Buying Business Travel - CIPS Events/Buying Business Trav… · –Corporate deals –Virgin Australia Agenda 2 . Business travel procurement Key components •Travel policy •Travel

Buying business travel

Perth, March 2015

• Business travel procurement

• Air travel

– Overview of Australian aviation

– Air fares

– Corporate deals

– Virgin Australia

Agenda

2

Business travel procurement

Key components

• Travel policy

• Travel management

• Accommodation

• Car rental

• Other components

• Air travel

3


Travel policy • Preferred suppliers

• Air travel class and fare types

• Hotel room types

• Rental vehicle types

• Booking methodology

• P

• M

Measurement and compliance

Expense management

4


Travel management

• Travel Management Companies (“TMCs”)

– Travel agencies who book and manage business travel

– Not household

names, not at retail locations, and don’t generally book holiday or leisure travel

5


Travel management

• What can TMCs do?

– Manage travel policy

– One stop shop for all business travel bookings

– Provide online travel technology (eg. OBT, MIR)

– Provide management information reporting

– Secure/support preferred supplier discounts

– Recommend savings and efficiency improvements

– Traveller tracking

6


Travel management

• Factors to consider

– Effective Service Level Agreement

– Fee modelling

– Sophistication of management reporting and online booking technology

– Effective account management

– Other service enhancements and value adds

– 24 x 7 service

7


Travel management

• How do TMCs make their money?

– Customers pay TMCs a fee for their services

– TMCs can earn commission from suppliers

• Who are the TMCs?

– Indicative examples follow (Not complete list and in random order)

8

9


Accommodation • Location

• Rates (model types)

• Value adds

• Security

• F&B facilities

• Business services

• Booking channels

• Payment methods

10


Car rental • Locations

• Fleet size/availability

• Rates

• Value adds

• Payment methods

• Vehicle types and special equipment

11


Traveller security • Traveller tracking

• Emergency communication

• Emergency assistance providers

12


Ground transportation

• Taxi vs car rental

• Charter vehicle

• Hotel transfers

• Coordination of share rides

13


Expense management

• TMC invoice account

• Corporate credit cards

• Charge card business travel account

• Enhanced data

• I

Integration with expense management systems

14


Air travel • Australian aviation

overview

• Air fares

• Corporate deals

• Virgin Australia

15

Australian aviation overview

Domestic - Qantas group

1992

Eastern Australia

Sunstate

Airlink

Southern Australia

Jetstar

Australian Airlines

Impulse Airlines

Qantas Airways

Qantaslink

2002

Regional RPT

Low Cost Carrier

Full service

Network Aviation Charter

2011

Qantas purchases Network Aviation

Australian Airlines and

Qantas merge

Qantas buys Impulse Airlines

Qantas owned regional carriers re-

branded as Qantaslink

Jetstar launches

16

Dry lease Regional RPT


Domestic - others

Kendell

Hazelton

Skywest

Ansett Australia

2001 2002

Regional RPT

Full service

Regional RPT Skywest

Regional Express

Charter

Ansett collapses

New ownerships

emerge

Ansett ceases operations

17


Domestic - Virgin group

2000

Virgin Australia

Skywest

Tiger Air Australia

2014 2013 2011

Low Cost Carrier

Full service

Charter Virgin Australia Regional Airlines

Virgin Blue

Change in business model and branding, from LCC Virgin Blue to full service Virgin Australia

Virgin Australia purchases and

integrates Skywest

Interstate & Regional

Low Cost Carrier

Virgin Australia purchases

60% of Tiger Air

Virgin Australia purchases 100% of Tiger Air

2007

Tiger Air Australia launches

Virgin Blue launches

18

International - WA


Air Asia Bali, Indonesia

Air Asia X Kuala Lumpur, Malaysia

Air Mauritius Mauritius, Mauritius

Air New Zealand

Auckland, NZ Christchurch, NZ

Cathay Pacific Hong Kong, PR China

China Southern Guangzhou, PR China

Emirates Dubai, UAE

Etihad Abu Dhabi, UAE

Garuda Indonesia

Bali, Indonesia Jakarta, Indonesia

19

International - WA

Jetstar Airways Bali, Indonesia Singapore, Indonesia

Malaysia Airlines

Kota Kinabalu, Malaysia Kuala Lumpur, Malaysia

Qantas Auckland, NZ (seasonally)

Qatar Doha, Qatar

Scoot Singapore, Singapore

Singapore Airlines Singapore, Singapore

South African Airways Johannesburg, South Africa

Thai Airways Bangkok, Thailand

Virgin Australia

Bali, Indonesia Phuket, Thailand


20

Air fares

Typically…

Fully flexible

Discounted

First Class

Business Class

Premium Economy Class

Economy Class

• Most expensive • Delayed purchase • Fully changeable • Fully refundable • Last seat availability • Fully inclusive

• Cheapest • Instant purchase • Limited/no changes • Non-refundable • Restricted availability • May exclude baggage, meals

21

Air fares

Typically, what customers want

Deeply discounted

Fully flexible

22

Air fares

Typically, the reality

Fully flexible

Deeply discounted

Somewhere in between

23

Air fares

Airline revenue management

Demand Discount

24

Air fares

Peak demand, typically

Leisure travel • Weekends • Public holidays • School holidays • Special events • Seasonal factors

Business travel • Weekdays • Early morning • Late afternoon

FIFO travel • Weekdays • Tue/Wed to site • Wed/Thu from site • Early morning • Late afternoon • Shift-specific

25

Air fares

Typical FIFO demand

To Site

To Site

To Site

To Site

To Site

Monday Tuesday Wednesday Thursday Friday 26

Air fares

Typical FIFO demand

From Site

From Site

From Site

From Site

From Site


Air fares

Typical FIFO demand

To Site

From Site

To Site

From Site

To Site

From Site

To Site

From Site

To Site

From Site


Corporate deals

Mid-large business

• Revenue / share target

• Point of sale discounts

• Other support

29

Air charter

• Ad hoc or ongoing

• By negotiation

SME business

• Revenue target

• Annual travel credit

Block bookings

• By negotiation

Corporate deals

What to consider

• Your travel policy

• Ability to mandate policy compliance

• Expenditure level

• Key routes required

• Comparison of: – Fare type conditions – Published fare levels

30

• Costs and savings

• Products and services

• On time performance

• Supplier engagement

• Account management

• Terms and conditions

Documents

Buying Business Travel - CIPS Events/Buying Business Trav… · –Corporate deals –Virgin Australia Agenda 2 . Business travel procurement Key components •Travel policy •Travel