summer holidays as a student
Isles of the Southern Seas – I think of Port Vila Vanuatu, airport code VLI, where I did a short transformation project for Air Vanuatu in 2019
Lands of the East – so much of my career has been in the east – Qatar Airways, Vistara, the Chinese airline consortium and more
Shores of the utmost West – Los Angeles, LAX, where I worked with Thales on Qatar Airways’ IFE system
Lo, from the North they come, From East and West and South
That’s you – the readers of this blog! Thank you for reading Airline Revenue Economics.
oliver AT ransonpricing DOT com
Airline Revenue Economics is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.