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Travel Management

 October 14, 2010
FCm: Corporates Continue To Evolve Cost Control Strategies For Greater Savings

 Corporates looking to achieve maximum savings on their business travel in 2011 will be focused on evolving their cost control strategies to suit the changing market conditions, according to FCm Travel Solutions.

FCm's executive general manager Asia Pacific Rob Flint said corporates would be reviewing cost control strategies and making necessary changes or updates to ensure travel programs continued to deliver savings in the post-GFC market. He said the ongoing focus on controlling travel expenditure would see travel management companies (TMCs) working closely with clients to review and update travel policies and tailor strategies to improve traveller buying and booking behaviour. TMCs will also be using benchmarking to gather more in-depth airfare intelligence and creating program efficiencies for clients with the help of online booking tools.

"As a result of developments in the travel industry, we expect updated travel policies will include new mandates around booking procedures and purchasing practices. For some clients this may include guidelines around aspects such as airfare bookings so that 'hidden' costs incurred through undesirable booking practices are minimised or avoided. It's likely we'll see greater implementation of policies to prevent excessive rebooking of the same air itinerary, which is commonly practised to circumvent ticketing time limits; tighter control over the types of tickets travellers are purchasing and how far in advance tickets are being purchased.

"The emphasis will be on educating in-house travel bookers, procurement managers and individual travellers on best practice across all of these aspects to avoid unnecessary costs.

"Corporates will also be more closely monitoring the spending habits of individual travellers to gain a better understanding of how, where and why their travel dollars are being spent. As part of this, companies will be reviewing the return on investment (ROI) of individual traveller costs and asking if the business outcomes produced by a travelling employee is generating sufficient ROI for the outlay."

Mr Flint said TMCs would also continue to benchmark low cost carrier (LCC) fares against full-service airline fares to ensure clients receive the most up to date airfare guidance available.

"As the visibility and service offering of LCCs increase, corporates need access to timely data on what the best procurement strategies are for their air travel. For business travellers that require more than just a basic seat and some level of flexibility, a 'no-frills' fare on an LCC may not be the most cost effective option," he said.

"Extra charges for features such as booking changes, cancellations, airport check-in, assigned seats, checked baggage and onboard amenities such as food and in-flight entertainment; may triple the cost of the cheapest no-frills fares, making them comparable to or more expensive than full service airline fares."

In addition, if there are service delays on an LCC that operates during off-peak times or on a reduced daily schedule, the productivity loss when a senior manager is left waiting for another flight can be a costly outcome for companies where time is money.

Benchmarking will also be used to show clients how their travel programs compare to other clients with similar sized travel programs.

Mr Flint said that while business sentiment had improved dramatically across Asia Pacific, he believed corporates would remain acutely focused on modifying cost control strategies as a way of adapting to future changes in the marketplace and to ensure savings were achieved over the long term.