Three Myths About Sourcing Airlines - Part 3/3

Forget about those frequent flier miles. Frequent flier miles add cost to the airfares your firm buys. And yes, firms have tried to cut those costs by stripping miles out of corporate fares, or by capturing employee-earned miles.

But it doesn’t work, for two reasons: [more]

1. Entitlement

No question, business travelers feel that those miles are theirs. They’ll agree that they don’t pay for the tickets--not with money, anyway. But man, do they believe they pay with their time and their stress. That’s hard to argue with, so don’t. The reality is that taking miles from travelers is a big hit to employee morale, recruiting and retention.

OK, it’s not impossible to take away traveler miles. If your firm’s culture is (or needs to be) one that puts cost savings at the top of the "who we are and what we do" list, maybe you can make it work. It sure is a visible plank in terms of company-wide policy, and if your senior management is serious about this--and will walk the talk-- you might have a shot at making it work. That brings up the second problem.

2. Administration

In theory, the best way to strip miles from employees is to eliminate the miles at the source. Ideally, your preferred airline suppliers will agree to not give your corporate travelers any miles, and will in return cut your air fares by about 1-2 cents per mile (roughly $10-20 per an average flight).

Good luck. Every airline would much rather have your travelers build up miles on their airline. It makes the travelers more loyal, more sticky. It’s a powerful way for airlines to reward their best customers, and at the margin it induces some travelers to (gasp) take a trip that might not really be needed.

So unless you’re the buyer for the U.S. Government, airlines will politely decline your request. That leaves you with the administrative nightmare of tracking, pooling and redeeming your employees’ miles. There may be software to do this; if so, then this may not be a big problem.

Otherwise, you or your travel agency will incur extra labor costs to do the messy job of keeping all the mileage accounts straight. Then there’s the challenge of applying those miles to future business trips. The core issues are likely to be expiration dates and name-change fees. Can it be done? Yes, with enough time and effort.

Best guess is that it might save you 2 percent to 4 percent on your air spend ... but at what intangible cost?

Scott Gillespie is the author of Gillespie's Guide to Travel Procurement.