Monthly Archives: April 2015

Everything Is Uberizing, Why Not Business Jets?

[UPDATE, April 8, 2016: We published new information related to this article here.]

The business jet industry is attracting loads of entrepreneurs offering tech-fueled brokerages, marketplaces and communities. Some of the ideas have gone too far for the FAA’s taste, but others could improve the affordability and utilization of unscheduled aircraft if they find a market.

Whether that market includes corporate travel remains to be seen.

“On-demand” charter service Victor last month announced investment of $8 million and its U.S. launch after some years operating in Europe. A new outfit called Ubair counts as an advisor veteran airline exec David Tait (Virgin Atlantic’s first employee). JetMe has a Priceline-style “name your price” option. Others with new mobile apps include Magellan Jets and JetSmarter.

LearjetBecoming the Uber for jet charters could mean different things. Some of the new providers welcome the comparison if it conjures up thoughts of on-demand ease of use. They like when those notions appeal to high net-worth individuals. The emphasis on glamour in some of the marketing seems designed to attract those who care for status.

But when it’s used for business, private jet travel isn’t as much about luxury. Convenience, sure. Productivity certainly. Even risk management.

Would a busy executive find it cool to use an app to order a plane? Could these apps cut the cost of jet travel enough that it becomes accessible to a new subset of business customer? We don’t know yet.

Some of the new services appear to offer many more price and availability results than a traditional broker. But for customers who need deeper information about the presented options, the new crop tends to have a phone service like any other broker.

Nick Verdea runs the travel department as well as corporate aviation for Tulsa-based energy firm Williams, which has about 6,500 employees.

“There is a lot of technology out there where you can get charters or use one-way flights,” he said. “I’m not implying all the companies don’t meet the appropriate requirements, but I am saying you can’t charter an aircraft blindly. You have to perform your due diligence: verify proper insurance coverage, validate details on the aircraft, assess maintenance records and pilot records … Someone needs to understand the business aviation market and needs to know what to look for to ensure the necessary safety levels.”

Larger companies chartering aircraft thoroughly vet the brokers, operators and equipment. Sanofi director of North America employee transportation Linda Francis during a late 2012 GBTA webcast detailed the items on which her company interrogated providers: accident history, crew training, maintenance, third-party audits, fixed base operations and catering. The firm narrowed its options down to two operators and then quizzed them on site about scheduling processes, access to pilot contact info and contingency plans. “It was a lengthy process,” said Francis.

The new raft of brokers would like to handle some of that work. Victor selects operators with valid Air Operator Certificates as well as ARG/US and Wyvern safety ratings. Audits cover aircraft documentation, crew training, flight time records, maintenance and manuals for engineering and operations.

Victor founder Clive Jackson argues that his company is not like other brokers. “We think it’s unfair that you have a marketplace where the broker keeps the customer at arm’s length from the supplier, the broker doesn’t have to disclose their commission and you don’t know who the supplier is when you commit,” he said. “Our model is predicated on trust and service, which requires transparency. The end user gets full details of the operator and pays a guaranteed 10 percent booking fee.”

“Every time we have worked with a traditional broker, we call and they send three options,” said Theo Osborne, founder of corporate and leisure agency Parnassus Travel Group in the United Kingdom, which now uses Victor. “The whole thing is a little archaic. It’s an industry where there are a lot of charlatans.”

National Business Aviation Association vice president Mike Nichols during the 2012 webcast said that while some brokers are very good, customers should be wary.

“According to the Department of Transportation, brokers either are acting as an agent of the customer or as an agent of the charter operator,” said Nichols. “Rarely are they a true middleman. If the broker doesn’t tell you what role they’re serving, ask them. It’s similar to real estate. There are some brokers in the U.S. who are unscrupulous. You need to know the broker’s level of experience and expertise.”

Victor claims to provide three flight quotes within 60 minutes. It takes credit cards, debit cards and bank transfers. Like most of the new providers, Victor searches for “empty leg” opportunities — that is, one-way flights with no passengers. Operators offer discounts of up to 75 percent on such flights, according to Victor.

Not Your Father’s Sharing Economy

On balance, the aforementioned companies do not want to be associated with the “sharing” aspect of Uber in which private drivers can sign up and start flagging down fares. Back in the day, private pilots posted their planned trips on local bulletin boards in an effort to attract passengers and share expenses. FAA regulations do not allow them to charge fees beyond a pro-rated share of costs.

Some of the new crop of apps are looking to take advantage of this concept and bring private flight opportunities to more potential customers. But FAA last year noted that companies like AirPooler, Jumpseat (whose founder is now CEO of Ubair) and Flytenow vastly expand on the bulletin board concept by allowing private pilots to post on the web. FAA determined the companies require Part 119 certification under Federal Aviation Regulations. Flytenow is appealing.

Uber chairman Garrett Camp in 2012 helped launch BlackJet. The company struggled to build a market for its service offering seats on charters (which are Part 135 in the FAA regulations) rather than whole aircraft. The concept required significant lead time to build up enough passengers for any given flight. The company has moved to a more traditional charter broker model, according to The Boston Globe.

“Share jet models are trying to make private jet flights more accessible to a larger audience by reducing the price point,” said Greg Raiff, CEO of Private Jet Services Group in New Hampshire. Speaking on a recent GBTA Risk Committee webcast and in a follow-up conversation with The Company Dime, Raiff pointed out several potential problems in sharing models for time-sensitive business travelers. What if one of the passengers cancels or is late for departure? Some operators have a “disclaimer that says if we don’t get enough people we can’t fly out,” he said. Can passengers bring pets, or peanut butter, or a criminal record? Are passengers comfortable flying with others when there’s no Transportation Security Administration screening?

Democratizing The Business Jet Market

Companies like BlackJet were among the first to attempt to create a new app-based layer in a market that Raiff described as a pyramid. The process of making private jet travel more accessible and affordable has been underway for decades, and each new layer seeks to improve aircraft utilization. At the top of the pyramid, with the smallest share, is commercial jet ownership. That falls under FAA’s Part 119 regulations. Fractional ownership popularized by NetJets is next, with larger share and lower expenses (Part 121, Subpart K). Membership-based jet card programs (load the card with flight hours, pay again when they’re used up), charters and so-called air taxis from authorized Part 135 operators all form layers as well.

“If there are additional flight hours placed on private aircraft, that should make air charter more accessible for regular corporate customers,” said Raiff. “It shouldn’t just be C-level execs and directors of boards traveling on private aircraft. It makes sense for multiple people going to the same place to share a ride — less fuel is wasted, pilots are used more efficiently and the airspace is less congested, which leads to fewer ATC delays for the rest of us.”

Will the new breed of app-touting brokers or the sharing economy startups make this happen? Raiff said he’ll believe it when he sees it.

“You will see a harmonization of new-economy applications in certificated companies,” said Raiff. “The customer acquisition and servicing component of the industry is maybe 4 percent of the overall spend. You can expand the market, but the family who is booking a flight to Boca once a year for March break is not core. There are not enough people in Corporate America with the spending authority. Those who have it are too busy to be online shopping when they have professional corporate travel departments to help do that procurement.”

About one in five travel managers is involved with selecting or managing business jets and charters, according to Business Travel News.

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Mitigating The Information Security Risks Of Travel With Mobile Devices

Between Edward Snowden and Sony Pictures, one would think awareness about cybersecurity is at an all-time high. Some would say it’s not high enough to counter the allure of potentially vulnerable mobile services.

