Survey: Airline Fees Complicate Total Trip Cost Calculations

The airlines' continuing strategy to unbundle products and pricing remains troublesome for corporate travel managers keen to measure total trip costs. According to a recent survey conducted by the Association of Corporate Travel Executives, just 20 percent of 297 corporate buyers said their organizations track total trip expenditures "very well." When asked if they tabulate total trip cost for top destinations, more than three quarters of respondents said "no." Yet more than 40 percent said "unmanaged ancillary fees" of all flavors represent between 5 percent and 15 percent of their organizations' total T&E costs. Another 27 percent said such fees represent even more of the total.
"In most cases, for most of the travel categories and most of the fees [including checked baggage, seat assignments, airport lounge access, hotel Internet access, airport parking and car rental GPS navigation and fuel surcharges], there is something in your corporate travel policy," said Rearden Commerce vice president of worldwide sales Tony D'Astolfo, who presented survey results this week during an ACTE forum in New York. "In very [few] instances are you actually capturing data. And you haven't negotiated preferred rates. So we have a policy, but we don't have data and we don't have preferred suppliers. Respondents are making a statement that 'we know this important, but because we don't have data we don't know how to deal with suppliers.'

"You probably have had a policy around dining per diems for years but have you really addressed the policy of how you pack for a trip?" D'Astolfo continued. "If you take two bags, it could cost the company another $200."

One buyer speaking during the New York forum acknowledged that "we would like to get a lot more of these expenses put into our policies. It is getting a little bit ahead of us." She said that her company is "working now on an enterprise wide policy that will be totally global, and all these questions are coming up now. When you look at the ancillary costs, there is a long list."

When D'Astolfo suggested that ancillary fees "could be a big threat to the viability of the program," the buyer responded by saying that "the positive side for us as travel managers is it increases my value proposition. My management perceives the complexity of what we are trying to do and expects us to at least heighten the awareness, make recommendation and, in all honesty, share the fact that we don't have the data. It is really important that travel managers educate their management proactively, not have them chasing after you saying, 'Look what I read in USA Today.' "

A consultant in attendance noted that in some cases, "TMC costs seem to be going down, and yet general ledger is not. There is a cost shifting going on that makes for uncomfortable conversations with senior management."