Monthly Archives: October 2016

Shelved US Airways Direct Connect Evokes Airline Distribution Aspirations

[UPDATE, Nov. 28, 2016: The Germany-based distributor with which US Airways tested its Farelogix-powered direct connection was consolidator Aerticket, according to case testimony. US Airways was disappointed with the volume of bookings processed this way.]

New York — According to court testimony, US Airways six years ago prepared to pay travel agencies as much as $4 per ticket issued through a new direct connection. It was ready to opt out of the prevailing discount program and pay Sabre’s “rack rates” on remaining GDS bookings if Sabre dropped a prohibition against direct connections. US Airways had tested such a connection in Germany, where its Sabre agreement did not apply.

American Airlines (on behalf of US Airways, which it bought in 2013) and Sabre are arguing their respective cases here in federal court about who bullied whom in their 2006 and 2011 negotiations. As they do, the rest of us benefit from learning previously untold stories. Loads of confidential information about airline distribution is surfacing.

For travel management companies and corporate travel buyers, it’s instructive to learn just how close airlines have come to going direct. While there is relative peace right now in airline-GDS land, at least in the United States, the case is a reminder of its fragility.

Andrew Nocella

American Airlines senior vice president and chief marketing officer Andrew Nocella

AA’s attorneys and witnesses are trying to prove that Sabre forced US Airways to sign a full content agreement. They’re trying to prove that this unreasonably restrained trade and caused the airline harm. They’re also trying to demonstrate a conspiracy among GDS companies.

They have produced evidence of US Airways’ short-lived plan for an alternative distribution reality using Farelogix technology. They said data processing for a usairways.com booking circa 2012 cost just under 50 cents per ticket, versus nearly $9 for a booking through Sabre.

A so-called direct connection to a travel agency would be about $3, in the estimation of witness John Gustafson, a longtime airline distribution leader who now is American Airlines VP for digital channels.

Add to that the maximum $4 payment as an incentive for agencies to use the direct connection, and you have an expense which is a couple dollars shy of the Sabre cost.

Asked why the airline would make such an offer, AA SVP Andrew Nocella testified that US Airways thought it needed to “make up” some of what GDSs pay travel agencies in incentives.

Nocella said the airline’s goal was to have its own “pipe” to travel agencies.

As had been the case since their 2006 deal, though, the “full content” agreement Sabre sought and eventually secured prohibited the airline from offering discount fares or better benefits on its website, surcharging GDS bookings (as Lufthansa now does) or establishing a direct connect program.

Ancient History?

Nope.

The US Airways story also helps illustrate a possible (some say likely) path forward in airline distribution. Already we have programs like Concur’s TripLink and Lufthansa’s direct connect. AA and others have enabled significant GDS bypass on the leisure side with the likes of Priceline.

If airline attorneys convince this jury that US Airways was unlawfully forced into accepting terms including a ban on direct connections, Sabre and other GDSs will be hard-pressed to insist on such deals in the future.

Not commenting on this case, ARC CEO and president Mike Premo this month at ARC’s TravelConnect conference outlined a few possible outcomes in the United States.

There’s an “evolutionary” scenario, he said, in which “the distribution landscape a few years from now looks a lot like today.” Airlines and GDSs would make “modest” progress in using NDC to “close the content gap” between agencies and airline sites on ancillary services.

At the other extreme, Premo suggested, is “the full Lufthansa.” Here, a major carrier adds a big fee for bookings in indirect channels, weathers the furor and shifts “a material number of customers” to direct channels, Premo said. In this storyline, other major carriers follow that model as their GDS contracts expire and big agencies take to the direct connects. That would halve ARC and GDS activity, resulting in “significant” changes in costs for remaining participants in those channels, said Premo.

Premo is betting on a hybrid of those: a “chunky, cherry-picking scenario” in which “the continued divergence of content creates enough friction or commercial effects that larger, more technically capable players sit down with major airlines and cut some deals.”

“In this scenario,” Premo said, “some of the large online travel agencies, Concur and perhaps KDS establish deep NDC links into the carriers and offer practically every product for several major carriers with added efficiencies from the reduction of debit memos and other servicing enhancements. This, in turn, puts pressure on TMCs in particular to keep up. If airline fulfillment processes instead of GDS/ARC processes were utilized here, GDS and ARC volumes could fall by 15 percent to 25 percent, pushing up costs for those remaining in the current methodology.”

In a followup email to The Company Dime, Premo wrote that people “underestimate” the pressures on airlines and their interest in reworking distribution. There are “meaningful” incentives for major airlines, through incremental revenue and “potentially cost savings,” Premo added. “If one carrier starts moving the needle away from today’s model, it’s going to make the pressures that much stronger — and create competitive challenges within the various agency verticals.”

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How Non-BSP Airlines Create Inefficiency For Travel Management

Informing clients of its new “high-cost” supplier expense recovery program, American Express Global Business Travel indicated $10 per transaction would apply not only to non-global distribution system participants, but also to airlines that are not in billing settlement plans like ARC. What’s ARC got to do with it?

Booking managed corporate travel on airline websites is a drag on productivity. Agents have to change workflows. Booking tools have to connect using aggregators or other solutions. Agents and systems take data from those web bookings and create so-called passive segments in a GDS in order to keep trip information complete and support client reporting. All that adds programming costs that standard reservations systems do not.

Even when some carriers are booked in the GDS, costs add up if they do not ticket through ARC. While it has taken some steps to minimize this, first with Travelport’s Apollo years ago and now with Sabre, Southwest is the prime example. Other non-ARC carriers named in GBT’s program include Frontier, Ryanair and Spirit.

According to ARC CEO and president Mike Premo, there are two main ways in which airlines that don’t participate in ARC cut into business travel agency productivity.

inefficiency

Image: Thinkstock

Say a business traveler books a refundable fare on an ARC-participating airline, but needs to change the trip. The agent clicks a button and the refund is done. For a non-ARC participant (even if the booking was completed in the GDS), the change requires correspondence to the supplier referencing the confirmation number. Keeping track of unused credit also is a hassle.

The second impact, Premo explained, is on reporting. Standard processes driven by GDSs and ARC provide “a robust data source to power their management reporting,” he said. “With just a confirmation number, you’re not getting that.” Non-standard processes again require manual data entry.

For some clients, Premo said, getting TMCs to support suppliers that do not provide for full automation falls into the “too hard” bucket. They may use Swabiz instead.

Several TMC sources corroborated these points.

MacNair Travel Management director of travel operations Mark Weston said booking Southwest requires as many as four separate “touch points” versus one for GDS/BSP-participating carriers.