A Global Business Travel Association Risk Committee webcast last week featured Disruptive Solutions CEO Sean Donahoo and iJet International director of information security Patrick Neise trying to raise awareness. Below is a summary of their tips to help traveling employees protect information on mobile devices.

Also speaking on the webcast, committee member Erin Wilk offered up the bottom line: “The equipment itself is quite cheap. That’s not what’s of value to us as an organization. It’s the information that is stored on these devices. It’s not just a BlackBerry or a laptop anymore. We have employees traveling with multiple mobile devices and risks come with that.” Wilk is global corporate security and travel safety program manager at Bank of America, which sends roughly 60,000 people each year to about 130 countries.

Data Security

Image: Thinkstock

Much like cost savings, risk management competes for priority with productivity. Business travelers need Internet access. Does it make sense to avoid the hotel’s WiFi network because of possible vulnerabilities? At what point are we being too paranoid? Unfortunately for firms that want to protect their intellectual property, client data and internal networks, the answer seems to be that there’s no such thing as too cautious.

Donahoo and Neise cited CyberEdge Group research announced in March indicating that companies are most concerned about phishing, malware and zero-day attacks. The study found that mobile devices and social media, both commonly used by travelers, represent the weakest links in information security programs. Too much information and too little return on investment tend to block improved processes, but researchers concluded that lack of awareness is the biggest impediment.

“I want to scare you into being more aware,” Donahoo said to start his presentation, “but I don’t want to scare you away from technology. The goal here is not to go back to carrier pigeons.”

It shouldn’t take a high-profile attack to increase awareness. Barack Obama’s executive order this month calling “malicious cyber-enabled activities” a “national emergency” may help.

Common sense ought to prevail. Just think of all the data — passwords, banking info, contacts, travel plans — that a hacker or burglar might like to know. It’s probably all on your phone.

As it turns out, a good defense can be as simple as having less exposure than another person coming off the flight or checking into the hotel. This means not becoming what presenters called “the low-hanging fruit.”

Information Security Guidelines For Travel With Mobile Devices

Create a cybersecurity travel policy. Consider limiting the types of data on devices or allowing only certain devices to go to certain countries. Look into requiring pre-trip training. Which procedures will help block malicious software from entering the corporate infrastructure upon return? “All of this should be as common as policies for booking tickets or hotels,” said Donahoo.

If you don’t need it, leave it home. This includes not only electronic devices but also credit cards and identification you won’t need.

Use “burner” or “clean” devices. Companies including Babcock and Wilcox integrated IT and travel processes to ensure travelers going to high-risk destinations are equipped with clean devices.

Keep “positive” control of devices. If customs brings your device to a back room for inspection, or if you pack it in checked luggage, consider it compromised. Even hotel safes have a default code, and break-ins happen. But bad actors don’t require physical possession of your devices to break into them.

Avoid free wireless access points, and possibly even hotel networks if you can use a satellite-based subscription data plan. Why? Ask Kaspersky Lab about Darkhotels. Also, disable “auto-join” for WiFi and avoid charging stations — use only your own cable and a power outlet.

Don’t “click” links from unknown sources. White-collar workers are well aware of this advice from the IT department with regard to their company laptops and desktops, but it may not be second nature on mobile devices. The guidance  goes for emails but also SMS messages, notifications and apps.

Know what your apps are doing. Carefully consider the need for allowing apps to access your microphone, camera, contacts or location information.

Before traveling, make copies of data, clear browser history and update software using known networks in your home or office. Doing so anywhere else, including via global carrier data networks, could mean exposure to malicious infection.

Turn off communication mechanisms you’re not using. Bluetooth, WiFi and GPS are wonderful for so many things, including broadcasting data about you and your company to criminals. Is it really necessary to upload all your contacts to the rental car system for hands-free calls? Will you remember to delete it before heading back to the airport? Other risks include Bluesnarfing and Bluejacking. If you’re not using them, turning these functions off also saves battery power.

Use Virtual Private Networks and encryption, but don’t assume safe data transmission means devices on either end are not compromised.

Be wary of strangers, and their gifts. The FBI warns to “beware of new acquaintances who probe for information about you or who attempt to get you involved in what could become a compromising situation.”

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Big Airlines Rein In Capacity Amid Fare Softness

Air travel demand is fairly strong and airplanes are pretty full. Airlines are raking in profits. Fares are flat or down. Where will they go from here?

Predicting airfares is risky, with wild cards in the form of fuel prices, competition and the economy. Fundamentally, fares are a function of supply and demand. An imbalance there created some fare softness this year, but the bigger airlines are looking to regain stability.

With consistent healthy demand, the metric to watch is capacity. The game for a while has been all about discipline — adding flights and seats in markets where warranted by demand, if at all, and not merely as a marketshare grab.

Image: Thinkstock

Image: Thinkstock

The big carriers maintain that they’re continuing to follow that doctrine and have slowed capacity growth.

United last week lowered its full-year 2015 capacity growth estimate by half a percentage point to between 1 percent and 2 percent. American also lowered 2015 capacity guidance by half a point to 2 percent. Delta by the fourth quarter expects flat systemwide capacity.

At the same time, Southwest and smaller airlines continue to expand operations, some by a lot.

During an earnings conference call on Friday, Cowen Group analyst Helane Becker told American Airlines executives that “you’re still seeing a lot of capacity going into markets that probably shouldn’t be there.” That made her wonder about market competition and the perception that “it’s not the same old airline industry.”

In response, AA CEO Doug Parker said, “It’s really different this time. It’s nothing like what we saw in the past when airlines got the first whiff of profitability and they said, ‘Gee if I can be profitable with 100 airplanes just think how profitable I can be with 150.’ ”

While AA executives acknowledged that supply growth on average has outpaced demand growth since last year, Parker said it not like the days when airlines were starting new hubs and encroaching on each other’s territories.

Becker told The Company Dime that she’s “heard every airline company complain about domestic competitive capacity increases. Airlines are trying to hold the line on discounting. What we’re seeing with fares is it depends on the market. Some are up, some are down. As usual, the most competitive markets will have the most competitive fares.”

Stifel Nicolaus analyst Joe DeNardi pointed to Dallas and Seattle as the two notable markets where excess capacity is translating to lower prices.

In Dallas, Southwest is expanding at Love Field. That accounts for a good chunk of the carrier’s planned 7 percent capacity growth for 2015. It is also adding service at Washington Reagan and New York LaGuardia.

Business fares at Dallas/Ft. Worth are falling as Southwest ramps up across town. According to Harrell Associates, the average one-way “alternate” business fare for flights last week on Delta between DFW and Atlanta was $299, down 34 percent. On United’s Newark-DFW flights, the average alternate business fare had fallen 28 percent to $557. On American to and from Chicago, it was down 40 percent to $274. Bob Harrell characterized an alternate business fare as one likely to be purchased by a business traveler, with some restrictions and an advance purchase up to 10 days.

In Seattle, Alaska Airlines and Delta are adding seats and routes. Overall, Alaska Airlines last quarter and this quarter has been growing capacity by about 11 percent but expects to slow down in the second half of the year.

