I was on the phone with a customer recently, working with them on developing the details of a travel management program for their organization. One topic that we covered on the call – which turned out to be one of the biggest challenges for this person – was when to purchase a non-refundable or refundable ticket; and then, how to be sure that unused, non-refundable tickets were being tracked and eventually re-used by the traveler. What was the best way to manage, and in turn maximize the use of this large travel and entertainment expense line item?
Refundable vs. Non-refundable
One way to maximize the use of your airline tickets is to develop a plan for purchasing either a refundable or non-refundable ticket. Airlines give both options for business travel, but refundable tickets cost much more than the lowest available fare for each particular class of service. Airlines know they can charge more money to set a seat aside for you - whether you show up or not.
On the other hand, travelers receive a discount for purchasing a non-refundable ticket, thereby (almost) guaranteeing that you will be on the flight. Airlines have these options built into their flight algorithms and in turn manage flight logistics appropriately.
As the manager of travel for your business, the challenge is in deciding what type of ticket to buy for whom, and in what particular circumstances. Is the traveler’s time so important that flexibility is imperative? Is the ticket purchased by a client, or does it come directly out of your bottom line? Does the traveler’s schedule require some leeway in booking a flight? Is there a life event, or potential risk that a traveler may experience that requires a possible need to change the ticket? These types of questions need to be considered when exploring the value of purchasing a refundable or non-refundable ticket.
Your best option? Take time to decide what’s best for your business. Analyze a number of possible scenarios and evaluate the cost differential between the two potential ticket purchases. Use these numbers to determine your tolerance level for approving, or not approving, the premium pricing. With this approach, you’ll have a better idea of the impact on that ticket purchase for your business. One size does not fit all in this situation, and every business differs. Once you have this plan in place, be sure it is clearly communicated to your travelers, and becomes a part of your travel policy
Tracking unused tickets
Another way to maximize the use of your airline tickets is to track the unused tickets. Let’s face it - in today’s global business world, travel can change unexpectedly, and even the most well-thought-out itinerary can be upended in a moment’s notice. When airline tickets need to be changed or cancelled, a fee is charged. According to the Department of Transportation, airlines charged a total of $2.98 billion in reservation cancellation/change fees in 2014. This is one way that airlines generate additional ticket fee income.
Many times however, when airline tickets are changed or cancelled, travelers are able to use that ticket at another time in the future. (A quick note – before you actively change and/or cancel flights, be sure that policies for each airline are clear – either through the airline itself or through your travel management company (TMC.) As an example, here is the “Refunds” page from Southwest Airlines web site.) This is great news for the business traveler, right? Yes…as long as each ticket is appropriately managed and tracked to ensure that it is used again.
A challenge to this exists if your travelers do not follow policy, and book their travel through multiple sites, not through your business’ online booking system. In this scenario, it’s very hard for you or your rogue traveler to keep track of this unused ticket, and the likelihood of its being used again in the future is very low.
If your traveler has followed policy and booked the itinerary through the preferred channels – either your online booking system and/or your TMC, the ability to track this ticket becomes much more likely. While some online booking tools have a way to appropriately annotate an unused ticket option in each traveler’s profile, not all have this ability.
This is one of the greatest values that TMCs offer today. When you work with a great TMC, they can be sure to track all unused tickets, and provide a reminder for travelers or travel managers that this ticket is available for booking future travel. In addition, TMCs can help with the “exchange” of a ticket; where the value of the unused ticket is put towards the value of the new ticket. That way, the “cash” that was used to purchase the original ticket is not completely lost and this relationship with the TMC can be better leveraged throughout your business to create enhanced travel program value.
Maximizing the use of your airline tickets can prove to be a huge benefit to your business. Savings is recognized in your travel and entertainment line item, and data becomes available to assess how and when airline tickets are being purchased, cancelled or changed. When you take time to consider the needs of your business and balance that with the needs of your travelers, everyone benefits.