“We’re still sending a message with all the invoice data to our back-office system for reporting,” said Travel Management Partners vice president of operations Holly Kahl. “So we’re capturing all the data but with it not going through ARC, we don’t have the 24-hour void window. If we need a refund it’s more complicated because we have to do it on the airline’s site or call them.”

“Since non-ARC participants issue their own ‘tickets,’ all have to be invoiced manually,” according to Casto Travel president and CEO Marc Casto. “Automating the transaction is extraordinarily difficult and ultimately requires varying levels of manual intervention, irrespective of if the booking originated online or with an agent. The non-ARC charges appearing on the clients’ credit card statements do not have the travelers’ names and oftentimes carry a different reference number from our invoice. This results in significant additional legwork for both the client and TMC when conducting credit card reconciliation, doubly so if an exchange or refund is involved.”

The inefficiencies factor into client pricing for AdTrav Travel Management, but not as a separate item as Amex GBT is initiating. Like other TMC execs, AdTrav president and CEO Roger Hale said these costs are baked in to the overall fee structure. This covers a blend of transactions ranging from less to more efficient to process.

Costs Of Education

GBT is rolling out the program in the large market methodically. Not all big clients had heard from GBT as of last week.

While buyers with large companies may understand these implications (and already have their backs up), TMCs struggle to describe the inner workings to smaller and midsize firms.

One of the biggest challenges, said Travel Incorporated senior vice president Tony Peter, is that this stuff is “hard to explain.” Clients are challenged to accept that reporting may be incomplete because of airlines that don’t participate fully in industry systems.

In a supportive blog post last week, consultant Scott Gillespie of tClara wrote that “GBT makes a good argument about the extra costs it incurs when handling a non-GDS, non-ARC/BSP airline ticket. While most buyers don’t appreciate how much more work that is, they should admit there is some, and so it’s a fair question of how to allocate those costs.” [TClara recently partnered with GBT on unrelated business travel research.]

“We all deal with it, but also are happy to see some additional light being shed on what’s going on,” said Peter.

“It’s clarifying for an entity like GBT to go public with it,” said Premo. “People may not like it, but there’s a case to be made here. If you’re going to manage travel, it comes at a cost. My experience with customers is they prefer the transparency. It may be difficult to not use [Southwest] and so it seems pretty rational to me that TMCs would be put in a spot” where they need clients to cover the cost.

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United’s Kirby Describes Alleged Sabre Threats Against US Airways On Participation Agreements

New York — When Scott Kirby in August left American Airlines for United Airlines, his roughly $13 million separation agreement provided that he would still make himself available for testimony and preparation “in connection with the company’s pending dispute with Sabre Corporation and any related actions or appeals.”

Under the name it took on when it was filed more than five years ago, that US Airways Inc. vs. Sabre Holdings Corp. dispute on Monday went to trial in U.S. District Court for the Southern District of New York. Kirby was here Tuesday, day one of evidence presentation.

Kirby suggested he didn’t need an agreement to appear. He believes in the plaintiffs’ cause. Walking to lunch, he said an entire morning in the witness chair wasn’t a challenge because of his confidence that his side will prevail. Though he no  longer works at AA, which acquired US Airways after the suit was filed, he has reason to support the case.

While it may result in damages paid to AA, the bigger picture is that a win for AA could alter the relative negotiating positions of airlines and global distribution system companies. Appearing like a typical risk factor, Sabre in financial filings has written that given the uncertain nature of litigation, it is “difficult to predict the outcome of any particular matter, including changes to our business that may be required as a result of the litigation.”

The last thing GDS companies need is a judicial ruling against so-called “full content” agreements, even if it is only regarding the means by which they are obtained. Less than full content makes it more difficult for corporate travel departments and their management company partners to guarantee business travelers broad access to fares and inventory. As if that’s not hard enough already.

Scott Kirby

United Airlines president Scott Kirby

AA is claiming Sabre’s 2011 US Airways contract restrained trade. AA aims to prove that Sabre colluded with other GDS companies. The relevant laws fall within the Sherman Act. The specific actions the airline has to prove are technical. Some jurors already had trouble staying awake on just day one of testimony. Judge Lorna Schofield advised them to go light on the carbs at lunch.

But Kirby wasn’t bored. His voice cracked a bit when recounting 9/11 as part of the background story leading to the dispute. He tried not to go too far into the weeds when describing concepts abstract to the layman like yield management, distressed inventory and direct connections.

Then came the meat of his material: conversations with outgoing Sabre CEO Tom Klein in Klein’s former role as Sabre’s airline negotiator prior to the closing of US Airways’ 2005 merger with America West Airlines. Kirby claimed he told Klein the combined company wanted to continue America West’s distribution approach. This included the ability to offer the lowest fares in its direct channels. Klein stopped him right there, said Kirby. He said Klein insisted that a “full content” provision be part of the parties’ distribution agreement to take effect in 2006. He claimed Klein saw the agreement as a precedent for other deals Sabre was soon to renew with rival airlines.

Kirby said Klein told him the airline would be either out of Sabre altogether, or it would be in the system with a full-content commitment. Then Kirby outlined Klein’s alleged threats against the airline: that Sabre could drop America West/US Airways listings in the travel agent’s display (so-called biasing); that Sabre could “zero out” the airlines’ inventory even if there were seats available; and that Sabre could disable codesharing functionality. The “nuclear option,” said Kirby, was to kick the airline company out of Sabre altogether.

Kirby said that at the time US Airways derived 40 percent of its revenue from Sabre bookings. Half of that was generated by traditional travel agencies, whom he feared would “boycott” his company in solidarity with Sabre. AA in a February court filing noted that Sabre in 2011 paid more than $600 million in booking incentives to agencies.

Because these moves would cripple the airline, Kirby said, it signed the deal.

Referring to Klein’s alleged comments as an “ultimatum,” AA’s attorneys presented a copy of an apparent October 2005 email from Klein to Sabre executives referencing some of the threats. According to the email, Klein informed his team that one option was to “bury them so deep in the display order that no one would ever see them.”

While display bias itself is not illegal, the U.S. Department of Transportation in 2011 warned GDS companies and online travel agencies that it may consider enforcement actions due to undisclosed display bias, which it called potentially “unfair and deceptive.” DOT this month again said it would take action against undisclosed biasing by OTAs.

Later on Tuesday, Sabre’s attorneys presented a copy of an email from Klein to Kirby assuring the latter that removing the airline altogether was not under consideration.

When the agreement was up for renewal in 2011, Kirby said, he had almost the same conversation with Klein, with the same result: the choice was full content or no distribution through Sabre.