Egencia director of client services Nathan Brooks pointed to buyer opportunities in Chicago and Los Angeles, two markets that have multiple players with a big presence and likely will see capacity growth. “There has never been a dominant carrier in Los Angeles,” he said. “Delta is adding a lot, United is adding a bunch, American is always trying to grow there and Southwest is trying to be dominant.”

Brooks said Egencia has tracked an overall “slight decline” in average ticket price across the domestic U.S. market and expects fares to stay rather flat for now. “In the past there always has been this feast or famine mentality,” he said. “When thing are really good the airlines would add a lot of capacity and then yank it the minute the market started showing some softness. There is discipline finally in capacity.”

DeNardi agreed, adding that domestic pricing in general has held up fairly well given reduced airline fuel expenses. “Airlines are reluctant to add capacity and lower pricing because of the volatility of oil prices,” he said. And he expects it to stay that way.

The Fuel Factor

Aviation industry analyst Robert Mann also cited capacity discipline for his expectation that “lower network fares” will not continue.

Mann argued that attributing lower airfares to lower fuel costs “makes little sense. Lower energy prices (in effect, a tax) mean greater consumer discretionary spending power, some of which is likely to accrue to demand for air travel. In addition, no airline that is operating ‘full’ today and heeding capacity discipline (as the network carriers have) can improve its profits by reducing fares, no matter the reduction in any particular supply cost.”

Advito has a different take on fares for the rest of this year. “In this environment you would expect airlines to start adding little bits of additional capacity,” which brings more low-fare inventory, said vice president Bob Brindley. “We originally thought there would be a flat to 2 percent increase [in 2015 fares] but now we’re looking at flat to 2 percent decrease.”

Brindley added that airlines “are having a hard time trying to justify a published pricing increase when their costs are going down.” Arguing that passenger fuel surcharges needn’t be adjusted is like “fighting a losing PR battle.”

United chief revenue officer Jim Compton told analysts and media on Thursday that airlines dropped fuel surcharges in certain markets, especially in the Pacific region. “Where demand permits, we have increased base fares to offset a portion of this headwind,” he said.

Increases in the domestic U.S. market have been rare. According to FareCompare, U.S. airlines this year have attempted one broad fare hike, a $4 roundtrip hike in February that stuck. By this time last year, U.S. airlines made 11 attempts to raise fares, succeeding four times.

On the demand side of the equation, airlines generally continue to characterize the environment as solid. Delta said first-quarter corporate revenue increased 3 percent despite currency pressures, and noted that 85 percent of the corporate travel managers it recently surveyed expect to “maintain or increase spending over the balance of this year.”

In an April report, the Global Business Travel Association projected U.S. business travel spending this year would increase 3.1 percent versus 2014. Its 2016 forecast calls for 6.1 percent growth. Trips, though, would rise more slowly, 1.7 percent this year and 2.3 percent next year. GBTA based its projections partly on an assumption that U.S. gross domestic product this year would increase about 3 percent.

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Accenture Plans To Endorse Uber For Employees

Atlanta – Consulting giant Accenture appears ready to urge limo-loving employees to use Uber. It would not be the first big company to approve the red-hot service, which remains questionable from a risk management perspective.

“We basically treat Uber like a taxi,” said Accenture global travel program manager Lisa Keller during last week’s Association of Corporate Travel Executives conference. “You are more than welcome to use it. Interestingly, we are starting to do some analysis on our travelers who spend the most on limo transportation in the United States, and we are going to start promoting it to them and their executive assistants as a cost-savings measure. ‘Are you aware that you can save some money?’ That is what our management is interested in.”

Image: Thinkstock

Image: Thinkstock

Keller said the initiative has support from the company’s North America COO. Presumably that’s Larry Solomon, although Keller did not name him. She said the COO is cognizant of concerns about new suppliers like Airbnb and Uber but feels it necessary to “embrace” them as the industry evolves.

The big question is whether Accenture conducted a risk analysis on the use of Uber. Reached later, Keller would not provide additional comments.

Company public relations officials also did not offer more information. They asked that Keller’s comments not be published but did not refute them.

There is no industry consensus on whether Uber offers sufficient liability coverage and driver background checks. The company’s terms of use alone are enough to scare off many corporate folks.

Speaking during the same ACTE event, AstraZeneca travel service global commercial leader Kerrie Henshaw-Cox said her firm’s employees are using Uber.

“We are currently going through a few questions with security and IT,” said Henshaw-Cox. “We’re asking security whether they will support Uber and we are asking IT whether they will approve the downloading of the app. Whatever happens, it’s not something I currently see as being managed by the travel team but rather it is endorsed by the travel team. But before I can endorse it, I need that tick from security and tick from IT.

“It’s not a supplier that we would manage, there’s not a contract that we manage as you would with airlines or hotels,” she continued, “but absolutely you have our okay to go and use it.”

Expense management provider Certify this month announced figures demonstrating Uber’s tremendous growth. The company said Uber in the first quarter accounted for 46 percent of paid car rides processed through its system versus 15 percent a year earlier. Traditional taxis, limousines and shuttles fell to 53 percent of paid car receipts from 85 percent in the prior year.

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For Some, Travel Policy Isn’t Black And White

Atlanta – Travel policies range from simple and suggestive to complex and mandated but travel manager Michelle de Costa argued they need a “gray area so people can make the right choices for themselves.” Others try to make gray areas closer to black and white by stratifying polices based on traveler profile.

Formerly Sapient’s director of global travel and client experience, De Costa and fellow speakers here last week at an Association of Corporate Travel Executives event discussed how to center managed travel on employee needs. They said attracting and retaining talent now is critical to good policy design.

Travel policy flexibility oscillates in different industries at different times. A memorable example at the turn of the millennium had dot-coms wooing talent with the promise of luxuries like private jet travel. That bubble burst. But after another economic recession, growing tech firms again are letting employees fly in the front of airplanes. Meanwhile, the oil and gas business is experiencing just the opposite.

In any organization, employees who travel the most are likely the ones experiencing negative side effects. AstraZeneca travel service global commercial leader Kerrie Henshaw-Cox said those people are most likely to leave their companies.

“The top 5 percent of travelers are experiencing a great deal of pain while traveling,” said Henshaw-Cox, who for the past few years has been examining the question of how much is the right amount of travel. “These road warriors really need to be looked after, to the point that we are going to start doing a tiered policy approach for them.”

Industry research backs that sentiment. In a 2013 report, Carlson Wagonlit Travel executives and professors from the HEC Paris business school found that “travelers can easily tolerate” five or fewer business trips each year. Beyond that, though, a “spoiled frequent flyer syndrome” can kick in. Based on a 2012 CWT survey of about 7,400 travelers, the authors wrote that “frequent travel evidently increases the traveler’s irritation for the inevitable problems that arise.” According to the findings, frequent travelers especially are bothered by flying in economy class, staying at lower-tier hotel properties and traveling on weekends.

Some companies already have written travel policy exceptions for road warriors, though exceptions for higher-ups are more common. A more flexible road warrior policy might be for those who travel a certain distance or at a certain frequency in the course of a year.

Companies can differentiate travel policy through more convenience, comfort and perks. That could include airport club membership, expedited airport screening programs or inflight Internet connectivity. Elite status in supplier loyalty programs or green lights on business class also are popular.

Microsoft group manager of strategic sourcing for global travel and meetings Georgie Farmer said four trips of seven-plus hours in a year qualifies travelers for business class. Other companies tie qualification to salary grade, seniority or hierarchy.

