Who should buy travel? (Part one)

This debate has rumbled on for a very long time and I expect it will continue particularly at this time of financial and strategic difficulty. Suppliers have to earn more and corporations have to pay less to achieve their recovery strategy so it has never been more important that the function in the middle of the pricing debate gets it right. If they don’t we will end up either with less products or fewer customers or perhaps both. The key reason for there being an impasse in this debate is there is no right answer for all the stakeholders. It very much depends on the flexibility, specialist knowledge and skills of individuals concerned.

It is not an easy subject to comment on without rubbing someone up the wrong way and getting called biased to one particular part of the supply chain. Although I was very much a TMC man I now feel I can look back more objectively and hopefully put forward some valid considerations to be taken into account. For example I do not believe this activity should be outsourced to a TMC in the current climate as they will be viewed sceptically by the suppliers and not have sufficient mandate within the corporation. It also has the potential of removing ongoing control of the programme, especially within large organisations and their global subsidiaries.


To understand the challenge and make an informed decision you have to know the key issues. I believe many of you know them so I hope you will bear with me while I ad my thoughts on them. Rather like buying most things the secret is to get the correct blend between quality of product and price. In the travel arena this is easier said than done especially when the product is either a commodity or a service and more likely both. In this environment the corporation needs to look closer at a) what exactly they want to buy and b) how they are going to manage the programme to maximum gain when it starts. A decision has to be made as to who in the company is suited to doing both jobs or if the project should be split into two parts. This is where it mainly goes wrong as one task naturally blends into the other.

If you put the TMC and outside consultants aside for a moment that really leaves just two functions which are procurement and the travel manager. One view is that a buyer is expert at buying a commodity and a travel manager is much better at controlling a service. Having seen both in action more times than I can remember it is very rare indeed to find one person who can lead both functions successfully as the skill –set is so different.


So there we have it. When a buyer says it should be their job they are probably as wrong as the travel manager who says it should be them. In my opinion there are only two alternatives. One is that you go out and find that rare breed of person who can both buy professionally and manage a complex service orientated project. After all travel is a commodity when you buy but turns into a service when you use it. The second option (and best in my opinion) is to form a triumvirate of a buyer, a travel manager and a leader who should be a senior board member with a strong mandate from his colleagues. All three should work together from concept to strategy to buying to delivery. This liaison should not stop at delivery but move forward to ensure disciplines and benefits are achieved.
What about the suppliers? Who should be negotiating what with whom?
I will put forward my views in part two but I can say now that I think it works pretty badly in general!

Cheap flights. What we want? Are you sure?

I have been waiting for it to happen and now it has. The major national airlines that have been fighting low cost carriers are finally joining them with a vengeance that is creating its own backlash.

Naturally it is about money or should I say profit and ‘shareholder value’. Let me explain. Those same airlines that denigrated those ‘cheap’ airlines in the past have seen their profits suffer and have found it necessary to respond in order to maintain their position as market brand leaders.

Now, they are not going to give away their profit margins and pricing models are they? No. What they are doing is changing them into possibly more profitable returns. You see low cost airlines relied mainly on new routes, new markets, low charges for high volume and almost a carte blanche to do what they want as they were new kids on the block. In fact the crazier their actions seemed the more they were admired.

The big airlines could do very little to start with. These new guys were a pain but did not really hurt them too much on key routes. Meanwhile they still earned enough loyalty from business and other higher end markets to cope plus they had solid schedules to key cities to reduce the damage. In fact I think they did not want to play with low cost in those early evolution times. Then things moved on. Or at least they have on the smaller routes.

The new ‘cheap’ market reached almost saturation point. These airlines introduced as many new routes as they could and filled them with as many passengers that were ready and willing to use them. But what happens when there are so few new routes available anymore? How do these darlings of the City maintain the expected rapid, continuing growth expected from them? The answer is they have to compete for those passengers they once scorned and mainly ignored the mainstream airline traveller.

How did they do this? By in part becoming a bit like their adversaries by flying in and out of major airports and fighting on a far more level playing field. By this I mean they kept their opening fare at the same low levels but charged add-ons for everything else from meals, drinks, bags, credit cards to reserved seats, extra legroom and most of the other things you get (or used to) as standard from mainstream airlines. This has created a massive change which will grow before it diminishes

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To some extent this is what the big world airlines were waiting for. People started finding that low cost airlines are not as low cost as they used to be. The ‘cheap flight love affair’ was beginning to be questioned. Those airlines that could get away with murder in recent years started being called to account when directly and openly being compared with their bigger and more established rivals.

