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Is It Time You Adjusted Your Travel RFP?

In years gone by, sending your travel RFP out to pitch was perfectly logical. Airlines would come back with competitive offers, your organisation would select a preferred carrier based on their proposals, and generally, a nice chunky rebate would end up in your company’s pocket every time your employees hopped on a plane. It worked, because really, there was no better option.

Today, however, our businesses exist in an entirely different landscape. Low cost carriers have penetrated the market, which has resulted in more competitive, cost-effective options for travellers. Cheaper flights are available every day, with no rebate required to see significant bottom line savings.

All this considered, it’s surprising that many RFP processes still haven’t changed, and low cost carriers are often not incorporated into RFPs. Being held ransom to ‘market share’ deals that influence short haul choices (only to receive long haul discounts) needs to be a thing of the past. If this sounds familiar for your organisation, is it time to rethink? Perhaps it’s time to fine tune those negotiation skills and leverage the competitive network we’re operating in, to achieve the most from your travel budget. Here are just some of the compelling arguments that make a case for incorporating low cost carriers into an RFP:

Look at the true lowest fare of the day

A travel policy should be in place to deliver maximum ROI to your business, and part of that ROI is in the reduction of the cost of travel. Therefore, including low cost carriers in the mix is a logical step. The ‘lowest fare of the day’ found by your travellers should be the true lowest fare of the day, based on the travel schedule they require. Supply and demand should drive the savings your organisation receives, by utilising the flexible model provided by low cost carriers.

Maximise long-term savings

By excluding low cost carriers from your RFP, your organisation’s long-term savings will be stunted. Low cost carriers are often unable to offer substantial fare savings in the RFP process, as their fares are already so low. What’s more, while legacy airlines submit static fares into RFP spreadsheets, low cost carriers use a dynamic model, making it relatively impossible to predict fare levels. As a result, low cost carriers are unable to comply with the RFP process, and your organisation misses out on significant savings and efficiencies.

Make your travel policy user-friendly

As well as maximising ROI, your organisation’s travel policy should be focused on being user-friendly. Organisations should consider how they can make travel (and travelling compliantly) easiest for their employees, so the maximum return on investment can be garnered. Staff should also have flexibility in their fare allowances, for example, as 10% of the overall fare, rather than a dollar amount. Policies should be adjusted for short haul flights, with lower tolerance levels to cater for the lower fares.

Consider all aspects of your organisation’s travel budget

Business travel is not just about long haul flights that call for negotiated rates with legacy carriers. An enormous amount of travel within European organisations is in fact short haul trips made throughout Europe. Excluding low cost carriers as an option for your travellers for these short haul flights is a decision that lacks strategic thought. Rather, organisations should be using valuable RFP negotiation time focusing on where the real value lies (long haul flights), and looking at ways to incorporate low cost carriers into the mix for short haul travel. Further, a decision should be made around how, why and when to mandate travel policies, and how your organisation can benefit from the inclusion of low cost carriers.

The benefits are clear, and we’re already seeing some large corporations bypassing the RFP process altogether for suppliers who offer the best value. By avoiding the additional work and costs involved with high resource fees, they’re seeing immediate returns. Organisations should be reaping the benefits that are behind this competitive travel landscape. Low cost carriers should be incorporated into the GDS, and discussed with your Travel Management Company, to ensure maximum benefits are received and that your employees are able to travel in a cost-effective, efficient manner.

For progressive organisations looking to maximise their travel investment, it just makes business sense. By adapting processes and policies efficiently, they should see a greater return on their travel investment that is aligned to the cost benefits of travel industry today.

Anthony Drury

Head of Business, easyJet

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