Few travel policy elements are more provocative than those dictating who gets which perks. The more precise the parameters, the harder they are to manage. In some environments, it’s just easier to have one common policy.

De Costa said tiered policies wouldn’t work anyway at Sapient, where the culture is “very ‘one for all and all for one.’ ” She said the common policy targets road warriors, “not the executives or the people who only travel a few times a year.” De Costa is about to take a new travel management position at KPMG.

Culture often is an outgrowth of industry sector. Macroeconomic conditions and an organization’s current state also may factor into the link between travel and retention. “It comes with the pressures of the employment cycle. If you look at companies that are laying off like crazy, is it as important? Maybe not,” said Maria Chevalier, Travelport global vice president of corporate incubation. “But the ones that are high growth? Yes.”

When she managed Hewlett-Packard’s travel program, Chevalier studied compliance and behaviors across various traveler demographics. “We have never seen a direct correlation” linking business travel policy to employee retention, she said, though a “stress index” was part of the analysis.

Chevalier said personalization is less about policy — which she sees primarily as a risk mitigation tool — and more about the travel experience. “That’s where your point of entry is different and where you can delineate,” she said. “Your first business trip, your first trip overseas, your first trip to London … they all need to be different. That’s where you can control and personalize.”

Henshaw-Cox agreed that differentiation is about more than perks. It can start with a tailored booking process. Programs should enable frequent travelers to more quickly book routine trips while helping out “the first-timers who need tips along the way.”

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Airlines Ease Disruptions With New Systems, TMC Processes

With parts of the United States finally thawed after another nasty winter, weary travelers can breathe a little easier. But cancellations are something airlines think about year-round. To better reaccommodate disrupted passengers, they are employing the next generation of internal automated rebooking systems and new processes for travel management companies.

Some airlines at first sought to rebook as many passengers as possible with software that beat manual processes used by airline personnel. Their newer systems use algorithms and lots of data inputs to find the most appropriate itineraries. American, Delta and United consider class of service, loyalty program status and other factors. They pair their systems with traveler notifications and a degree of self-service. Travelers often can select a different flight than the one their airline gave them.

“Just rebooking customers on something is not the goal,” said United Airlines managing director of customer solutions Scott O’Leary. “Booking our customers on flight options when there is a high likelihood the customer accepts that option is what needs to be done.” He added that a basic automated rebooking system “can go out and gobble up” seats on flights for passengers who might have other options, leaving out those in the most need.

That’s why United is replacing a tool it’s been using for several years. The new Journey Management system is “introducing that next level of intelligence,” O’Leary said. It helps the airline plan scenarios, detect disruptions and be “as responsible as possible in using limited seats.”

Built to learn things like travelers’ preferences during disruptions, Journey Management is now in limited use. In its initial release, the system works off “five very basic user stories,” O’Leary added. At full maturity, that could jump above 2,000. United expects to cut over by the end of this year.

Delta deployed its new system in 2013. Called Viper (for Virtual Inconvenienced Passenger Expedited Reprotection), it “uses creative routings and connecting points to get customers where they need to go,” according to Delta materials. Viper works through Delta’s reservations department. It prioritizes reaccommodation for corporate accounts enrolled in the airline’s Edge program.

American Airlines developed its current rebooking tool several years ago. Managing director Jim Diamond described it as a “global, optimal approach to reaccommodation.”

“We may book a local customer on a later flight to ensure that a connecting customer gets that last seat that will get them to their final destination on that day,” Diamond said. “We’re not leaving anyone behind.”

In contrast, a “sequential approach” ranks customers and finds the best available option for each when the system gets to them. That, Diamond said, “can get you painted into a corner. You end up with a number of passengers with no good options.”

He said that AA for years has had success with the tool, “but I am sure we can and will do better.”

A Little Help

Automated systems aren’t perfect. Infrastructure constraints and limits on available seats due to high load factors make it difficult for airlines to serve all impacted passengers.

“When things go sideways, airlines no longer have enough people to handle it,” said Sabre Travel Network president Greg Webb. “That goes to agents.”

But servicing disrupted passengers has been a sticking point with travel management companies. Though some TMC execs and corporate buyers praise airlines for being more proactive in issuing waivers, agencies find their hands tied in some situations. Tickets already in a checked-in status are problematic.

“Airlines close access, then the agent can’t do anything for them,” said Sabre Corp. CEO Tom Klein. “In a different scenario, they could push the problem to the agent. Some airlines are working with bigger agencies on that, saying, ‘We’re going to allow you to have access.’ ”

United Airlines, for example, built an “uncheck-in” function on its website. Combined with better messaging in global distribution systems within 24 hours of departure, this makes it easier for agencies to service tickets and keep information synchronized.

“As a function of the way our GDS messaging is set up, a lot of our agencies were having challenges seeing what actions we have taken on our end if a customer was disrupted,” O’Leary said. “All they saw was the old version of the passenger name record. That generated some friction. We are about 60 percent of the way there in terms of the types of changes that are visible [in GDSs], and we expect to close the gap on that in the coming months.”

Egencia vice president of supplier relations Chris Vukelich said his company has been working with major carriers on the issue, including a beta test with United. “Our traveler wins because we can help them quickly, we win because we don’t have to be on hold with United and hurt our productivity and United wins because they don’t have to take our calls and instead can take calls from the people who booked directly,” Vukelich explained.

Carlson Wagonlit Travel senior director of traveler services support Tim Husted said “the ability to at least get something unchecked-in so you can adjust it is a big step forward in allowing us to advocate for the needs of our travelers.”

American Express Global Business Travel in December stated interest in more closely integrating with airline systems to handle disruptions. A spokesperson this month had no new information to share.

United since October also has been providing better guidance — and flexibility — to the TMC community during disruptions. That’s included being more proactive in issuing waiver codes and less concerned with matching exact booking classes when booking a new itinerary.

Sources indicated that Delta, too, has expressed a willingness to improve TMC access during disruptions, possibly including an undo check-in feature. A Delta spokesperson did not confirm that but said the airline a few years ago “enabled visibility to ticket revalidation in all GDSs, showing that those tickets are check-in ready.” Revalidating, the spokesperson added, gives control back to travel agencies.

Delta also provides “self-service waivers to managed partners, so agencies and corporations have the ability to reissue” during irregular operations.

American started its mega merger more recently than Delta and United, and still has big-picture IT priorities to work through. “American understands the need to improve disruption handling with the travel agent community and we are evaluating the functionality within our own systems,” according to a spokesperson.

Overall, CWT has seen progress. “The real focus has been our preferred suppliers empowering us to do more without having to call and get permission,” said Husted. In some scenarios, airlines always give permission. “We told them they are rubber stamping something that could easily be done through the GDS. Let’s make that part of our waiver, part of the standard process. Let’s ensure you won’t debit memo that.”

He also noted improvements in how airlines use GDS messaging to communicate itinerary changes. “It’s a huge benefit,” he said. “It’s important that we are on the same page with our carriers.”

Travel and Transport CIO Mike Kubasik agreed. “It’s been refreshing,” he said. “The airlines really understand the value of the TMCs.”

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JPMorgan Chase Exit From International Commercial Card Market Leaves Clients, Partners Scrambling

JPMorgan Chase will exit the international commercial card business at the end of the year, and that has partners and clients scrambling. Competitors including American Express and Citi stand to benefit from an unscheduled influx of requests for proposals.

