By Olivier Benoit, Senior Director and Practice Area Leader, Air, Advito
On the 26th of September, I had the opportunity to participate in the second Turkish Airlines’ Corporate Club Conference that took place in Istanbul, Turkey. This large and truly global conference is designed for members of the Turkish Airlines Corporate Club, its corporate travel program. The airline recognizes its buyers for their business, solicits feedback on its services and delivers the latest in corporate travel news and trends.
As a member of the GBTA Europe Aviation Committee, I joined the “D’Air to Be Different” panel moderated by Paul Tilstone, managing partner of Festive Road. Rüdiger Bruss, global category manager of Travel Mobility Services for Continental AG, and I explored the evolving relationship between airlines and buyers.
As a starting point, the basic question is why are airlines and corporate travel buyers talking to each other? And the answer is just as simple – it is because the relationship creates value on both sides. On average, for a global corporation with a business class travel policy for long-haul flights, 10% of the segments represent more than 50% of the revenue for the airline. Volume matters, quality of yield even more. Thanks to the negotiated pricing terms a global travel program can generate more than 20% savings.
While pricing terms tend to be the biggest area for savings, there is a new trend developing. Corporate travel culture is changing. It’s shifting to a more holistic return on investment approach that takes traveler satisfaction into account. It also includes added-value items, on-time performance, distribution costs and innovation. Look beyond supplier relationships with airlines and consider strategies to manage demand and traveler behavior.
Another takeaway from the panel is that this buyer-airline relationship can be more effective. It appears as though both airlines and buyers agree that the good, old-fashioned RFP process is behind us. It is no longer just about full, yearly sourcing. New practices have emerged such as multi-year agreements, the “Turbo” RFP and ongoing performance management.
Finally, it seems there is never a panel without a question about the impact of NDC implementation. Buyers shouldn’t worry about the NDC standard itself; it’s just an IT schema that should be transparent. Buyers should raise their voices and engage in discussions with airlines to influence how airlines will build personalized offers and how they will distribute them.
For an idea of what ongoing RFP and performance management looks like, please see our Dynamic Performance Management offering. And be sure to follow Advito on Twitter and LinkedIn for the latest in corporate travel news and trends.