The Wall Street Journal on Monday caught up to the significant changes at American Airlines.
The article hit several themes covered in the trade press over the last six months. Its headline and sub-headline reflect the debate over whether AA is responding to the changed business market or trying to remake it. Raymond James analyst Savanthi Syth wondered “if it’s shortsighted and they’re kind of assuming what you’re seeing today or right after the pandemic is what will be forever.”
The Journal put a number to the airline’s salesforce cut: down 40 percent to about 210.
Scrolling to the bottom, that’s a lot of comments! Like the readers of any mainstream media outlet, WSJ subscribers like to pick on airlines. Some countered the bashing. Among the observations on the AA strategy, one reader thought it profound that “the era of the middle-manager business traveler that has driven the travel industry for the last 35 years is over.” Another argued that one-day trips fell out of favor less because people don’t want them than because they can’t count on schedules and take-offs. A third picked up “lots of doublespeak” from American.
Reaction: Several readers of The Company Dime responded to the release of American Express Global Business Travel’s minimum NDC requirements with commentary on their purposes and origins. Brandon Strauss and Mike MacNair weighed in on the unmanaged business traveler and how distribution changes impact the TMC value proposition. Former GBTA executive director Mike McCormick was not a fan of the recent court decision that would tear down AA’s alliance with JetBlue: “I don’t know what is worse – the decision itself or the incredibly short timeframe given for AA and JetBlue to unwind the relationship given the significant investment already made.” (The airlines are appealing.)
Elevating The Experience
Consternation about next-generation airline distribution gets a lot of press. But it’s not all hand-wringing out there. Some travel buyers are venturing forth with efforts to close the gap between consumer experiences and what corporate travelers get in the managed program.
Kim Hamer, senior director for global travel and events sourcing at Visa, works with CWT, Serko, Travelfusion and United Airlines to enable NDC options. Asked during a BTN Group virtual event in April for her reaction to AA’s distribution strategy, Hamer said, “I think it was time that someone drew a line in the sand [and identified] how we need to move the industry forward.” She acknowledged the need for buyers and partners to work out NDC solutions for post-ticket servicing and change management.
According to Hamer, continuous pricing creates opportunities for cost savings. “The ability to understand an individual’s loyalty status” allows for customized, in-policy offers based on that status level, she said. “Now your travelers don’t need an additional expense item or to go to another place to make that purchase. It’s a one-stop shop and a recognition of where they are in their journey, whether they have status or not.”
Speaking on an April Cvent webinar, Oracle global travel sourcing director Rita Visser mentioned the company’s use of custom preferred supplier offers through Tripism, the travel intranet killer. “This is specific to Oracle,” said Visser. “So a traveler can say, ‘When I do things in policy, they know I’m Oracle so they will take care of me.’ There’s a slight policy tie there.” Separately, Oracle went live with NDC content through GetThere and Sabre in April.
“We struggle in general with offering company travelers a better experience than they can get on their own,” said Bechtel manager of global travel Dave Weaver during an April BTE Town Hall event. “I’m willing to test. That’s how positive change can happen. People say they don’t know what NDC will deliver. We won’t know until we kick the tires.”
Microsoft was Tripism’s launch client for the supplier offers feature. Travelers are “out there experiencing what it is like on an airline or hotel website,” said Microsoft senior manager for global air and ground program strategy Diane Lundeen Smith. “Their frequent flyer status might be identified. They might get special offers for upgrades and do things we are not yet capable of through corporate systems. I’m a corporate travel manager, but I’m also a consumer and a corporate traveler. I’m excited about where this could head.”
What Buyers Need From TMCs
Festive Road did one of those studies in which respondents (travel managers) rated the importance of various aspects of servicing by suppliers (TMCs) versus the suppliers’ performance in delivering on it. Of 11 components in the survey related to TMC capabilities, the traveler experience was the most important (4.6 out of 5). The gap to its perceived delivery also was the largest (1.66 points).
“We’re looking at an SLA: Did you answer the phone in a certain amount of time?” said Reed & Mackay global brand and communications director Lyndsey Atkins on a Festive Road video series posted last month. “That feels archaic to where we are today. What does service really mean? Where’s the magic? Where’s the bit that really looks like service? We are not measuring service in the right way anymore.”
One KPI that American Express Global Business Travel now measures is how regularly it discusses issues with clients. “Being clear on what service looks like is critically important for TMCs thinking more about the end-to-end experience,” said Amex GBT EVP Jason Geall. “Where we see success is where there is a clarity of roles and responsibilities between the corporate and the TMCs. Where it can fall down is where both parties aren’t clear.”
At EY, the traveler experience is up to the travel department. “I don’t think the agency should be responsible for that,” said global head of travel meetings and events Karen Hutchings. “It’s down to our relationship with our suppliers.”