JPMOrgan Chase

Image: Thinkstock

Unplanned is how one JPMorgan Chase corporate card customer described the situation. “We got official notice in January,” said the source, who requested anonymity due to company policy prohibiting public comments about suppliers. “It just wasn’t on our project list for this year.”

It’s not exactly clear why Chase is making the move. Information about it showed up in financial filings and at a February investor event. The company listed “international commercial card” among about a dozen businesses it decided to exit. These included Carlson Wagonlit Travel (divested last year). “We exited businesses, products and clients that were either not at scale, not returning hurdle or had outside operational risks,” JPMorgan Chase CFO Marianne Lake said.

Nilson Report publisher David Robertson suspected the move could be related to the European Commission’s cap on interchange fees. JPMorgan Chase co-brand partner AirPlus in response to the cap announced a transaction fee on individual-pay cards for Germany-based clients.

“Corporate card products don’t have annual fees,” said Robertson. “And now you have squeezed those revenues that come from the merchant side. This makes it a very different proposition.”

The number of clients impacted by the JPMorgan Chase move also is unclear. The bank in the past has claimed more than 6,000 corporate and public sector clients, but that includes Canada and the United States. It plans to remain in those markets. The company’s media relations team did not provide information.

According to Business Travel News, JPMorgan Chase as of 2010 had made global expansion a priority and issued cards in 95 countries and 28 currencies. “In a very short timeframe we have grown from a U.S. and Canada supplier into the full European Union,” a company official told the publication. About two years later, JPMorgan Chase announced a significant partnership with AirPlus to support global expansion. AirPlus declined to comment on its partner’s decision to retrench.

Commercial Payments International founder and CEO Joanne Robinson said that although it’s unexpected, corporate travel buyers forced to find a new partner are in a good position. As with any RFP, she suggested that they be as “exacting” as possible on what they want. “Some are too general,” Robinson said. “Don’t ask for more than you really need.”

In a case like this where a conversion is inevitable, Robinson recommended buyers seek as much help as bidders can offer on the transition and deployment of the new platform.

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Cindy Allen Departs Concur As Some TMC Relationships Remain Touchy

Concur executive vice president of supplier and TMC services Mike Koetting will take direct responsibility for travel management company relationships as the firm says goodbye to Cindy Allen.

Allen, who has served as vice president of TMC services, joined Concur upon its 2013 acquisition of GDSX. On Tuesday she informed TMCs by email that she plans to depart at the end of the month to “start a new adventure.”

Cindy Allen

Outgoing Concur VP of TMC services Cindy Allen

Along with its TRX acquisition, the GDSX purchase represented a significant boost to Concur’s TMC services portfolio. Some TMCs now are “preferred” partners, reselling the booking and expense tools, using GDSX and promoting TripIt. Others may resell only the travel tool or support clients who use the expense product.

It’s been rough going of late, though. TMCs complained to Allen about the recent unprecedented travel booking tool outages. In her note, Allen indicated Koetting would be “working directly with our customer experience team to further develop our strategy to improve communications, not only in our day to day, but with a specific focus on delivering critical information should we experience performance challenges.”

TMCs also remain skittish about Concur’s “open booking” program, TripLink, which originated partly at GDSX. The “Suppliers” aspect of the program allows participating travelers to book negotiated rates on supplier websites.

Air Canada and Marriott are aiming to go live in Concur’s TripLink Suppliers program before summer. That would double the number of traditional suppliers up and running on it just about three years after Concur first announced it.

Concur this month announced that Etihad and Enterprise Rent-a-Car agreed to join the program. The company also said 3,500 clients are using TripLink. But the press release did not make a distinction between clients using the TripIt (email parsing) version and the Suppliers version. A Concur media official declined to say by press time how many clients have registered with active participants IHG and Starwood for direct bookings.

“I was very surprised when I heard the 3,500,” said Air Canada manager of distribution business development Keith Wallis. “It makes more sense to me now. It’s useful to highlight the fact that there are a couple versions of TripLink.” Wallis figures early adopters of the Suppliers component will be lightly managed accounts “because they’re predisposed to self-service. That’s one of the reasons I’m interested; we haven’t traditionally been strong in that segment.”

Wallis said Concur now is working on “access to data for TMCs to provide servicing and to report and manage. A lot of people have been looking for that.” Asked about TMC concerns, Wallis said, “We’re not interested in disintermediating anybody. I am certainly not looking to shrink the TMC market or shift a booking anywhere or change the current ecosystem. I’m looking to broaden my opportunities to work with corporate clients. Some may switch to this method, but I’m much more interested in all those corporate clients I don’t have a relationship with today that I may get tomorrow.”

‘Still Slow’

“Those thinking about signing up to the full-blown version of TripLink may be waiting for a higher volume of suppliers,” said Wallis. Several key suppliers in the fall told The Company Dime that they’re waiting for clients to ask them to join.

“It’s a chicken-and-egg thing,” said Starwood director of sales, new business and digital programming Jonathan Kaplan last month. The company went live about nine months ago. “It’s still been slow, but we expected that. It’s a handful of accounts. A lot of them are small and medium-sized. Some of them are sort of new accounts for us, so that’s pretty nice.”

According to Marriott International senior director of B2B e-commerce Geoff Heuchling, “We’re doing this on behalf of buyers that have requested this functionality. Each company will have to decide if this product is right for them. We think that TripLink makes sense for travel managers who value the booking data more than the booking channel.”

Other announced suppliers include Airbnb (which is live) and Avis and United (which are not). United is first focused on relaunching its website. Etihad expects to complete integration by early 2016.

In her email to TMC partners, Allen wrote, “I absolutely believe in the initiatives and direction the Concur organization is going, and look forward to being a part of this great industry, striving to help managed travel evolve in the years to come.”

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TMC Apps: ‘Table Stakes’ For Clients

When asked what mobile apps they suggest company travelers use, travel managers invariably name apps from their risk management and tech providers. They also name their TMC, if it offers one.

A TMC app’s standard feature is itinerary management, also core to popular apps like TripCase, TripIt and WorldMate. TMC apps grab information on bookings made by a travel agent or through a corporate booking tool, and update when there are changes. Another common feature is flight and gate alerts, very often provided by FlightStats. Some TMC apps offer guidance on what to do in the event of a cancellation. They may prompt flight alternatives or make it easier to call a travel agent for help. Other common features include weather and destination information.

TMC appsIt’s in their latest development priorities that the bigger TMC apps show some differentiation.

Based on technology from the Carlson Wagonlit Travel acquisition of WorldMate, the CWT To Go app has more than 400,000 registered users. That includes about 40 percent of all CWT travelers who take more than five trips a year. About 60 percent of those use it every quarter, officials said. New features include profile management and in-policy hotel bookings using company rates. CWT recently launched apps in Japan with its JTB partner and WorldMate.

CWT’s app uses WorldMate’s email parsing technology to pull in data on non-CWT bookings. The traveler simply has to forward his or her email confirmation to a particular email address.

CWT vice president of emerging products and innovation Patrice Simon said TMC apps can deliver policy information and controls not found in other business travel apps. For example, they can suggest the traveler make a hotel booking on overnight air reservations that don’t already have one. CWT’s smartphone hotel booking soon will be available in Australia, Canada, Germany, France and New Zealand. It launched in December in Ireland, the United Kingdom and the United States for clients who opt in. Users can make cancellations in the app if the booking was made with it. An air booking pilot is underway.