On cross examination, Sabre’s attorneys posited that AA’s attorneys helped Kirby form the opinion that the airline company had “no choice” but to sign the deal. Kirby said that while he shared that view with the lawyers, he had developed it independently.

They argued that it was US Airways with which Sabre had “no choice” to work, at least in some markets. Kirby quibbled with their definition of markets and said US Airways never seriously thought about pulling out of Sabre.

They tried to undermine his knowledge and recollection, challenging him on why he did not inform his colleagues or the airline’s board of directors of these threats from Sabre. He said they were communicated verbally.

They pointed out the apparent inconsistency between Kirby’s supposed feeling of being manipulated and his public statements of support. Kirby said he was happy the airline wasn’t going under as a result of the contentious contract talks — but that the press statements omitted the airline’s real views.

They questioned his knowledge of the travel agency market — on which US Airways claims Sabre has a “chokehold,” according to court filings.

In short, it got prickly.

They even suggested a personal interest, arguing that Kirby’s lucrative separation agreement with AA included an “express condition” to testify in the trial.

Asked by AA’s counsel whether that had anything to do with his appearance, Kirby said, “No.”

The trial is expected to last about eight weeks.

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University Plans Rare Corporate Travel Management Curriculum

Metropolitan State University of Denver next year will offer corporate travel management education, a scarcity at the collegiate level.

By comparison, those interested in becoming a travel agent can find training in several places. Plenty of tourism and hospitality schools offer other kinds of travel-related degrees. Efforts to educate the next generation of travel managers, though, have been mixed.

A career in corporate travel management doesn’t come to mind for too many collegians. People usually land there later. Maybe they worked for a travel agency or other travel supplier and jumped to the buyer side. Or maybe they had a procurement role and picked up the travel category. Some started as administrative assistants and built on their responsibilities for travel planning.

There’s nothing wrong with any of that. But like any discipline, travel management only can benefit by bringing in new talent and fresh perspectives.

“The academic world has been slow to pick up on the fact that travel management is a profession in its own right,” said Sandy Moring, director of education for the Institute of Travel Management of the U.K. and Ireland. “There is still too much of an umbrella approach where it is put under tourism and maybe a few hours are allocated to cover the subject.”

university corporate travel

Image: MSU Denver

Metropolitan State University of Denver is transitioning its Hospitality, Tourism and Events Department into what is to become the School of Hospitality, Tourism and Events. The first step is separating the Hospitality, Tourism and Events Bachelor of Arts degree into four separate majors: meeting and event management, hotel management, restaurant management and travel and tourism management. The school will offer all four starting in the fall 2017 semester. The corporate travel curriculum will fall under travel and tourism management.

“Previously we had focused pretty much on the leisure side,” said department chair Carol Krugman. “We have added corporate travel not only as a course, but our plans are, as the major grows, to have an entire corporate travel track. It is different. It’s a huge economic driver. It goes hand in hand with those other areas: business tourism, meetings and conventions. It was just a huge hole.”

Krugman discussed the “critical” need to train newbies as veteran travel management pros age out. She said today’s environment demands a very different skill set than when those seasoned vets began their careers. “We teach our students that it’s not just doing stuff, it’s connecting the dots and understanding that this is a business,” Krugman said. “We want our students to walk into a corporate travel department and hit the ground running.”

Krugman praised the Rocky Mountain Business Travel Association for supporting MSU Denver’s programs.

Last year, the Silicon Valley Business Travel Association worked with San Jose State University’s College of International and Extended Studies to develop a corporate travel program. Before it began, SVBTA invited students from SJSU’s hospitality program to attend meetings.

“It was eye-opening,” said Makiko Barrett, SVBTA’s education and professional development director. “College students only want to be event planners. They had no idea what a corporate travel manager was. It is not a career path that anybody dreams about. Many of us just happen to become one.

“We want to bring in new blood and get some new ideas,” added Barrett, who also is Yahoo’s senior manager of global travel. “We can’t be stuck in our old ways.”

SVBTA Academy chair Janet Wyer said it took a bit of explaining for university leaders, too. “There was just a lack of understanding” about the profession, said Wyer, who also is travel relationship manager at Stanford University. “And where do you put it? They kept wanting it to be a travel agent-type position.”

Ultimately, SJSU’s College of International and Extended Studies formed a class on travel administration during fall 2015. It was a six-week course conducted on Saturdays, about six hours per class. About a dozen enrollees included existing SJSU students and some who had been working for travel suppliers and wanted a change. A few of the students found at least temporary placement in a travel management position following the course. Barrett is bringing one onto her team at Yahoo.

A second part planned for spring 2016 and focused on travel agent education didn’t pan out. Enrollment fell short.

Now the college has no immediate plans to continue either component. “Had it been more affordable, we probably could have continued to offer it, but we couldn’t bring the cost down,” said Christine Stradford, an SJSU extended studies program coordinator. “It’s on the back-burner. We haven’t written it off.”

Barrett described the program as “a great start.” It taught SVBTA lessons on how to better attract students for future initiatives. “If we are to do the next course, it could be with another community college or we might do our own,” she said.

Across the Atlantic, ITM had a program with the University of Brighton, but that’s winding down.

“Working with University of Brighton as part of their program has been successful,” Moring said. “ITM is now researching other suitable university partners as part of a larger effort on career development.”

Sara Rooney is one of the last going through the University of Brighton-ITM “route way.” After completing undergraduate studies, she enrolled at Brighton to study travel management. It was the only such degree program she could find. The profession appealed to her because of her interests in business management, multiple languages and global travel.

“When I told people what I would be studying, there were a lot of misconceptions,” Rooney explained. “People would say, ‘Oh, you are going to be a travel agent?’ ”

As part of the program, Rooney interned with HRG, working on the PwC account. She was surprised that it was one of only two placement opportunities available. That compared with 20 or so for classmates focused on the leisure side.

SVBTA’s Barrett has observed the same. Because colleges want to place as many graduates as possible, and because corporate travel is such a “niche field,” she said, “they lean more towards hospitality. Hotels hire lots of new graduates.”

Now in the final year of the Brighton program, Rooney landed her current job as an associate with consultancy Festive Road.

It’s easier to find professional development for those already in travel and related fields. Associations like ITM, the Association of Corporate Travel Executives, the Global Business Travel Association and others offer programs. Some result in certifications.

“The industry is developing at such a fast pace,” Moring said, “which means that qualifications can only remain current through continued learning and development.”

Disclosure: The Company Dime and Festive Road have a non-monetary partnership on our Teleconference series.

