Today’s advisor is Egencia chief operating officer Mark Hollyhead. He provides a sneak peek into his company’s latest research on travel policies. The analysis zeroes in on what’s required at small and large companies around the world related to class of service, advance purchasing and pre-trip approvals.


Travel policy is one of the core elements of managed corporate travel and a key lever for travel managers looking to drive cost savings. Yet it is one of the least benchmarked dimensions in corporate travel.

Corporations typically store travel policy across multiple systems and tools, some in-house, some third party. They house policies within their travel management companies in each country. As a result, it’s challenging to get an accurate picture of global policy trends. Such information would be helpful to travel managers as benchmarks. It also would benefit travel suppliers looking to retail the “right” product to the right traveler at the right time — within the constraints of travel policy.

Beyond preferred supplier requirements and lowest logical fare restrictions, we examine three key policy levers directly driving cost control. In all cases, we see significant variation in travel policy by region of traveler, region of trip and client segment.

1. Highest cabin allowed. All business travelers will tell you they prefer to fly in premium cabins (first or business), particularly on long trips. In recent years, some companies adjusted travel policies to allow more of this premium cabin travel in recognition of the value of improved traveler satisfaction, productivity and talent retention. Just how many travelers are actually allowed to fly in first or business class? Unsurprisingly, the answer varies by the type of customer and region of travel.

Egencia COO Mark Hollyhead

Looking at our client segments globally, we find small and medium-size corporations are most likely (one in seven) to allow premium cabins for domestic or intra-regional trips. Our largest global clients are least likely to allow premium cabins for domestic flights (about one in 13). By region, half of North America-based travelers can book premium cabins for some or all of their trips. This masks large variances by destination or length of trip. For example, 46 percent of travelers at our largest clients in North America are entitled to book premium cabins for some or all of their international travel while only 11 percent can do so for domestic travel. Asia/Pacific-based travelers on domestic flights are least likely to be permitted to book premium cabins (2 percent).

Premium economy is a focus area. A number of airlines have introduced premium-economy cabins. This includes recent additions by American Airlines, joining British Airways, Cathay Pacific and others that have had it for many years.. Overall just 10 percent of travelers buy up from economy to premium economy (but no further). Travelers originating in Europe or those working for global corporations are most likely to be allowed to fly premium economy for international travel.

2. Advance-purchase requirements. One-third to two-thirds of travelers must to adhere to advance-purchase policies. The cheapest fares in economy class were available more than 30 days in advance, according to a recent study. This demonstrated the cost-saving power of adhering to these types of advance-purchase policies. At the high end, two-thirds of travelers from large global organizations are subject to advance-purchase restrictions. At the low end, only one-third of European travelers working for local SME corporations are subject to these restrictions.

3. Pre-trip approval. Data shows a wide variation in the use of pre-trip approval to ensure travelers are most effectively spending a company’s travel budget. At the low end, only one in five SME-company travelers are subject to pre-trip approval. At the high end, almost nine out of ten travelers working in Asia/Pacific or for large global corporations are subject to this control.

How do we anticipate travel policies evolving in the future? What are the implications for travel managers, suppliers, TMCs or third-party technology providers?

Travel managers are looking for dynamic tools that enable policies to quickly evolve. They need to react to internal company decisions (e.g., a downgrade in cabin allowed or a new preferred supplier) and industry changes (e.g., the recent rise of new categories of suppliers, such as rideshare and alternative lodging). Recently, clients and prospects have requested more personalization and recognition of traveler preferences to increase compliance and savings.

Some large industry developments on the horizon will require travel managers to review how they approach travel policies. For example, many airlines are working on the IATA-led New Distribution Capability initiative. Airlines believe NDC will enhance their ability to effectively retail their products and services to travelers who book through third parties like TMCs. Airlines envision a future in which they can offer personalized prices and special retail bundles (e.g., a lounge pass or Uber discount included with the airfare) per traveler or corporation. In this world, travel managers need to consider whether a lowest logical fare policy remains relevant. Does it makes sense to restrict travelers by cabin when a personalized premium-cabin offer may be lower than a published economy fare.

Overall, we see the need for policy tools and systems to continue evolving. This would give travel managers flexibility while recognizing different client segment needs around the world. TMCs also have a key role to play in evolving policy settings to make them more efficient and relevant for an ever-evolving corporate travel industry. For example, there may be new ways to display search results that optimize relevant content and client savings alongside policy, rather than only displaying options within policy. Those TMCs best able to navigate changes in the travel marketplace, and use test-and-learn methods to continually evolve the experience will be best placed to serve both corporate travelers and buyers.

Additional info: Findings are based on an Egencia September 2017 study of global travel policies and travelers’ online and offline booking behavior. Small and medium-size corporations had a gross booking volume up to $2 million. The company will publish more details in the upcoming report, Egencia Policy Insights: Global Air Edition.


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