Clients will not pay fees for mobile hotel bookings. Simon said supplier commissions earned by CWT would pay for the app’s upkeep. “Bookings will be more than enough,” he said. “The goal is not necessarily to make money on it.” Features like profile management also reduce costs, as does any self-service function.

Simon said the company also is “taking steps” toward implementing en-route messaging, for example on suggested ground transport options.

BCD Travel vice president of digital and product planning Will Pinnell said the company is aiming to enable self-service — “which some believe is the best service” — while also engaging with travelers on policy. For a fee, the enterprise version of the TMC’s TripSource mobile app offers policy reminders with gamification elements. About a dozen clients were testing it as of last month.

BCD Travel also is an early partner of CheckMate, which enables remote hotel check-in and provides related information and merchandizing via mobile devices for guests at more than 100 properties. In addition to check-in, CheckMate allows users to request a preferred room, access deals and upgrades and receive notification when their room is ready. BCD is looking to use CheckMate’s services in TripSource, which has managed more than a million trips in its ten months on the market.

BCD expects this year to add email parsing using proprietary development. It plans also to integrate hotel booking from its GetGoing partnership. “We think we can increase hotel attachment in a way that we’re honoring the preferred agreements our clients have in terms of how we display the results,” said Pinnell, formerly Sabre’s mobile strategy director.

Between revenue sources like client fees or booking commissions and cost savings from not using a contact center, these TMCs are aiming for a return on what is no doubt a significant investment. “We and other TMCs take a lot of calls just asking for information — travelers want to know the options,” said Pinnell. “As we evolve TripSource, it will be not just information but also a place to make changes.”

According to Egencia, its TripNavigator app has updated travelers on their itineraries more than two million times. Egencia was the first TMC out with an app nearly four years ago, and it subsequently added booking capability. Global transactions grew by nearly 200 percent year-over-year in the fourth quarter of last year, officials said. In addition to bookings, a key feature is trip disruption assistance for travelers when they click for help on a cancellation notification. There’s also a new dedicated iPad app.

Like their CWT counterparts, Egencia officials in recent interviews emphasized a mobile-first development approach. “Mobile has forced us to think hard about what is essential,” said Egencia CTO Sravana Karnati.

Travel and Transport executive vice president and CIO Mike Kubasik believes TMC mobile apps are in their infancy. “Corporate travel managers like a closed app, where the data is not being shared, there’s no advertising,” he said. “We’re doing custom things with it that only a Travel and Transport customer can use.” The Dash app is embedded into the agency’s telephony technology, for example. The company at one point had a paid version, but it changed direction. “The juice wasn’t worth the squeeze,” said Kubasik. “It’s now a fundamental, and the amount we were charging was nominal anyway.”

Travel and Transport is planning to port its proprietary pre-trip system to the mobile environment as a way to provide messaging capability. It’s also enabling email parsing using technology licensed from WorldMate for meetings, leisure and what Kubasik said is “a very small number of clients who want it for ‘out-of-system’ bookings.”

American Express Global Business Travel integrates with Sabre’s TripCase, but also is in the early stages of building mobile apps as part of its overall tech refresh.

Lest it be understood that app building is solely for the very largest TMCs, a few that are smaller than the aforementioned also have their own apps. These include Adelman Travel and World Travel Inc. On the other hand, other big ones like FCm Travel SolutionsHRG and Omega World Travel have partnered with travel app makers — respectively Mantic Point Solutions, Amadeus and Sabre.

Partnering is the approach that most smaller TMCs are taking, but not all.

Travel Leaders affiliate World-Wide Travel Associates is a small, three-year-old Washington, D.C. agency that also uses MagnaTech for some of its mobile app components. The company takes a different approach by presenting mobile app features in a client-branded wrapper. There’s no World-Wide app, per se. While some features are common, like itinerary management, the company also is adopting third-party services like CheckMate’s hotel check-ins. General manager Kevin Drury said World-Wide also is considering licensing interactive features from another developer, mTrip.

“We’re selling customized, high-touch management,” said Drury when asked about the cost of development. “There’s a lot of value proposition there when you go into a pitch and they have never seen that product before, so we’re able to allocate some funds to it. Having someone on your team to project manage will save a ton of time and money, and a lot of that boils down to talent. You need to invest in even one young developer. If you develop something other people want, there’s nothing saying you can’t sell to other TMCs.”

How Important Are Apps?

It’s safe to say that for most companies, mobile is a significant factor in travel and only growing in importance.

“It has made it onto scoring matrixes used to select a TMC, and gets a decent weighting,” said GoldSpring Consulting partner Will Tate. “Anyone can cut tickets and answer phones and fulfill booking tools. People now are looking to the next level — the service components to drive policy and preferred relationships. They want proactive support and problem solving.”

Drury said mobile comes up “almost immediately once you get in the client’s door. You need to come with your phone to show them the app. The last couple clients I talked to really hammered that.”

According to CWT director of mobile product management Amy Ludwig, “It’s becoming a client expectation to have solid experience. It comes up very frequently in bids. It’s table stakes for clients.”

Here’s a rundown of selected solutions.

Travel Management Company Apps

 TripSourceTo GoTripNavigatorDash
ProviderBCD TravelCarlson Wagonlit TravelEgenciaTravel & Transport
Compatibility iOS 7.0 or later (Android 1.3) iOS 7.0 or later
(Android 2.3, BlackBerry 10)
iOS 6.0 or later (Android 2.3.3)iOS 7.0 or later (Android version varies by device)
Sync itin.
Parse email
Flight alerts
Book hotel✔*
Book air✔**
Profile mgmt.
Air check-in
Policy messaging✔***
LanguagesEnglish, French and GermanEnglish, French, German, Italian, Japanese and SpanishEnglish and 32 moreEnglish
Language translation
Sync cal.
Updated April 2015. Checked features may be available only on the app’s iOS version.
* Select markets
** U.S. only
*** Enterprise version
**** Canadian and “select” U.S. travelers

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Saving Dollars And Making Sense Of Travel Management’s Worth

Looking after human capital should be the top priority at any organization. That means ensuring travelers are safe — and maybe even productive and comfortable. A managed travel program helps a lot. Calculating and reporting the financial benefits of travel management and procurement, though, is less straightforward.

Buyers and managers get plenty of data. They find some useful. To prove the travel program’s worth to senior management, the trick is knowing which numbers mean the most.

The approach varies, sometimes depending on company size, culture and program maturity. Some companies use finance and procurement methodologies. Others keep it simple; monitoring total T&E along with average airfares and hotel rates is enough.

savingsProcurement teams earn credit within their organizations for different achievements. Are they judged on hard-dollar savings only? How is cost avoidance defined, and does that count? Can sourcing managers claim credit for value-adds resulting from a preferred relationship?

“I am continually talking to my peers and it seems as if everyone does it differently,” said Reed Elsevier director of global travel services James Sisco. “What’s really valuable is profit and loss savings, taking money off the bottom line that we will not spend this year.”

That’s one way to tie travel spending to broad company metrics. Travel’s return on investment or its impact on earnings per share are others.