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With Scale, Jeff Katz’s Efforts To Improve Traveler Service Could Impact Travel Management

You check in for your flight. Your hotel learns this and also checks you in, delivering your room key to your mobile device. But your flight is delayed. Your hotel finds out, notes a late check-in and orders you a late meal. On the way home, you return your rental car early and your airline asks if you want to catch the earlier flight, or grab a lounge pass.

This is how it should be, right? Jeff Katz thinks so.

The travel tech and airline veteran teamed with Boston Consulting Group and several major airline and hotel companies on a startup aiming to improve the travel experience through better communications between suppliers.

It’s still early days but Katz’s company, Journera, expects to enable its first use cases within a couple months. More services will be apparent to travelers by next summer, he said this month at the ARC TravelConnect conference in Washington, DC.

Jeff Katz

Journera co-founder and chief executive Jeff Katz

Travelers do nothing to get on board. This is all behind the scenes in standards and infrastructure. They’ll just suddenly find service enhancements from what Katz calls publishers and subscribers of travel data. Do they opt in? That’s covered by the privacy framework of, say, American’s or United’s booking and servicing touch points. Affiliates of the two airlines plus Hilton, Hyatt, InterContinental and Marriott are the early investors along with BCG.

“Permissions will be requested from the traveler by both publishers and subscribers, and how that’s implemented is to be determined,” Katz said in an interview. “Most privacy policies already provide for what we’ll be doing in the beginning, mainly due to the broad marketing partnerships already in existence. So consumers have agreed, but there may be a redo.”

Katz expects that any sort of company could get involved as a producer or consumer of data — from travel management companies and booking tools through to indirectly related organizations like The Weather Channel.

He has suggested subscribers would pay publishers, and many companies will be both. Presumably Journera takes a cut.

What does this mean for business travel? Katz outlined the “non-threatening implications.”

A Weather.com app, for example, might access Journera’s “global experience record” to show customized weather information based on the traveler’s next destination — or even at a connecting point. No data input necessary.

Business travelers do this themselves already. E-itineraries include weather info. However, Katz said, “there’s no travel agent who calls us and says, ‘You might want to think about a Dallas connection instead of a Chicago connection today.’ ”

Executive assistants or VIP agents may do that. TMCs are trying to get better at it.

“Or maybe there’s an alert system that goes to the travel manager or agent,” said Katz. “All that has nothing to do with business agreements, and that’s one layer. Another layer [raises questions of] who is really providing value, and how do I pay for it? I can conceive of business relationships changing.”

He was hesitant to say more, but added, “A lot of things can change when you separate the booking from the data. We facilitate all those rules, whatever they may be, between a travel provider and a publisher. It could be an airport. It’s a completely different world.”

Pressed for an illustration that more directly impacts the management of travel than the experience of it, Katz considered duty of care.

He drew up a hypothetical app modeled on a flight-tracking service. “We’ll call it ‘People Explorer.’ In real time, it gives me a map of where my people are based on the global experience record. Who owns duty of care then? If there’s broad adoption, it knows a person is in a car if Uber is a publisher. That they checked in to a Marriott. That they boarded a flight, or didn’t.”

He also got into data for contract performance, conjuring up some of the notions of smart contracts. “This whole idea of booked but not flown — now I take contract data but also live performance data and loyalty data, and all these become published and managed through the Journera platform,” he said.

These scenarios are theoretical and, Katz said, “a little downstream.” What’s more practical and possible for now are the individual service enhancements stemming from suppliers communicating better.

“I believe there’s valuable data which today could go to a corporate account that would not go to a non-corporate account, and you need a mechanism to turn it on and off,” Katz said. Take the aforementioned upgrade example: “Maybe you want it available to the executive tier of Corporation XYZ.”

He cautioned that industry professionals should not think of this as specific to air, car and hotel. Meetings, dining and fitness are other potential components.

“This is a big data extension of what some of us know as a passenger name record, but with all aspects of travel plus all marketing data surrounding that data: clicks, social interactions, searches,” he told ARC’s attendees. “It’s a live view that is constantly being updated for changes in the operation and details of the journey.”

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BA Champions IATA’s NDC For Corporate Travel

British Airways is in the vanguard of using IATA’s New Distribution Capability for corporate travel. The carrier is at the highest level of development on the schema, according to the International Air Transport Association. Next week it will host corporate accounts and travel management company representatives at its head office to discuss the developments.

“The latest changes will enable any corporation with a British Airways contract and access to an NDC-enabled system to gain full access to their deal,” according to a BA statement issued this month. The setup enables users to hold bookings, pay later, cancel, change dates, request upgrades, reserve seats and pre-order food.

The airline already has a few partners connected on the leisure side.

“Some travel agents have developed this directly, positioning it in their own front ends, and both flights and seating are available on Kayak and Skyscanner,” according to a BA press official. “We are in conversations with the GDSs, which will enable the content to be offered seamlessly through their existing front ends. We are also actively working with several NDC aggregators.”

Image: Stuart Bailey / British Airways

Image: Stuart Bailey / British Airways

The spokesperson said TMCs are “doing some direct integration,” but will more likely rely on aggregators. NDC-certified aggregators include Travelfusion, which Egencia, Concur and others use to access web content. GDS companies also are working toward this status, according to IATA.

“The addition of corporate fares to our NDC capability makes it much more relevant for TMCs and travel managers,” noted BA head of corporate sales Marie Hilditch in the press statement. “And this is just the start.”

What’s possible thus far is fairly standard, though NDC will facilitate the sale of still-elusive ancillary items. NDC also promises capabilities like personalization and customized corporate contracts. The BA press official said such functionality will evolve based on client feedback.

Festive Road managing partner Paul Tilstone applauded BA for the London forum.

“This is the only airline that has created anything like this for corporate, TMC and tech partners,” said Tilstone. “They should be praised for grabbing hold of it and engaging with the value chain. Corporations and TMCs need a sense of momentum.”

One U.K.-based corporate client who was not authorized to be quoted by name said it would be difficult for travel buyers to join up until more preferred airlines are involved. Nevertheless, the buyer also commended BA.

The agenda for next week’s meeting shows BA chairman and CEO Alex Cruz will join several distribution and sales officials in addressing invited corporate travel partners. Travelfusion founder and CEO Moshe Rafiah, IATA NDC program director Yanik Hoyles and Hogg Robinson Group CIO Bill Brindle also will speak. Sources said more than 100 corporate travel representatives are expected to attend.

Festive Road works with IATA on corporate travel-related aspects of the NDC program. According to this guide Festive Road created for travel managers, PricewaterhouseCoopers early this year convinced a U.K.-based airline to provide full content through Travelfusion and into corporate booking tool KDS. The airline, FlyBe, used NDC. PwC’s U.K. travel department in January tweeted the resulting commitment: “All fares available on our KDS system.”

