Airline Contracting in 2021: Best Practices for Travel Programs

Posted in Blog
Ryan Hohag

By Ryan Hohag, Air Practice Director

In part one of our blog series on airline contracting, we covered what to expect with airline policy and pricing trends, and the importance of understanding your company’s business travel needs going forward.

In this post, we’ll cover best practices for addressing the changing landscape and how to get the best results from your available data.

First and foremost, use your 2019 data as a baseline when working with other stakeholder groups to forecast business travel recovery scenarios since it is a full year and provides maximum spend potential. Map the changes that will impact your footprint (will your sales team shift to all virtual sales calls? Are internal meetings going to be happening? Etc…) and factor in other organizational changes that will affect your travel policy. A great approach is to use a “what if” scenario modeling tool to forecast spend and map out a range of scenarios from conservative to aggressive based on the speed of recovery and recovery start date. Eventually, you’ll be able to match forecasted demand scenarios to future supplier offers, allowing you to identify which air suppliers to include in your portfolios and adjust negotiated terms to your ever-changing needs.

Now is the time to integrate new goals and changes into your program build the business travel program you want. Prior to 2020, there was already a shift away from traditional sourcing, as the process has become outdated and cumbersome. Now is the time to focus on a dynamic contracting approach that allows you to customize fares and routing within contracts that work for you and your shifting travel and air program needs.

Looking deeper into 2020 data (even if you had little to no travel post-Q1) can answer a few key questions, like: What is my essential business travel? Did my traveler purchase behavior change in the wake of changing supplier health & safety protocols and more flexible pricing? Were my travelers compliant with policy changes, travel restrictions, preferred booking channels, and preferred suppliers? And finally, How have my historical partners supported us throughout the year?

Other best practice to consider:

  • Multi-modal approach: Air, Rail, Car- Shifting towards a multimodal approach to business travel by finding the right mix of air and rail will optimize spend, reduce carbon emissions, and increase traveler productivity and satisfaction. By integrating your approach, you will drive increase your negotiation leverage and drive more competitive rates from suppliers across your portfolio.
  • Align your program with forecasted spend rather than historical spend– Work with your internal stakeholders to better understand future business patterns and goals. Use these projections to cultivate a group of suppliers that support the future of your business needs and build a program that matches your projected travel footprint, rather than relying too heavily on patterns from the past. Nearly every industry has changed, and your business has likely changed as well.
  • Review your travel policy – Use this time of change to review your policy and see where you can add guidance that better aligns with today’s climate. Make adjustments that account for traveler comfort level, supplier inventory, sustainability goals, and essential business needs.  For example, many companies are allowing more trips in business class and premium economy to address social distancing concerns.
  • Consider the changing industry landscape – Travel suppliers are still feeling the effects of the pandemic, and that means we will continue to see a shortage in inventory, consolidation of network coverage, and schedule changes. Consider how these changes will impact your policy (days advance purchase for example) and traveler satisfaction (personal preferred airlines and time preference), as well as how they will affect coverage as your travelers are ready to get back on the road.
  • Look at supplier biosafety measures – Each airline and airport are setting their own standard of safety and sanitation. Make sure your travelers are educated on the measures being implemented by your airline partners, as well as the cities and airports most frequently visited. Don’t forget to continually check and update quarantine, vaccination, and masking requirements.
  • Reevaluate your commitment to sustainability – Use this reset as an opportunity to examine your travel program’s sustainability goals and find areas where you can educate travelers on the importance and impact of each decision made. Examine how your partners are working towards a more sustainable business and make sure it aligns with your internal goals. When considering airline partners, look at different factors such as fleet, sustainable aviation fuel purchases, on-board sustainability and offsetting practices. Use the right methodology to accurately measure your business travel emissions and ensure you’re meeting your goals.

The common thread running throughout your airline contracting strategy in 2021 should be a focus on quality suppliers, ones who align with your core goals and values and who can offer tangible value to your program. Use your data and align with other stakeholders to create a recovery strategy, and then work with your airline partners to bring your program back online.

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To understand how Advito can help you prepare your air program for the new future of business travel, contact us today.

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