Get informed: Airline policies and pricing trends

A new Advito blog series on airline contracting covers supply side explanations and guides decisionmakers in understanding their air needs in this new era of business travel.

A new Advito blog series on airline contracting covers supply side explanations and guides decisionmakers in understanding their air needs in this new era of business travel. Written by Advito Air Practice Director Ryan Hohag, the posts examine what the pandemic has meant for airline policies and maps a strategy for getting through the days ahead.

What should you expect?

Ryan Hohag, Advito Air Practice Director

Travel programs and travelers will continue to benefit from flexibility in change fees for domestic and international routes, Hohag predicts. Many airlines have extended the expiration date on vouchers received from flight cancellations on existing tickets and new bookings. Loyalty programs and status match incentives will likely be offered for travel buyers who commit to significant volumes in 2021.

As a result of this flexibility, airlines will lose some of their bargaining power with corporate customers. They’ll seek new, creative ways to add value for corporate travel clients beyond the hard dollar savings. Beyond that, permanent schedule reductions and inevitable consolidation will lead to fare increases as demand grows this year.

Needs vs. wants

Business travel will be more selective as corporates decide what is and isn’t “business-critical.” Travel requests will be met with greater scrutiny as travel teams aim for potentially greater ROI per trip. Specific requirements at each destination will also affect travel decisions. Restrictions may escalate, Hohag says, in the wake of vaccination requirements.

Travel footprint is always related to company activity. New stakeholders may emerge – business units from HR to IT now have a vested interest in travel. A best practice is to engage with internal stakeholders to make sure the right tools and policies are in place to help preserve business continuity as the definition of business-critical shifts.

Get the best results from airline program data

 In his second post, Hohag guides travel programs in using 2019 data as a baseline or starting point for fine-tuning projected future volume. Why? Because it was a full year and provides maximum spend potential.

Begin the review with two steps:

  1. 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?)
  2. Factor in other organizational changes that will affect your travel policy

Hohag suggests using “what if” scenario modeling to forecast spend and map out a range of scenarios from conservative to aggressive based on the speed of recovery and recovery start date. But don’t overlook 2020 data, he cautions. It may turn up clues and patterns about essential business travel, changes in traveler purchase behavior, compliance and how your partners supported you through the downturn.

Understanding expectations and making great use of data is only part of a recovery strategy, Hohag says. A common thread for all 2021 airline contracting strategies should be a focus on quality suppliers who are committed to helping bring your program back online.

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