IATA’s NDC registry shows several Asia- and Europe-based airlines at the same development level as BA, described as “Offer and Order Management.” This includes Flybe. However, an October update indicated BA is set up to receive e-ticket and ancillary purchase requests specifically from corporate accounts. It’s the only carrier described that way.

Additional info: For more on NDC, have a listen to American Airlines’ Cory Garner on our first Teleconference.

Disclosure: The Company Dime and Festive Road have a non-monetary partnership on our Teleconference series.

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Buyers Balk At Amex GBT Fee

Though some understand the rationale, corporate travel buyers don’t like the new American Express Global Business Travel surcharge on certain airline bookings.

Concerns go beyond the amount of the fee, which client communications indicate is $10 per transaction. Customers raised several other financial and operational questions. Speaking anonymously due to the sensitive nature of supplier relationships, some GBT clients said they are considering recourse.

A few said they expect the hit to be tens of thousands of dollars. Another described it as “a material cost” for the company. “I do not intend to pay a fee for GDS-participating carriers that aren’t part of the revenue pass-back scheme other carriers provide” to GBT, that travel manager said.

This gets into overrides. These are the payments travel agencies receive for volume on airlines. Sometimes that money is passed through to corporate clients. The Big Three U.S. carriers play heavily with overrides. Low-cost carriers really don’t, and those are the ones GBT’s surcharge targets.

Amex GBT fee

Image: Thinkstock

Other questions relate to the mechanics of how clients will be charged. “Will it be invoiced as a separate line item that needs to be expensed by the traveler?” asked a veteran travel manager. “If so, that will require additional training and communication so that the fee is accounted for correctly. And if we can prove how much we’ve spent for that particular fee, will we end up creating policies to avoid those carriers? It will be very difficult to simply accept and bury yet another fee. They do add up.”

According to written statements attributed to GBT senior vice president and general manager for supplier relations Mike Qualantone, GBT is “working within the framework” of customer agreements to include the “high-cost booking charge to partially recover our incremental costs to process these bookings. In most cases, this means the charge will be within the invoicing and settlement processes.”

Paying the surcharge is one thing. Presenting it at the online and offline points of sale is another. GBT often is “prohibited from adding such charges to the airlines’ fares by the airlines themselves,” according to the written statements. In an interview with The Beat, Qualantone acknowledged travelers “may not see it on each booking on a comparative basis on faring.”

That travelers won’t have all the relevant information during the shopping process doesn’t sit well with clients. Travel Consulted’s Grant Caplan said a travel agency “should be telling the traveler there is an extra fee to book this airline. It’s disingenuous not to tell them.”

In online booking tools, a variety of triggers prompt pop-ups to inform travelers of policy violations, security risks and other scenarios.

“We would definitely put pop-ups in Concur to notify travelers” if GBT applies the surcharge, said one travel manager. “It’s just like we do if they try to make a nonrefundable hotel booking.”

Buyers with clout will try to avoid the surcharge altogether through negotiations. One said the company would switch agencies before paying it.

“If you have a lot of this kind of business, be concerned and try to restructure the financial terms of your travel agency deal,” Caplan said. “If you have very little of it, oh well, it’s a price increase, swallow it and move on.”

TCG Consulting senior engagement manager Pam Collins said affected companies should examine booking patterns. She “anticipates significant assessment and business case development on the part of organizations before agreeing to the fee surcharge proposed by GBT or other travel service providers.”

Collins also suggested travel managers may want to “design strategy for point of sale processing to cover ancillary charges to simplify expense processing and settle with the agency on a periodic basis.”

Meanwhile, Caplan advised travel managers to reconsider preferred airlines. When total costs increase, whether through fees and surcharges imposed by an airline or otherwise, it shouldn’t be ignored.

A buyer at one GBT client went the other way, saying the firm would consider allowing employees to book directly with airlines that otherwise would incur the TMC’s new fee. “We will still capture the data since it will be paid for on the corporate card,” according to the buyer, “and GBT will actually earn less rather than more.”

Travel managers at a few of GBT’s largest accounts said they hadn’t been approached by the travel management company on this issue. According to Qualantone, the company is “progressively enacting the charge” through discussions with all customers.

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Teleconference 5: Inside TMC Economics

Inside TMC Economics
Jan. 12, 2017, at 12 pm EST
Special 90-minute episode

Thanks to all our attendees and speakers! This event’s recording may be purchased here or gifted here for $25. Grab the slides here.

During the sold-out Teleconference 5 AmTrav CEO Jeff Klee and Short’s Travel Management CEO David LeCompte talked about the differences in how their companies generate income, as illustrated below. They also talked about expenses and pricing.

Meritor global travel manager Jack Reynaert detailed his travel management program which uses the ARC CTD model. CTBR managing director Don Swartz commented on the TMC data and offered his views on client pricing and RFPs. And Festive Road managing partner Paul Tilstone updated his own research from several years ago on TMC remuneration.

Find information on other upcoming Teleconference episodes and download previous ones here.

Background On Teleconference 5:

How travel management companies are compensated has been a focal point of industry change for decades.

Most recently, American Express Global Business Travel revealed a new fee to cover the costs of processing bookings with certain airlines. These airlines may be hard to book. Or they may pay less in incentives either directly to the TMC, or through the GDS in the form of segment fees.

tcd-teleconference-featuredNew information on GDS incentive fees paid to TMCs by Sabre reminds the veterans and informs the newbies about this normally under-the-radar revenue line.

Hotel revenue is a big part of the picture. So is the cost of labor. Tech partners including online booking tools are in the mix. New applications of artificial intelligence could play a role.

For corporate buyers, all this plays into the structures of contracts with TMCs.

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American Express Global Business Travel Fee Idea Isn’t New, But Goes ‘A Step Further’

It’s common for travel management companies to charge extra when booking a supplier requires more work or generates less revenue. This is the basic idea behind American Express Global Business Travel’s additional $10 per transaction fee for certain airlines, revealed here on Tuesday. Sources contacted mainly by email during the past 24 hours indicated that other TMCs have not taken such a program this far. GBT, they said, is charging a lot. Its program is broad, and formal. The TMC execs among them like it.

“Southwest is the most expensive airline for us to work with,” according to Christopherson Business Travel president Mike Cameron. “Amex GBT is correct in their assessment of the inverse cost/revenue relationship between booking non-GDS airlines and those airlines using industry-standard methods.” He said costs are higher and revenue is lower for the 17 percent of total Christopherson bookings processed outside global distribution systems.

While Southwest is represented in GDSs, it does not pay for full participation.

