Basic economy fares introduced last year by many airlines are typically cheaper, but come with restrictions, and business travel programs are not on board with them, according to new research out today from the Global Business Travel Association (GBTA) in partnership with Airlines Reporting Corporation (ARC). The study reveals a majority of travel programs (63 percent) never allow basic economy and even more (79 percent) configure their booking tool to hide basic economy fares when travelers are not authorized.
The research explores how managed travel policies address air travel. Beyond shying away from basic economy, the research looks at other fare classes and shows most travel policies allow business class in some scenarios. Nine out of 10 (89 percent) allow it occasionally and these policies commonly do so for lengthy flights, international flights or for senior executives. Many travel programs are embracing premium economy fares, which provide extra legroom and other amenities such as early boarding. More than half (58 percent) of policies always or sometimes allow them and an additional 30 percent occasionally allow these fares.
Its not surprising to see many business travel programs shying away from basic economy fares, said Michael W. McCormick, GBTA executive director and COO. These fares pose a challenge for travel programs, creating difficulty for spend visibility and comparison shopping when add-ons are factored in. Additionally, travel buyers are increasingly factoring in traveler preference and convenience as they recognize the importance of their role in employee retention and recruitment in a strong economy with low unemployment.
Should Travel Programs Be Putting A Larger Emphasis on Advance Purchase?
Travel programs almost universally (91 percent) address the advance purchase of flights with 29 percent requiring advance purchase whenever possible and 71 percent recommending it. However, even when advanced purchase is required, 52 percent of programs do not require special approval of flights booked after the advance purchase deadline.
ARC transaction data shows that booking in advance can mean significant savings, so travel programs may want to consider a stronger focus on advance purchase based on the needs of their travelers. Even a small advance purchase policy of only a week or so before travel can yield savings vs. average ticket prices, said Chuck Thackston, ARC managing director of data science and research. Longer advance purchase is generally better, but balancing the needs of travelers and cost savings opportunities is achievable for most companies.
Add-Ons and NDC
The vast majority (82 percent) of travel programs address add-ons, yet only one in five say these are commonly purchased through TMC channels. With the growing rate of New Distribution Capability (NDC) implementations, however, ancillaries will become more accessible during the booking and ticketing path presenting both opportunity and a need for clearly defined travel policies.
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The study showed only 3 percent of travel programs reward travelers for saving money on air bookings. However, 21 percent would consider rewarding travelers for policy compliant or low-cost air bookings.
An online survey of U.S. travel buyers was fielded between March 28 and April 10, 2018, with 168 respondents qualifying for the survey given they are buyers or procurement professionals and their company has a written travel policy.
A summary of findings, How Do Travel Policies Address Air Travel, is available exclusively to GBTA members by clicking here.
To request an interview with a GBTA or ARC expert for a deeper dive and to learn more about trends in travel policies and air travel, please contact Colleen Gallagher.
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