Viewpoint: Demystifying Group Air January 11, 2010
By Yvonne Long, Senior Vice President, Air Fulfillment Services
For many travel professionals, group air remains a mystery. However, seasoned procurement specialists now recognize it as a separate expense category that offers tremendous opportunity to control overall expenditure and achieve further savings.
Business travel concentrates on moving one traveler from Point A to Point B. Multiply that by 100 or more high achievers booking simultaneously, restrict the window of arrivals, add specifically negotiated airline contracts and mix with highly organized event planners—that's group travel.
Competing globally has forced companies to streamline processes, consolidate purchasing and reduce the cost of conducting business. Across the United States, corporations are reexamining how they purchase and deliver low-cost services to their internal customers and maintain consistently high service standards for both corporate and group travel.
Objectives for managed group travel include:
• Identifying and understanding the true cost • Managing a small number of approved suppliers • Driving purchasing volume through preferred partners • Capturing, tracking, and reporting purchasing information • Improving attendee satisfaction • Reducing financial exposure
A large opportunity for a company to achieve savings, consolidation of group air is the new wave in purchasing control for non-inventory items. Recognizing the financial successes of corporate travel consolidation, the market is moving toward harnessing this previously unidentified expense.
Group travel is still viewed by airlines as a discretionary purchase. Unlike group, transient corporate airline contracts do not permit savings off the lowest fare levels, include earned tickets, or permit late ticketing to allow for name changes or cancellations. Additionally, lowest-cost inventory is not guaranteed. To permit separate processing of group air, corporations can add a third-party ARC number to airline contracts to retain complete control of the process.
Another challenge is that of data management. When group travel is managed like transient travel and expensed by individuals, data is almost impossible to track, and costs become "hidden" under many different line items. By segregating group travel, it is easier to identify the true cost of a meeting or event.
New technology permits easy consolidation of data from several sources across multiple currencies. When a separate ARC number is used, airlines can track marketshare, further facilitating effective purchasing.
Group air travel can also provide the following advantages:
• Savings can quickly be achieved • Low-cost fares can be secured in advance • Expert management and control can increase cost avoidance • Earned tickets reduce overall expenditure • Focused relationships can achieve value-added benefits
Meetings management is now recognized as a highly professional discipline. Strategic sourcing initiatives by numerous corporations have proven that selecting a small number of preferred suppliers and managing them centrally can satisfy all parties and encourages internal compliance by delivering exceptional services.
Group air represents a significant opportunity for a corporation to achieve savings within the strategic meetings management mix. Air expenses typically represent nearly 50 percent of a company's business travel budget and 36 percent of a meeting or incentive budget, so making the right purchasing decisions for group travel has clear impact on the bottom line. Savings of up to 30 percent can be achieved by moving to a professionally managed environment with intelligent procurement decisions leading to increased budgetary control and improved service levels.
Recent case studies demonstrate that lost savings opportunities within the group air sector are substantial in comparison to those managed via corporate contracts.
By segregating group travel, it is easier to identify the true cost of a meeting or event, and technology developments now permit seamless consolidation of data from disparate sources, even across multiple currencies.
Meeting planners can easily capture airline market share by adding a separate ARC number to corporate contracts, permitting transparency of information at the agent level and full data capture to track airline market share and client productivity.
Customer service levels have typically represented the most significant obstacle to consolidation initiatives, because in most traditional travel management companies there has been a rapid decline in service levels overall, with a dramatic move towards low-touch, self-booking services in recent years. Multiple reorganizations have almost obliterated expertise surrounding group travel management. As a result, air spending for the most part is invisible because it is being managed like transient travel, which defeats the larger objective of any strategic meetings management initiative by offering little to no comparison between corporate airline contract procurement and best-in-class purchasing practices for both business travel and group air movements combined.
Yvonne Long is senior vice president of Air Fulfillment Services, www.airfulfillment.com, a group air specialist focused on delivering high-touch, professional air services to group travel, meetings, and incentives.
Source: MiMegasite, a Nielsen Business Media Web site
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