Mike Cameron

Christopherson Business Travel president Mike Cameron

“We, too, have always absorbed the additional processing costs in order to maintain a simplified pricing structure,” Cameron continued. “There could be a tipping point where it is not possible to continue to do that. We’ve not reached that point yet.”

Tower Travel Management owner and president John Smith echoed Cameron and applauded GBT. “It’s very standard for TMCs to charge additional for Southwest Airlines bookings, either to pass through costs from online booking tools, or because they use BookingBuilder to book with live agents,” Smith wrote. “Amex is taking a step further.

“It does take more time to book all these carriers, and therefore adds operating costs, and clients should expect to pay for inefficiencies in the system,” Smith added. “As a general rule, our clients prefer to have a blended average fee that covers all airlines, with the notable exception of Southwest’s pass-through booking costs from online booking tools. However, if Amex’s strategy proves successful in the market, I think that would be a very good thing.”

A GBT client letter indicated that the new $10 fee “replaces and will not be in addition to any non-GDS fees previously implemented by GBT.”

“This is a fixed sum game,” noted Steven Mandelbaum, who runs The Advisory Board Company’s travel program as vice president for information systems. “If it takes more work, then theoretically someone needs to pay for it. If it isn’t overtly more expensive, then it’s simply buried somewhere else in the economic model and the fees that we pay to TMCs. Ten dollars is a big surcharge. However, booking tools have successfully charged for Southwest bookings for years, so perhaps it’s just the ongoing shift of the economic model.

“The real culprit is the virtual total reliance and dependency of TMCs on the GDS,” Mandelbaum argued. “They use it as their CRM and ERP. I believe that progressive agencies would find competitive advantage and be well served by leveraging the GDS for most content and fulfillment, but taking the CRM and ERP functions out so they can be more innovative and flexible.”

[Doing so wouldn’t be unprecedented. FCM, for example, has moved to Salesforce for customer relationship management. The company credits this in part for its ability to innovate on mobile technology.]

“The root cause is the GDS companies’ flawed business model that pays rebates to TMCs,” agreed consultant Donald Swartz of Corporate Travel Buyer Resources. “This practice only antagonizes travel suppliers and vendors by sending a message they are paying too much in GDS fees if there’s money left over to rebate.”

Swartz said GBT’s program appeared more formal and expensive than what he has seen before.

KesselRun Corporate Travel Solutions partner Brandon Strauss said the $10 fee “will not be seen by many [clients] as nominal. At first glance, the fee seems high but perhaps GBT is also providing a value-add for qualifying segments.”

Swartz said the outcome of GBT’s new policy is hard to predict. While the TMC is a giant handler of demand for many airlines, he said he wasn’t sure “if that will be enough to get the impacted travel suppliers’ attention. It’s also difficult for the industry to accurately measure the net impact (loss or gain) to the targeted travel suppliers and vendors from this surcharge practice.”

Mandelbaum said he was “somewhat struck by the blunt approach; it seems designed as punitive for those who are using these carriers and theoretically a disincentive for doing so.”

GoldSpring Consulting partner Mark Williams speculated that the surcharge on some airlines may be meant to steer traffic to others. “Is there a play here for Amex GBT, or any other agency, to push more volume to those with which they have preferred relationships — by making those other airlines more expensive — to increase their override commissions?” he asked. “Seems like it might be.”

Swartz warned that the program could backfire by further alienating surcharged airlines or driving clients to book directly.

Airlines named in GBT’s program that offered statements in response to the news appeared unmoved.

According to a Frontier Airlines official, “We’ve made decisions for our business that help us keep our costs low allowing us to pass those savings, with some of the lowest fares in the industry, along to our customers.”

According to a Southwest representative, “We’re aware of the recent changes by American Express. While we cannot speak for them, we remain valued partners and continue providing the best service for our customers through GDS bookings.”

Spirit Airlines replied, “The only reason we would be on the list is because we are definitely a low-cost airline. This appears to be [a way for] American Express Global Business Travel to collect a commission from their customers, as we don’t pay them a commission.”

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Amex GBT Goes After ‘Higher Processing Costs’ Of Gol, Ryanair, Southwest, Others

American Express Global Business Travel in an August letter indicated customers would pay a $10 surcharge on transactions booked with airlines deemed “high cost.”

“This additional $10 fee applies to any transaction booked with a supplier that is booked outside a GDS; does not settle its accounts through industry-standard methods; has limited or no participation in industry-standard fare filing processes; or is designated as basic booking, low cost, specific or other similar designation,” according to an Aug. 8 letter addressed to clients and obtained by The Company Dime.

Included among these suppliers are Aeromar, Dragonair, Frontier Airlines, Eurowings, Gol, Grand China Air, Regional Express, Indigo Airlines, Jetstar Airways, Ryanair, Southwest, SpiceJet, Spirit Airlines, Volaris and Vueling.

Amex GBT surchargeAsked to confirm the letter’s authenticity, officials provided the “sample” list above and this written statement: “The travel industry has standardized certain processes to ensure transparency and efficiency; however, some airlines have opted out. At GBT, we aim to provide our customers with the greatest range of data to facilitate travel bookings, as well as efficient processes to create the right itinerary for their travel needs. By not participating in industry standards, airlines create higher processing costs that must be absorbed by other parts of the travel booking chain. As a result, GBT is looking at alternatives to manage the increased costs resulting from these bookings.”

According to the travel management company’s letter, “Over the last several years, high-cost supplier bookings have seen double-digit growth while the overall business remains flat to down. Historically, travel agencies have absorbed these additional costs; however, as the number of high-cost bookings grow[s] these costs continue to rise, making it unsustainable.”

The press officials declined to say whether the program took effect on Sept. 1, as planned according to the letter.

While some of the listed airlines are available in global distribution systems, they may use the “basic booking” option and pay the GDSs lower segment fees than larger network carriers. This, in turn, may mean lower incentives paid to TMCs like GBT.

Apparently absent from the list are full-service carriers in the Lufthansa Group. Those airlines in September 2015 began charging a fee on GDS bookings, which GBT opposed. The airline company’s fee applies to the fare it charges, so the cost already is borne by clients. Lufthansa low-cost subsidiary Eurowings, though, is listed by GBT. Eurowings reportedly is not part of Lufthansa Group’s GDS fee program.

This would not be the first time a TMC considered a standardized fee program covering suppliers deemed more expensive to access. Carlson Wagonlit Travel in 2011 threatened to enact one after American Airlines created its Direct Connect program. CWT’s CEO at the time was Doug Anderson. He joined Amex GBT as CEO shortly after the August letter was dated.

