The MacNair Travel Leadership Blog

What Flat Airfares Mean for Your Travel Program

Posted by Mike MacNair on May 12, 2016 12:00:00 PM

What Flat Airfares Mean for Your Travel ProgramCorporate business travel is an important part of a globally relevant SME’s strategic plan. To remain competitive in this real-time, instantly connected work environment, businesses must seriously consider the benefits and risks associated with travel, and make decisions that create successful outcomes for their company. When budgeting with $5M or less for your corporate travel program, it’s vital to look forward and understand how projected travel trends will impact your SME’s bottom line.

The Business Travel News (BTN) forecast states that airfares will remain relatively flat in 2016, pending continued stable oil prices, which means good news for your corporate travel program. As the second largest controllable expense within your travel and entertainment (T&E) budget, relatively consistent airfare prices means increased control and visibility into your overall corporate travel budget and in fact, provide additional opportunities for cost savings.

Encourage your finance and travel team to find additional opportunities and possible challenges that may impact your T&E line item. Following are key items to consider to further evolve your corporate travel program, while efficiently managing travel and entertainment expenses.

Potential savings from low-cost carrier options

With the ability to move and change much more quickly than their larger counterparts, low cost carriers will increase their availability of competitively priced domestic and international flight options for travelers. When considering flights, be sure to investigate their pricing and assess the options that exist for your road warriors, to see if they make sense for your traveler and your budget. Utilizing a low cost carrier can create savings that positively impacts your bottom line, and provide a more personalized trip for your travelling employees.

Ancillary fees impacting both budgets and travelers

The potential airline ancillary fees that affect your budget, while they seem small, can add up very quickly. The use of Wi-Fi and inflight entertainment, expedited security line access and airport club availability are just a few of the airline ancillary fees that have the potential to severely impact your budget. According to recent information from IdeaWorks and CarTrawler, airline ancillary fees were projected to be more than $5 billion in 2015. That’s a lot of money hitting your SME bottom line.

In order to properly manage your T&E line item, and to benefit from flat airfares, consider what ancillary fees are appropriate for your road warriors and if they align with your overall corporate travel program objectives. If your business requires a lot of international travel, for example, paying more for in-flight Wi-Fi access may be appropriate.

The Global Business Travel Association (GBTA) and BTN give full lists of possible ancillary fees for your SME to consider as you continue to update your travel policy. Ancillary fees that are properly managed and included in your corporate travel policy contribute to overall control within your travel program and increased compliance from your travelling employees.

Innovative aircraft design

Airlines are becoming increasingly creative in the design of their aircraft, making travel more effective, especially for business travelers. Passenger seating reconfigurations, the availability of charging pads and tablet holders are allowing travelers to be more productive while they travel. Overhead bin sizes are being adjusted to accommodate the larger number of traveler carry-ons.

As you contemplate the options for your traveling employees, be sure to consider which airlines offer these added improvements. Innovative aircraft designs can increase your traveling employees’ productivity and overall satisfaction while on the road.

Increased complexity in airline flight cost details

Even with flat airfares predicted, airline carriers still reported record profits in 2015. According to the International Air Transport Association (IATA), the global airline industry recorded a net profit upwards of $33 billion, with North American carriers recording the highest margins – almost double compared to the next best performing regions. These record profit margins make it difficult for corporate travel buyers and finance executives to effectively compare airline prices. The systems by which airlines operate allow some airlines to conceal their fees, making the true cost of travel more difficult to compare.

Utilizing the services of a travel management company (TMC) can help you navigate this complex fare and fee system when planning airline travel. Their knowledge and expertise, as well as industry relationships provide the necessary support to ensure your business is getting the best, most cost-effective ticket for your travelers. This support will not only increase overall control and compliance with your corporate travel program, but can positively impact your overall T&E cost savings by 10-20%.

Increased availability of point-to-point international flights

Globalization means increased international travel. The airline industry has appropriately accounted for this increased need for travel by introducing new point-to-point routes such as Washington-Lima and Oslo-Miami. As you plan your travel for the rest of the year, stay in-tune with new offers that airlines may propose, as these shorter flight times increase overall productivity for your employees…less time in the air, means more focused work time, happier travelers and increased business success.

There’s no debate that flat airfares will help keep T&E costs at a manageable level this year. A smart, forward-looking finance director will consider all options to ensure a long-term, cost-effective T&E budget, and explore new opportunities for corporate travel. Through efficient tracking and managing of the opportunities and challenges that may exist right now, your corporate travel program can become a driver of success for your business.

What do flat airfares mean for your corporate travel program? Please share your insights below. Interested in learning more about the 2016 travel trends that SME’s need to consider? Download our whitepaper, 2016 Trends in Corporate Travel Management for the SME Marketplace for additional information.

2016 Trends in Corporate Travel Management for the SME Marketplace

Topics: Travel Trends