What's The Deal With Ancillary Fees?

Ancillary fees have become the Susan Boyle of the travel industry. That’s right, they aren’t sexy, but people still love to talk about them. Plus, nobody agrees on the magnitude of these things, and how could they, when tracking them is such a daunting task. For example: The Beat reported that TRX found that "ancillary airline fees account for between 0.75% and 1.5% of the total air spend."
On the opposite end of the spectrum, the National Business Travel Association says ancillary fees could reach up to 30% of total airline spend. A couple weeks ago I saw a story claiming that in 2010 the airlines will make $58 billion in ancillary fees on everything from baggage to seat allocation, in-flight services and various products.

Who’s right? Who cares?

Until there is standardization across the industry, we’ll never know who’s right. At a recent BTA meeting, I heard that could be years away, so don’t hold your breath. We’ll probably have a Starbucks on the moon before that’s all said and done. Even if you could track it to the actual percentage, what good would it do you? Airlines fees only make up one segment of expenses that comprise the total cost of a week on the road. While it’s all real money, you can’t control some of these yet, so why not focus where you can make an impact?

Unless your travelers hitch rides to the airport and pack their own meals, these are two of the most common areas that lack proper management. They aren’t small ticket items, either. Dining alone is typically 10-15% of T&E, and can be the third largest expense category after air and hotel. Obviously you aren’t going to start negotiating deals with every pizzeria (although I do have my personal favorite where my standard “two slices and a grape drink” order gets upgraded to a large drink every time), but imagine if your company could get rebates at many of the restaurants your travelers already frequent. Or what about cutting a deal with an Internet provider so every time your travelers are on the road they know they’ll pay less?

Believe it or not, this is already possible. And, there are programs to reduce the costs of ground transportation as well. At the end of the day, I’m more of an action guy who’d rather figure out how to reduce my spend now than sit back and debate it for another few years. It’s time to take action.

Now, let me sit back, throw on my headphones and enjoy I Dreamed a Dream. I find her voice to be quite melodic, especially while enjoying a slice of pizza so thin it cracks when you fold it, and washing it down with a vintage grape drink.

Tony D'Astolfo is vice president of worldwide sales for Rearden Commerce. These comments are syndicated from his Carrying On blog