Also an executive with CWT in 2011, Andrew Winterton is now on the board of Certares. Certares leads an investor group that owns half of American Express GBT. The other half is owned by American Express Company, some of whose cardholders now receive quintuple bonus points when they book directly with airlines.

Media personnel with Frontier, Southwest and Spirit did not immediately respond to questions.

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Conferma Virtual Card Advance Isn’t The End Game

Much work is needed for email authorizations to supplant old-fangled faxes as the de facto standard for virtual card authorizations. That is, if the industry cannot first dispense with both.

Conferma last month described its new encrypted email solution as a PCI-compliant “breakthrough.” The company says it is cheaper than sending faxes and approved by such banking partners as American Express and Barclaycard. Other virtual payment firms also are looking at email authorizations. There are some obvious advantages over faxes, but emailing isn’t a perfect model.

“It’s not the most elegant process but at least it’s consistent and doesn’t require hotels to get into any technical work,” said Conferma CEO Simon Barker. “They can all deal with an email.”

The Conferma Connect program also includes direct connections to some hotel groups’ property management systems and API connectivity. Properties can decide which mode suits them best. Barker said “the vast majority are embracing email.”

CSI globalVcard has been testing a secure email option for a few months. “Quite a few hotels” prefer it over faxes, said senior vice president Juliann Pless. For now it’s a back-up option. She explained that when a fax transmission fails for whatever reason, the hotel can choose to receive the authorization by email. CSI is working toward offering email as a primary transmission option for agencies and corporate clients.

virtual card

Image: Thinkstock

Wex said it’s been sending virtual card info by email to hotels since 2007. “In our experience, many hotels still prefer fax over email for their own internal processes, which is why we provide the ability to deliver both methods at no cost to our customers,” according to Mike Reinlein, director of sales for Wex Virtual Payments in North America. “Our hope is that all hotels will eventually shift to email delivery to ease the traveler’s experience and simplify the hotel staff’s workflow, but change takes time.”

Grasp Technologies director of virtual payment solutions Michael Duffy said his company also has looked at email and may use it as “a supplement.” But encrypted emails, he said, actually may add complexity. “If starting from scratch,” according to Duffy, you’d use email over fax. Because today’s standard is faxing, “adding another communications channel into the mix may be a little better, maybe not.”

As with faxed payment authorizations, hotels need to get onboard. This means properties must determine how they’ll configure systems to accept encrypted emails and which addresses to use.

Speaking this week at Sabre’s Connect conference, Hilton Costa Mesa business travel sales manager T.J. Ransom said companies in requests for proposals should specify all that, just as they should for fax numbers.

CWT Energy, Resources & Marine works with Conferma, Sabre and a bunch of banks used by clients. Americas vice president John Vawter said that for encrypted emails, Conferma or CWT would get the proper address from the hotel. Conferma then would “ping” it. “There’s a little more validation behind the new process,” Vawter said. “From a PCI standpoint that has to happen anyway.”

Like others, Ransom can see a more integrated future. He pointed to digital check-in and digital room keys that allow guests to bypass the front desk. If payment is tied in, that would “eliminate the need for faxes and email altogether.”

Many see global distribution systems as the best bet for progress in that direction. “They will be the conduit of change, and maybe online booking tools as well,” Duffy said. “The booking channel is the means to transmit that information and keep it as seamless as possible.”

He said Graspay, a Wex partner, integrates with GDSs and online booking tools. “If the GDSs tell us there is a particular field — a place for this information — and you don’t need to send a fax, then we’ll rapidly adopt that,” Duffy said. “We don’t want to do the faxing either.”

He alluded to Choice Hotels’ faxless process that uses a specified GDS entry, calling it “an innovative approach.”

That’s a one-off solution. Pless said to achieve the ultimate goal, “a standard across GDSs” is needed. GDS operators have stated general support for such a development. Big hotel chains also prefer that approach.

“The long-term solution is machine-to-machine connectivity,” Barker said. While he agreed it’s on the GDSs to get on the same page, he also noted that not all hotel reservations use one of those systems. That means multiple, standardized solutions for the industry will be necessary.

In the meantime, most virtual card transactions are using faxes. CWT ERM now has about 30 customers using virtual payments, Vawter said. Volume amounts to 20,000 virtual card numbers a year. He said that’s “good momentum” despite the energy sector downturn.

In North America, much of the action is with hotels. Vawter said clients also use virtual payments for air travel, especially with low-cost carriers in other regions. He and a few others noted how car rental is a bit trickier, since credit card numbers aren’t needed to make a reservation.

“Some day, you will have a card number for your entire trip and maybe you’ll use Apple Pay to pay for your taxi or whatever else you are going to do,” Vawter said. “That is the eventuality of all this, to get rid of walking plastic. And at the end of your trip, you press a button to file your expense report.”

Apple global process lead for travel Stephen Olson said he’s “quite keen” on the company using virtual payment around the world for its own business travel. “We still have some gaps and currencies that you can’t do today,” he said during the Sabre event. “Once we can tie those loopholes we’ll be in good shape.”

Apple operates as an ARC-accredited Corporate Travel Department. It overcomes the issue of bad fax numbers by maintaining an internal database. Olson said that “all agents can regenerate a fax to a different number if we need to.” He also said Apple will try Sabre’s mobile solution to support virtual payments.

Additional info: Conferma said Conferma Connect “is the first PCI-compliant way to send virtual card details to suppliers without the need for a fax machine.” According to the PCI Security Standards Council, the Payment Card Industry Data Security Standard (PCI DSS) applies to one-time account numbers based on “the particular restrictions around their usage as defined by the payment brands.” Wex and CSI, for example, pointed to MasterCard information explaining that “single-use virtual cards do not require PCI DSS be applied because these cards are inactive/disabled after use.” Visa Europe has said the same. Conferma’s Barker said single-use cards using tokens can fall outside PCI DSS, but regardless of the configuration, complying with PCI standards is a best practice.

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Global Online Booking Providers Amadeus, Sabre Seek Some Local Partners

Amadeus and Sabre are taking a new approach to developing corporate booking tools for small and medium businesses. In some smaller markets around the globe, they’re hooking up with tech partners.

Sabre in August announced a deal with Serko to serve SMEs Down Under. The New Zealand-based company will replace proprietary booking software in the Sabre Online service. As it migrates to Cytric from E-Travel Management, Amadeus is soliciting partners to provide the underlying technology in secondary markets rather than building it internally.

It’s partly an admission that the world is just too complicated to make a buck on out-of-the box booking technology.