Hutchings also said the TMC, not the airlines, should provide service. “Otherwise the TMC could actually start losing volumes,” she said. “Or, corporates could go out and say, ‘We have this piece of business with this particular airline. We’re going to put that piece out to bid and find the TMC that can actually service that.’ “
In terms of “relationship governance,” Hutchings referenced “changes that have come from the airlines” and “smoke and mirrors around what funding there is for the TMCs and the importance and reliance on whatever incentives they get from suppliers. Is it our business to know everything? Perhaps not. But that does create some challenges around trust.”
UBS global head of travel Mark Cuschieri agreed there was an “element of distrust” regarding the industry’s economic model and the viability of different fee structures.
“There have been opportunities to relook at that completely, and it’s been disappointing that that hasn’t come to fruition,” he said. “Depending on the value the corporate sees, they are willing to pay for it — as long as the TMC can demonstrate that. No corporate wants to enter into a relationship to be unprofitable for their supplier. They want them to be profitable, which means they can invest more into that relationship.”
Travel Fraud: ‘Back With A Vengeance’
Along with the travel recovery from Covid, “all the fraud schemes are back with a vengeance,” said ARC director of investigations Doug Nass. Phishing schemes, in particular, have been surging, spiking in the past 18 months.
“This issue is down to every front-line user,” said Nass. “Everyone with GDS access.” That includes home-based agents with potentially less secure networks and servers. During an ARC webinar in April, Nass said five unauthorized ticketing incidents from the prior week comprised 230 tickets valued at $357,000.
A form of social engineering, phishing is an attempt to trick victims into handing over personal info or downloading malware or ransomware that quickly spreads. Fake emails often use familiar company imagery that can appear to come from within a victim’s own firm.
One fraudulent email flagged by ARC used Sabre’s name and logo, and redirected the unsuspecting user to a different domain to “harvest” GDS login credentials. “They will wait until late in the evening or overnight; they will remotely access the GDS and start issuing tickets for immediate departure — within hours,” Nass said. “Overwhelmingly, it’s happening out of northern and Northwest Africa, but we are seeing more diversity. Some passengers are coming out of Europe and the Middle East. It spread pretty widely. A year ago, it was very few routes. Now, it’s really diverse, which is unfortunate.”
“Every time you think you figured it out, they figure out something different to do,” said Finnair SVP for strategy and finance Christine Rovelli during a UATP event in March. “It’s just a constant process. There’s no getting ahead of it. You just have to stay in touch with the new tech and what folks are trying to do. That’s more of an industry-wide effort.”
ARC last year issued more than 1,500 fraud alerts to travel agencies.
ARC offered tips on how to watch for phishing emails. Does the sender look correct? Does it look like previous legitimate communications? Any misspellings? Is the mailing address valid? When hovered over, do links look legit? It’s a red flag when an email says immediate action is required or something bad will happen.
ARC suggested using corporate email warning banners auto-displayed on external incoming emails, security filters and regular antivirus and general software updates. Don’t connect to unsecured Wi-Fi. Avoid pop-ups. If something looks very wrong, unplug it and call your IT specialist.
‘There Is No Diverse-Owned Airline’
In June 2022, tech hardware maker Logitech co-founded the Coalition for Gender Fair Procurement. The group seeks to promote gender fairness, based on UN Women’s Empowerment Principles, by leveraging “trillions of corporate spending power around the globe.” In travel, that’s not easy to do.
“There is only so much you can do with supplier diversity in certain parts of your spend,” said David Latten, Logitech head of global indirect procurement and supplier diversity and equality. “There is no diverse-owned airline to work with.” There are some hotels, but not everywhere.
If Logitech’s suppliers aren’t owned by women or minorities, “we make sure those companies are progressing on these topics,” Latten said during an online event in May hosted by Partnership Travel Consulting. “Anyone can pledge to those UN principles. Gender Fair assessments make sure you are living up to them.
Logitech asks its suppliers to undergo the assessment and stake out plans to improve. According to Latten, “a lot” joined the effort.
Companies that meet the Gender Fair standard, as listed on the coalition’s website, include American Express, Choice Hotels, Hilton, Lyft, Marriott, Uber and Visa. “Despite all our best supplier diversity efforts, only 6.1 percent of the total corporate spending in the U.S.” goes to suppliers owned by under-represented groups, according to the Coalition.
EY Approval Tool Puts Emissions Over Cost
EY built a sustainable travel approval tool as part of a product set it’s selling in collaboration with IBM. “It takes the emphasis away, when someone wants to go on a trip and get approval, from the cost and puts it squarely on the emissions,” said Hutchings during a May BTN Group webinar.
