How much is business travel costing your business?

How much is business travel costing your business? article image

With airline fuel surcharges on the rise and prices for premium and business class seats also creeping back to pre-GFC levels, exporters need to be buying their airfares strategically to drive maximum savings. For many exporters that have employees travelling on a regular basis, airfares will be one of the highest costs for your business. Fortunately the cost of air travel is also where companies can save the most. With the right advice, smart policy and discipline, exporters can significantly reduce the cost of air travel and garner more value from your outlay on travel. A number of airfare studies conducted by FCm Travel Solutions reveal there are a number of ways exporters can reduce air travel costs. One of these studies analysed ticket prices that had been bought using ‘best fare of day’ policy. FCm conducted the study to show companies what the cost and savings impacts were when a best fare of day strategy was used to purchase tickets for domestic travel. When companies use a best fare of day strategy to buy airfares, they are booking the cheapest available fare across all carriers servicing that route. A best fare of day strategy can be used for domestic and international travel. The study was conducted between 1 January and 31 March 2011 and analysed ticket prices across airlines for 160,078 one-way trips using fare data from FCm’s portfolio of Australian clients. As part of the study the average price of all ticket types sold for a single-leg journey were compared to the average price of tickets bought using best fare of day. A selection of 20 domestic routes showed that by using best fare of day, companies could save on average between $11 to $154 per one-way trip. The top five routes for savings included:

  • $154 on the Melbourne to Perth route
  • $144 on the Perth to Sydney route
  • $136 on the Brisbane to Perth route
  • $89 on the Brisbane to Melbourne route
  • $83 on the Adelaide to Perth route.

If best fare of the day or cheapest available fare is used by every traveller across your company for every export trip, the strategy has the potential to chip thousands of dollars off the cost of air travel. Do you need flexibility? But, while best fare of day is an excellent method of reducing air travel costs, travellers should be wary that conditions attached to the ticket may not suit your style of travel. Generally these are fares with no flexibility for changes to flight times, names or dates. These ticket types are most suitable for travellers that know their travel plans are not going to change. [Continued]

FCm recommends exporters look at using a combination of ticket types to optimise savings. If travellers know what date they need to fly out but are unsure what day they need to return, smart policy suggests using a restricted ticket (best fare of day fare type) for outbound travel and a flexi-ticket, that allows changes free of charge, for inbound. It’s essential your travelers are buying the right fare to suit their travel needs and know which type of ticket is most suitable for travel to events such as internal meetings, training or conferences, which are of a fixed nature versus new customer/prospect meetings that may need flexible conditions. Exporters that book airfares through a dedicated business travel manager are in the best position to take advantage of this strategy as a travel manager can help to monitor the use of best fare of day and they also have the technology to search, track and select the best fare within minutes. Advance and combination fares Export companies can also look at using ‘advance purchase’ to save on airfares. A 2010 study by FCm showed companies could save on average up to 72 percent on the cost of their domestic air tickets by booking 21 days or more in advance of their departure date. Travellers booking international tickets in advance also have the potential to save on selected routes by up to 50 percent on the cost of a ticket. Generally, last-minute tickets are more expensive, as the cheaper seats, which are fewer in volume sell out first. The availability of different booking classes on airlines around the world is dictated by a range of factors including season, demographic, fare restrictions, market (domestic or international) and inter-airline agreements. Using ‘mixed-class’ air tickets for long-haul journeys can also help to reduce costs and provide staff with an added level of comfort if they need to arrive fresh and ready to focus on core tasks as soon as they touch down. For example a traveller heading to Europe with an Asian stopover can fly Brisbane to Asia economy class and then on the longer leg of the journey (Asia to Europe) in premium economy or business class. Exporters can introduce policies around cabin class according to the length of the flight, employee seniority or even as part of an incentive model. It’s also crucial that exporters stay abreast of inter-airline agreements between carriers to stay ahead of market trends and capitalise on industry changes. The ability to interline with multiple suppliers and achieve better rates by negotiating unique deals under these circumstances could provide greater overall value for an exporter’s spend on air travel. Industry examples include: the Virgin group’s alliances with Etihad, Delta Airlines and Air New Zealand and British Airways’ with Iberia in Europe. While every business will have different requirements, a clear travel policy that is implemented and monitored by an experienced travel management company, will produce tangible long-term benefits for your operation. When airfares are booked by a travel manager with expert knowledge and understanding of airfares your business is in the best position to weather market and price fluctuations now and in the long term.


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