As a Sept. 15 Serko blog post claimed, global players have difficulty keeping up with changes and variations in content. It used recent examples of new fares and bundles from Jetstar and Virgin Australia. Being local, the company wrote, Serko will “drop everything to ensure that we’re able to sell and support all of these new packages the second they go live.” Serko suggested Australia-based businesses would not like the answer if they asked “global OBT providers” when such content would be available.

global online bookingAfter eight years at Amadeus, Florian Tinnus in August joined Sabre. He is now vice president of global sales and account leadership for the company’s Traveler Experience group.

Tinnus said SME clients don’t have a lot of requirements. Instead they are looking for an integrated “package,” much like Egencia offers. “You look at the investment you need,” he said. “You’re happy if you can outsource it to a travel management company.”

TMCs offer Sabre Online in Australia and New Zealand as part of reseller deals. Customers will move to the Serko-powered version by the end of March 2017, according to the partners.

Amadeus expects to offer two Cytric models. An enterprise version will be for direct corporate deals while a “business edition” will be for the reseller market. Axel Mueller, head of global sales for the company’s corporate IT unit, said most of the unique, local needs relate to content.

“We were really deploying AETM everywhere and ended up with a substantial long tail in customers in some markets,” said Mueller. “Now we’re focusing on the top 20 or 25 markets, which covers more than 80 percent of the spend. [In other geographies] we are looking for partners to serve the SME space or the long tail.”

Such arrangements are most likely to emerge in Africa, Asia/Pacific, Latin America and Eastern Europe, but not in all markets. In Brazil and Mexico, for example, “we are fully customizing the product for corporations there,” said Mueller.

Travel tech experts and other sources were not surprised to hear Amadeus and Sabre reached a point of diminishing returns on global booking tech.

Does a movement toward local expertise hold any lessons for large, multinational clients?

The Amadeus and Sabre execs said no. Global enterprises are more complex and for such accounts, interface commonality and back-end customization are paramount. This may warrant a single system.

“With GetThere,” said Tinnus, “we are completely behind the idea of a global platform and tool. We will continue to be so, including in Asia/Pacific. This is a tool that requires 3,000 features, policy, mobile, etc.”

Tinnus said there are benefits in integrating with other elements of the Sabre suite. A GetThere user who chooses another provider in another country would miss out on them. “Connecting to another booking tool is a strategy of the past,” he said.

Mueller said he has not seen a trend one way or the other on global versus local for multinational clients.

“Each enterprise thinks of it differently,” he said. “European companies are more inclined to select the best in region. U.S.-headquartered companies are more likely to impose what the headquarters sees as best. I have seen a couple RFPs where headquarters is selecting two providers and letting each market choose.”

Mueller said companies often desire one system, but then end up making compromises.

Additional info: Officials said both Cytric and GetThere operate in more than 80 countries. Top rival Concur claims more than twice that.

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Self-Driving Cars: Time To Update Risk Policies

[UPDATE, March 28, 2017: Uber restarted self-driving car operations in Pittsburgh, San Francisco and Tempe, Ariz., according to published reports. An Uber official told Reuters that the company completed an investigation into the Arizona crash and cleared the autonomous driving technology.]

[UPDATE, March 27, 2017: After a self-driving Uber car crashed in Arizona a few days ago, the company halted use of the autonomous technology. Uber had been field-testing also in Pittsburgh and San Francisco. “We are continuing to look into this incident, and can confirm we had no backseat passengers in the vehicle,” according to an Uber statement reported by various media outlets.]

If you haven’t started thinking about guiding business travelers on the use of self-driving cars, you probably should. What recently seemed like science fiction is becoming more of a reality by the day. Uber’s first self-driving vehicles already are operating on the streets of Pittsburgh — for now, with a human driver present just in case. Others are field-testing in Singapore. They’re coming to London.

Driverless technology promises to change everything, and raises a million questions. It’s not yet proven sufficiently safe. There will be plenty of regulations and insurance considerations. Even at the quickening pace of development, it likely won’t be commonplace for several years.

Many scoff at the very notion. But safety concerns didn’t stop ridesharing and homesharing services from entering corporate travel, even before Uber, Lyft and Airbnb became household names. In those cases, employee adoption preceded related policies.

So far, no International SOS clients have asked for guidance on autonomous cars, according to regional security director Matt Bradley.

self-driving cars

Image: Reuters/Aaron Josefczyk

“The best practice and actual practice often differ, and if the rideshare economy is an indication, companies will be behind the curve,” he said. “New policy after behavior already has been engrained is very difficult to enforce. If you were to have a policy on driverless cars it would be ‘do not use’ because there is not enough data to show that is safe. If my company reimburses me for doing something that could potentially be dangerous, without protecting me or at least warning me of the risks, then they are ultimately going to be liable.”

DK Consulting Group CEO Dave Kilduff agreed that companies shouldn’t let employees be “guinea pigs” during the early development of driverless cars. “There will be accidents. It’s too risky,” he said. “If there is an accident and there are injuries or a fatality at the fault of the technology, it will be litigated.”

Understanding all the angles is daunting. Individuals will ride in their own self-driving vehicles or use their companies’ fleets. They’ll rent them. They’ll hop into autonomous taxis, rideshare vehicles and public transport. Risk-averse organizations should see red flags everywhere.

“As with anything involving travel safety and security, a host of concerns need to be identified, addressed and tested before business travelers and the public at large should feel comfortable with it,” according to travel risk management expert Charles Brossman. For example, systems for navigation and network communications might fail, or get hacked.

Brossman also pointed to questions about liability: who owns the cars, who operates them and how does that affect service providers’ terms, conditions and indemnification?

Bradley said driverless cars in locales outside the United States bring other concerns. Driving patterns in some countries, he said, are “erratic.” That complicates the task for an automated system. He also pointed to carjacking. If the car perceives an attacker as an obstructing pedestrian, it will stop. Human drivers sensing that kind of danger wouldn’t.

The concerns are legit, and the potential benefits are tremendous. Big companies including car manufacturers, Lyft, Google and perhaps Apple are seizing the opportunity.

Asian ride-hailing service Grab has found that its drivers in Singapore are less likely to fulfill passenger requests for rides to or from remote locations. That’s something robo-cars can address, according to the company. It’s testing with self-driving software developer nuTonomy, for now in a limited area of a Singapore business district. NuTonomy is aiming for a commercial launch in 2018.

Additional info: The U.S. Department of Transportation issued policy “guidance” last month. The agency is hoping to “speed the delivery of an initial regulatory framework and best practices to guide manufacturers and other entities in the safe design, development, testing and deployment of highly automated vehicles.” The guidance is a first step toward “a foundation and a framework upon which future agency action will occur.”

Find several driverless car reports, forecasts and more here, here and here.

Check out this fun video from educational blogger CGP Grey on how self-driving cars could reduce traffic congestion:

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