The tool is live internally at EY in 43 countries, with 15 more on the roadmap, including the United States. It’s been challenging for EY, Hutchings said, to “get back to travel … in a controlled matter so we don’t have such a high percentage of our emissions being from business travel.” EY uses offsets, but Hutchings said the key was travel reductions (at least until sustainable aviation fuel is widely available).
Rather than just reporting carbon by metric ton, the tool can inform approvers that, say, a train ride instead of a flight saves carbon equivalent to a tree growing for 10 years. If a traveler still picks air, robotic messaging challenges the decision.
According to EY, the tool helped increase rail bookings where trains were viable options. Along with a policy change, it led to a sharp reduction in one-day trips.
Robotics and AI also inform approvers when the number of people going to the same event hits a predetermined threshold.
Around The Web
• Harvard Business Review in May published pieces based on Gartner research finding that too much information and too much change are exhausting. The learnings may speak to corporate travel managers working on traveler communications and engagement. According to one article, information overload is the enemy of engagement. A “low-burden” culture, thanks to more efficient and effective communications, can counter disengagement and poor decision-making. A second HBR piece addressed post-pandemic fatigue and reduced patience for change initiatives: “The irony is that many of the goals of transformation — redesigning teams and structures, automating drudge activities, re-engineering corporate culture — seek to ease burnout and fatigue and increase efficiency. Unfortunately, many leaders are approaching change management by applying short-term fixes, which is unsustainable.” The authors highlighted prioritization and rest periods, among other antidotes.
• According to a May post by TechCrunch, “bottoms-up” sales approaches are losing favor. These are tactics in which a software or service vendor enrolls employees, putting pressure on the company for full adoption. It’s an approach preferred by Expensify and available from Navan. “It’s too soon to pronounce bottoms-up dead, but it’s looking pretty moribund,” according to TechCrunch, citing data from Battery Ventures that found enterprises were “getting more conservative” and planned to “standardize spending, consolidating vendors to save money and optimizing SaaS licensing.” They’re “re-examining pricing models to determine if consumption- or seat-based pricing makes the most sense.”
• “Blame the airlines” and “book in incognito” mode are tips from sources of The Atlantic for how to combat the growing complexity in hotel booking, at least for consumers. Corporate travel surely has it all figured out.
• Here’s a fun read from The Wall Street Journal in April about how former Expedia CEO — top dog at Uber for five years now — Dara Khosrowshahi acted as a rideshare driver for months. The “moonlighting was part of a campaign by him and his lieutenants to better understand and improve Uber’s experience for drivers, whose scarcity had become a critical challenge for the company after the U.S. reopened from Covid-19 lockdowns.” Lyft’s leaders also do some driving.
Here’s a page where we pull in business travel news feeds from around the web.
Hat-Tips And Heads-Ups
Congrats to industry stalwarts Tony D’Astolfo, Betty Fix and Kevin Iwamoto on their retirements, and to travel managers Hal Rudy and Andrew Rzasa on their new roles at, respectively, S&P Global and Cargill.
The trend to consolidate spend and relationships to one global TMC, perhaps with selected local partners, continues, according to travel and procurement leaders at The Hackett Group. “Other back office travel and expense reporting activities continue to be outsourced, e.g., to access technology where the trend towards AI-powered T&E auditing continues, VAT reclaim, and for specific countries like China with their unique legal and compliance controls,” according to the firm. The Hackett Group’s Beate Hausmann, global P2P and travel management program lead, and Nic Walden, EU procurement advisory practice lead, provided the comments after the deadline for our April article about outsourced travel management. As for outsourcing the procurement function, they said there was no solid trend one way or another. Some are going out; some are coming back in-house.
SAP Concur lost the U.S. Department of Defense. Instead, DOD travelers were told on May 24 to return to the pre-existing Defense Travel System.
From The Archive
A draft Biden Administration proposal headed to Congress calls for airlines to compensate customers when they are responsible for delays of more than three hours. How would affected passengers learn what they’re entitled to? How would they request any due compensation? Is it theirs to keep, even if their employers pay? These are not new questions in Europe, where flight delay compensation has been required for nearly two decades. Our 2016 article contemplated related questions and highlighted a few specialists that help. Here’s a 2019 update.
“You have to have higher ticket prices if all your costs are much higher. We have some constraints on the labor side and the supply chain side in terms of parts and things like that. The airports are constrained. But the airline industry generally is always one where you have an incentive to add a seat to the market because if you sell that seat, you get 100 percent of the revenue. If you don’t, you share the pain with everyone else in that market. That is just a reality that will continue to come back. So while there are constraints that make the yield environment better than it has been before, I’m not ready to say that’s a durable situation.”