Senior management at TCG Consulting’s clients are most interested in monitoring total travel costs as a percentage of revenue. For those companies, higher travel costs are not a concern if they’re outpaced by revenue gains. “If they are bending the cost curve down, that’s where they are seeing a win,” said TCG chief marketing officer Bill Kerr. “If they grew at 10 percent, travel price inflation was 4 percent and they had a net 1 percent increase in travel, they had a margin expansion because they cut it as a percent of revenue.”

Others are not as keen on attempting to correlate the travel program’s costs to companywide financial metrics. They say the math can be convoluted. It may be easier to pull off at the department level.

TClara managing partner Scott Gillespie said that to measure travel costs as a percentage of company revenue, it’s not enough to consider only price inflation and company growth. Travel patterns, “trip quality,” employee headcount and attrition, and even the definitions of “travel costs” and “revenues” factor in as well, he said.

Without all that, Gillespie called the measurement “eye candy for low-IQ travel dashboards.” Even with it, he said, “you still would not know if you’re spending the optimal amount on travel.”

Yet while big-picture measurements have their critics, it can be hard to grab C-level attention with more tactical data. CFOs and chief procurement officers may not care much about online booking percentages, advance-purchase usage and other metrics program managers watch. Benchmarking against peers and market averages have their place, but incremental savings seems to matter most.

Take hotel costs. It’s great to negotiate daily rates below the market average, or better than industry forecasts, internal expectations or other companies’ rates. But beating last year’s paid rates would be even better.

That’s not always possible, especially with hotel rates these days. If measuring savings is important, measuring lost savings is too. What did it cost when employees didn’t use negotiated discounts or follow the travel policy? While CPOs may focus on year-over-year reduction targets, other senior leaders just want to be sure the company is not missing out.

“Some of the difference between the hardcore procurement people and the finance people is procurement is driving at true cost takeout, not mitigation,” said TCG global managing director Albert Taras. “The finance people see the bigger picture and ask, ‘What may have changed behaviorally to cause spikes and which factors are somewhat in my control?’ ”

“We’re paying less than published fares because of discounts and the only reason we have discounts is because of the managed travel program,” said Partnership Travel Consulting CEO Andy Menkes. “The rollup math is savings multiplied by the number of tickets, and from there the math stops. In general, the CFO wants to know how are we doing, what we can do better and what do I need to do to get us there. It’s always been a five-minute conversation.”

Cost Avoidance

Measuring cost avoidance is one way to keep travel costs in check. Demand management, for example, becomes more important when negotiated supplier deals lose their punch. Notably, airlines over time have whittled away the discounts they offer on lower fare classes.

Demand management can include scrutinizing trip purpose, applying pre-trip approvals, combining trips or replacing them with remote conferencing. It’s a direct method of cost avoidance. Beyond that, the distinction drawn between cost avoidance and savings varies. In some cases, cost savings means soft-dollar benefits from suppliers. Though bundling Internet, breakfast and parking into negotiated rates provides value, it may not count toward savings goals.

“We can’t prove that anyone took advantage,” said Rita Visser, Oracle’s director of global travel GPO/executive travel services. “Ours is true savings on the rate. You never get credit for any of that cost avoidance.”

“The more advanced procurement departments probably are just doing cost savings, year over year, and they’re not even looking at cost avoidance,” said Advito senior director and practice area lead for emerging practices Lesley O’Bryan. “Cost avoidance is avoiding an increase, avoiding what the market tells me I should be doing. But budgets are being cut. Large corporations are saying it doesn’t count unless I can take it off my bottom line. That’s the year-over-year hard dollar savings, which is all I care about it. I don’t care that you got me free WiFi.”

The Unmeasurable

Average ticket price may be the most common metric in travel management. It’s easily understood and, on the surface, easily benchmarked. Air travel for most companies accounts for the largest part of T&E spend. An organization tracking its average ticket price over time may see indications of whether lowest-fare policies are having the desired effect.

But benchmarking average ticket price or cost per mile against industry metrics and peers doesn’t reflect an organization’s own travel patterns and the behaviors of its traveling population. For ATP to be meaningful, it must account for price discrepancies between city pairs, classes of service and advance-purchase period.

That many CFOs don’t care about those specifics presents a dilemma. Company leaders want concise, high-level information. Dashboards and scorecards can be effective. No one wants their division to catch the eye of senior management for the wrong reasons. But these messages may not tell the whole story.

Much of travel management is about providing proper service, minimizing employee wear and tear and managing risk. Executives don’t always understand what’s involved. Buyers oftentimes are challenged to qualitatively explain themselves.

“How do you value the employee’s time on the road, the satisfaction with the program and the influence you have with behavior?” asked Advito’s O’Bryan. “That’s where we need to focus.”

Additional info: The Company Dime polled about 40 travel buyers during the past four months to understand how they quantify savings and justify the travel department.

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NetJets Adds Corporate Travel Functions To In-House Logistics System

Most companies don’t have a homegrown business travel booking system, but NetJets Aviation is a bit unique. Its business is scheduling travel and moving people around. The company in the mid-1990s spent $20 million to build proprietary logistics software to handle requests from clients. NetJets then layered on corporate travel components for its own pilots and flight attendants. Hotel booking automation came online in 2006, followed last year by some commercial air booking functions. Ground transport may be next.

The underlying automation, which NetJets calls IntelliJet or IJet, is reminiscent of crew scheduling automation used in the energy, resources and marine sectors.

The Berkshire Hathaway subsidiary has about 3,000 crew members in the United States and another 1,000 in China and Europe. They account for the vast majority of about 170,000 airline tickets issued annually by NetJets corporate travel. Because Federal Aviation Administration rules restrict crew duty days, NetJets doesn’t want crew members spending any time booking business travel.

Mark Dropsey of NetJets

Mark Dropsey, NetJets Aviation vice president of vendor relations and travel services

NetJets has flight centers at headquarters in Columbus, Ohio, and in Lisbon at NetJets Europe’s base. In its latest iteration, IJet serves as the consolidated data source for client reservations, billing, global aircraft movements and crew scheduling. Once a crew is scheduled, a request goes to the travel team.

“If we need to move them commercially on an airline, we’ll do that,” said Mark Dropsey, NetJets Aviation vice president of vendor relations and travel services. “Sometimes we move them around on our aircraft. Regardless of how they’re getting from A to B, they are always ending up at a hotel.”

The process used to be manual. “We would book it long hand and go in and populate the data in IJet,” Dropsey said. “Now, once IJet indicates where a crew member is going to end that evening, it’ll interface with Sabre. Behind the scenes, the system goes through a series of queries to book our No. 1 hotel in that location and automatically populates the booking information in IJet.”

Some aspects of the NetJets hotel program are like any other corporate program. It spends a few months each year sending out requests for proposals and securing rates. “In some cases we’ll have 20 or 30 hotels in a given location,” Dropsey said. “In other cases, just a few based on the volume in that location.”

Rates are loaded into IJet, as is info on any included amenities. When travel requests come in, a hierarchy of NetJets’ preferred hotels and their availability automatically determine where a booking is made. Crew members don’t get to choose.

About 65 percent of such hotel bookings are automated. Dropsey pointed to a reason why 100 percent isn’t a goal: less flexible cancellation policies at certain properties. “We don’t want the system to book after a local no-show time,” he said. “We want to be absolutely certain that [crew members] are going there.”

