1. Scott, same goal but different paths to get there.

    The best way to cut emissions and guarantee that only the most valuable trips are taken is to cut budgets. When you see employees volunteering to pay for their business trips out of pocket, you know you have cut too far.

    The best way to increase cost is not to move up to a more expensive seat or hotel but to implement a carbon tax. I would recommend a minimum of $100 per metric ton of CO2 ($250 for a West Coast to Europe coach flight) but $400 is going to get you closer to the cost of actual SAF required to offset.

    Side note: Any policy over two pages is just creating opportunity for travelers to game the system to their personal preferences regardless of cost.

    1. I’m with you on the goal, Eric, for sure, but agin’ ya on one of your methods.

      Budget cuts are a knee-jerk reaction to cost or P&L pressures. There’s no thought put into how those budget cuts will affect the ROI or carbon intensity of the remaining travel spend.

      The smaller the budget, the more desperate travelers are to book low-cost trips. One can hope that the approver will be looking hard at the trip’s expected value, but since that’s hard (for most) to quantify, the approver is more likely swayed by the trip’s price, as in “Cheap is good, so you can go.”

      Contrast that with a trip request priced a thousand dollars higher, and the approver is bound to think harder about the value of the trip. High prices weed out low-value trips – on this, I think we agree.

      So yes, a carbon tax is helpful. The US EPA has established the social cost of carbon at $190 per metric ton of CO2. If SAF’s cost is twice that, then I’d have to ask if buying SAF is the most rational way to spend money on the global decarbonization challenge…but that’s another debate.

  2. I normally agree with you Scott but on this one I have to say I am not seeing it. Based on your logic of making the trip more expensive to avoid travel, then corporations should do the same on all they buy, not just travel. Increase the cost of a new PC then the user will use the old one longer, increase the cost of office supplies and users won’t use so much, etc. Anything a company purchases down to the smallest item should be necessary. This is just good business. Saying people travel more simply because it is cheaper does not make sense. I know many people that travel and I don’t know one of them that does it just because they can. Any approver that does not scrutinize every trip regardless of cost is not doing their job. Making things more expensive simply to get users to cut back is a badly run business. Travel managers and procurement do a great job of trying to keep costs as low as possible whenever a trip is necessary. A business needs to optimize the price paid and the value received for everything they purchase. Not obtaining the lowest prices does not solve the value received for the trip. They are two separate items that need to be considered separately.

    1. John, you’re not alone in questioning this approach. I offer these comments in an effort to move you and many others a bit closer to this line of thinking.

      There should always be a cost versus value trade-off made before any purchase. Mobile phones and PCs are good examples where many buyers are willing to pay significant premiums to get more perceived value. So price alone is not enough to make a good decision; we must (and do) make the cost vs value tradeoff on any purchase decision.

      By itself, a sufficiently higher price will (hopefully) make the buyer think twice about buying a new PC, mobile phone, or business trip, exactly as management would want. The thing about a business trip is that it can’t be reused or kept in service. Instead, the question becomes one of substitution. Should I take this higher-priced trip or replace it with a virtual substitute?

      This forces the value dimension back into play, more specifically, the marginal value gained by showing up in person. If there was some but not much marginal value to be gained by meeting in person, a significantly higher price to travel will likely mean, “OK, now this trip isn’t worth it.”

      So higher travel prices become a forcing factor that makes trips harder to approve. Note that the reason for the higher prices doesn’t matter – inflation, fuel costs, carbon taxes, revenue management…the question remains, is this trip still worth taking?

      I agree that procurement and travel managers have done a good job keeping travel prices low. They’ve done what management has asked – focus on keeping costs down. This is a timeless business strategy for essential costs, such as the direct and indirect materials and services that go into a company’s end products.

      But discretionary travel is being seen in a new light, largely due to the Covid and climate factors.
      There’s growing scrutiny around the need for these trips. As there should be, given my research shows that 25% to 30% of business trips taken in late 2022 were low-value.

      Absent a more disciplined approach to evaluating the need for a business trip, higher prices are a pretty darned good device to force more clarity around this question. Imagine if an approvable trip at a cost of $1,500 now costs $2,000 – and the approver says, “Sorry, it’s now not worth it.”

      Shouldn’t that tell us that the trip’s inherent value wasn’t much to begin with? Or perhaps that the approver sees much better uses for that $2,000 in their travel budget?

      Either way, the effect is the same…a low-value trip is avoided, its emissions are never created, and the approver stands to get a better ROI on their travel budget.

      To your point, I’m not sure if this approach would be good for other spend categories. But travel, specifically discretionary air travel, is a great fit for this strategy because it is so carbon-intensive.

      In 2021 the payments, brokerage, and software industry had a very low carbon intensity of about 3 kg CO2 per $100 revenue. The entire US GDP used about 24 kg CO2 per $100. The US airline industry came in at about 124 kg. I’ve found economy-class fares in the US with carbon intensities above 150 kg per $100. Business-class fares can come in around 60 kg per $100.

      Air travel’s high carbon intensity makes it a red cape for the sustainability bulls out there. The fastest and, by far, most effective way to reduce airline emissions is to eliminate trips. If you buy that much, you should then agree that we need to start by eliminating the least-valuable trips. Higher prices are a quick, easy, and effective solution.

      John, thanks for letting me respond to your critique. Have I moved you any closer? Can you prescribe a better approach?

  3. Determining the “ROI/payback/value creation” generated by a corporate business trip, to Scott’s point, is a technology problem; back to this in a minute. Costs matter; just ask any public company CEO. I ran a public company for five+ years, and you simply have to have “good” numbers. You have to separate controls and value creation. Hammering on costs is controls, creating value is all bout creativity, listening to your customers, etc., and that is not cheap.

    The best-laid corporate plans set you on the road to hell if there is no cash flow to fund them. Managing cash flow everyone in their own way, but what is being done to compute the “ROI/payback/value creation” of travel? “Talking” down travel is never going to work; it is too expensive from a human resources point of view. We quoted one company that buys 300,000 air tickets a year. It simply cannot be done “talking” down travel; the process has to be automated.

    Traditional BI models cannot provide the answers. They simply cannot handle the number of variables you need in a model to provide best-in-class answers. The solution is AI. That sounds super self-serving since I run an AI company, but that is the bottom line, no matter who says it.

    Corporate travel “ROI/payback/value creation” is all about understanding the customer. There are other good reasons to travel, but let’s focus on the best reason – impacting a customer’s decision to buy our products – job one in most companies.

    We have done extensive modeling in customer experience ( CX ); one model for an F50 company included 1,900 variables to start with for 5M customers to understand customer churn and what next best actions ( NBAs ) were needed to reduce it. You could easily see that travel might be a very good answer.

    To eliminate low-value travel and optimize your travel program, you will first have to invest in new technology; from the work we have done in both CX and corporate travel, we know this will work. You can take that to the bank!

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