Commercial air booking automation is a bit more limited, but it’s still faster and more accurate than the pre-existing manual process. Once the travel team knows where and when a crew member must go, it can with the push of a button send that information as a query through IJet to Sabre, which returns flight options. Those options show calculated prices with any negotiated discounts applied. The travel team selects an option and Sabre processes the booking. From there, booking info populates in IJet.

For ground transportation, NetJets negotiates annual contracts with black car companies. It uses Deem’s Saturn reservation system, which “sits on the GDS and allows the travel team to book black cars,” Dropsey said. Like hotel and commercial air bookings, that information is populated in the Sabre record and in IJet. It’s an improvement over an earlier process that required phone calls to NetJets’ black car suppliers. Further automation for those bookings is under consideration.

Dropsey and the travel team reviewed and tested the hotel and air booking projects with NetJets’ IT group. The IJet system now adds commercial air, hotel and ground transport information to the crew member briefs that it generates. Those go to mobile devices through an internal application. IJet also helps NetJets track its employees, a key security feature.

IJet uses Web services to access Sabre through Global Crew Logistics, NetJets’ Miami-based travel management company, which handles fulfillment.

GCL director of operations Jackie Lachman has seen other companies take similar approaches, “but I don’t know anyone who has quite what they have. Other clients use systems that have been on the market for a while and were built by someone else.” She noted that GCL agents “are cross-trained on IntelliJet” and can step in when required.

Non-crew business travelers from the NetJets Europe operation use the Sabre GetThere booking tool. NetJets this year is beginning to use GetThere for non-crew in the United States, also supported by GCL.

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Pressured On Travel’s Value, U.S. Entertains Exceptions To Spending Controls

Under pressure from federal workers, some members of Congress and travel industry groups, the Obama Administration has loosened up a bit on the severe travel spending cuts mandated in 2012. The White House Office of Management and Budget in January formerly relaxed the controls, though only slightly. Federal travel volume growth returned last year after years of reductions, according to Carlson Wagonlit Travel.

Advocates are pleased with the progress of their message: blanket spend reduction targets and additional red tape for approving conferences create serious unintended consequences. It’s a familiar story to those who have faced a command from on high for a rigid reduction by x percent, or new, complicated approval processes. Such approaches often fail to appreciate travel’s varied place in the day-to-day function of organizations.

federal travel spending

Image: Thinkstock

The 2012 OMB order required federal agencies to cut travel expenses by 30 percent (subject to exceptions) as compared with fiscal year 2010 and maintain those levels through fiscal year 2016. In its January clarification, OMB sought to “reiterate” those reduction numbers. However, “agencies are responsible for finding the right balance between reducing spending and meeting mission-critical needs,” OMB wrote. “If agencies have new mission-critical travel needs not captured in the original fiscal year 2012 travel reduction targets, OMB will entertain proposals for baseline adjustment.” The update also softened certain requirements related to approvals and spending for conferences.

To meet the spend reduction target, federal agencies have slashed trips, increased use of virtual conferencing and set up new approval procedures. According to The Washington Post, the White House claimed the 2012 order saved about $3 billion. “But employees and their bosses have struggled to work within a new bureaucracy created to make sure that the government spends money wisely,” the Post wrote.

The U.S. Travel Association in 2012 opposed the “across-the-board cuts.” U.S. Travel senior director for domestic policy Erik Hansen said Monday that the January relaxation is helpful but “we have a lot of progress to make. Federal agencies are still having a difficult time traveling. Travel needs to be seen as a tool that can make government more effective.”

CWTSatoTravel is the U.S. government’s largest travel management provider. CWT in 2014 processed about 15 percent more government traffic than it did a year earlier. But that included some pent-up demand in the first half of last year after the 2013 government shutdown. In the end, 2014 government travel still was down roughly 20 percent from 2012.

“It hasn’t gotten back to those 2012 levels, nor will it,” said CWT Americas president of military and government markets Matt Beatty. “We’re seeing a normalizing. But even though OMB has given more flexibility, the federal agencies are still operating under sequestration, which means if they put a dollar into travel, they have to take it from somewhere else. They’re still handcuffed.”

Beatty expressed some concern about the potential impact of any federal budget showdown this fall.


Beatty said he thinks the “meat cleaver approach” has taught some lessons, albeit slowly.

General Accountability Office report issued last month helped demonstrate that the blanket cuts and bureaucracy turned out to be costly, if not counterproductive.

GAO found that the White House policies — including additional “senior-level review and approval of conference requests based on department-wide cost thresholds” — caused the Department of Defense Army Research Laboratory to send about 100 people to conferences in 2013 compared with 1,300 in 2011. Meanwhile, the average time to approve conferences at some DOD and Department of Energy units grew from a few weeks to as much as nine months.

“Approval decisions are often not made until close to the start of a conference, which creates a disincentive for the departments’ scientists and engineers to take on active roles, such as presenting research or serving as a keynote speaker, and may lead to increased registration or travel costs,” GAO noted.

Furthermore, the Army spent $658,000 on a “conference reporting and tracking tool” designed to improve efficiency in the request and reporting process. Los Alamos National Laboratory spent $708,500 to update its travel and expense system to meet OMB’s requirements.

In a January letter, American Institute of Aeronautics and Astronautics executive director Dr. Sandra Magnus told OMB the 2012 directive is “restricting the open exchange of ideas among scientists, engineers and technologists, thereby adversely affecting important national interests by throttling back on our nation’s ‘innovation engine.’ ”

In an October 2014 letter to OMB, the National Academy of Sciences, National Academy of Engineering and Institute of Medicine argued that “federal employee attendance at national or international scientific conferences is not the same as the General Services Administration’s unfortunate decision to spend extravagant sums on an event in Las Vegas intending to boost the morale of GSA employees.” That GSA event was one of a few to gain national attention and prompt the original cuts.

These additional passages from the science organizations aptly describe the value of travel for the corporate suit and researcher alike.

One might ask why in-person meetings are still important in this age of Internet communications. Advances in communications have without question contributed to interactions among researchers and fulfill many important communications functions, but they are a poor substitute for the intensity and richness of the exchanges, debates and challenges that occur when researchers meet in person.

Science and engineering are often activities in which the work of individual scientists and engineers depends on the work of others. Scientific conferences provide the opportunity to share research results, test new ideas and brainstorm about emerging opportunities.

They engage one another with challenges and suggestions. These interactions, both formal and informal, fulfill an essential role in helping researchers decide what research directions to pursue when they return to their laboratories.

What’s ‘Mission Critical’?

Across-the-board cuts are not uncommon for any sort of organization, but they’re a brute-force way to manage spending. “You have no way of knowing if it was the right number,” said Partnership Travel Consulting’s Andrew Menkes. “Or if cutting back to that degree had an impact on revenue.”

The natural next step is the difficult task of identifying essential versus non-essential travel. For the military, training obviously is critical. But The Washington Post highlighted a U.S. Army utility contract manager who needed to travel for recertification, without which her facility would not be properly authorized to remove sewage. That’s a different spin.

In the private sector, a cost-cutting mode typically results in prioritizing client-facing travel and new business acquisition. “The higher opportunity for cutbacks is on internal travel,” said Menkes. “A larger percentage of internal travel could be cut for the short term without impacting revenues, as compared with cutting travel to client prospects. Some client opportunities could be done with less travel, but new business acquisition is infinitely more successful in person.”

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