Finally it seems the national airlines have started to act and I am not sure how popular it is going to become with Joe Public who enjoyed slating them but needed them to be around too. As ‘low cost fares’ went up so did ‘full fare’ prices go down. Except they were no longer the ‘full service’ fare.

The opportunity for these global carriers was there for the taking and being openly displayed to them by those competitors they feared were their nemesis. If you change elements of pricing you can milk extra profit. So now the low cost charges are being introduced by the big boys, particularly on short journeys. Food and drink quality have gone down but now you have to pay for them on top of your fare. The airline takes out a cost and replaces it with a new income stream! This is not the only example of this rapidly growing income stream. On flights cabin crew numbers are getting smaller and compelling reasons present themselves for reducing pay and benefits too. After all it is what ‘the people’ (you and me) want. Now we are finding that major airlines are more often the same or cheaper than low cost airlines on main routes. Sadly it must be at our cost not theirs.

It is a bit sad really but I think the major carriers are going to get a bit of a public bashing over this but hey, they are more profitable and the city institutions will love them! The will also be able to defend themselves by saying they are reacting to what the public want. Meanwhile, as I said before, ultimately Joe Public will end up paying more for less.

Finally a look to the future. I think the short flight market will level out and airlines of all persuasions will compete on more equal basis albeit we, the public, will probably get a more reduced service and at higher prices. As far as the longer distance destinations are concerned, I personally think that it will be a while before this, what I call ‘cost plus’ model takes hold. Companies bankrolled by city institutions have tried before to start up new low cost long haul airlines and have failed miserably.

 This may change and I see airlines like Norwegian trying their new model in this market but I hold out little hope for such in the near future.

But who knows!

Hoping for an airline upgrade. You’ll be lucky!

No seriously, I mean it because luck is probably the best way to describe so called airline selection policy as it applies to that all important upgrade. A huge shame really as, with the arrival of single class competitors, the incentive of potential upgrades is a definite plus when deciding who to fly with. Sad that airlines do not recognise the power and competitive edge upgrades give them.

I read a long running blog the other day on the subject of ‘How to get an upgrade’. It started with someone’s opinion and grew enormously as others (including me at the time) regaled other readers with their tips, experiences and failures. The only thing that seemed clear is that almost everybody wanted upgrades and very few actually got them. The only successes seemed to with people that made no particular effort but got them as a pleasant surprise.

On looking closer at these and other people one thing began to become evident. It did not seem to matter much on what you looked like, how many in your group or how important you are to that airline. It seemed purely down to numbers an seemed triggered by how full the cabin was you were booked in. Obviously the vast majority of seats are in economy class and also economy passengers are more likely not to show up. As a result airlines overbook this cabin in the hope it ends up going out full. If there are seats available in higher classes then these are used for any surplus economy numbers via upgrades. The same approach applies right up to First Class. Very often when someone gets upgraded from economy they will create a chain reaction of upgrade through Premium economy and Club class right up to the front cabin. Either that or, to save hassle the economy passenger finds themselves placed directly into seat 1A.

Meals also impact the need to upgrade. If the particular cabin is short of meals they will often upgrade or sometimes if a forward cabin is almost empty but fully catered for they will again upgrade. There is also the airline staff upgrade where travelling airline folk hold upgrade tickets or possibly are friends of the crew. And if there are plenty of meals and not many staff? Then you might just get lucky.

Now I always used to think that if I looked smart my chances of upgrade were better. I had hoped that someone in the ground staff were wandering around thinking “now let me find a smart, deserving individual I can bestow this super upgrade on” I am afraid I do not believe this happens any more (it used to). Now some machine randomly selects you or a tired, bored departure desk operative gets told to offer upgrades to whoever is in front of them. I am afraid the truly discretionary upgrade has all but gone out of the window. I suppose the computer could be programmed to select that airline’s frequent flyer members but I have not seen this happening either.

Looking deeper there is only one true way of getting an upgrade and even that is risky and impossible for most people and that is before check-in. If you can persuade the right airline person at the right level to mark your booking ‘upgrade space available’ it might just happen. A lot depends on the relationship between reservations and airport staff and if the latter remembers to do something about it. For example I tried to help a friend who had just lost his wife and needed to get to Sydney. I phoned the airline reservations number and explained the situation and got nowhere until I got my call escalated to a supervisor. After a lot of persuasion on my part she agreed to try and help and ultimately he got upgraded. Not easy but possible if you persevere

So that is that really. Computerisation, apathy and, in my opinion, short sightedness by airlines means upgrades are hard to get and mainly coincidental. Just think what a valuable selling tool they could be. They would buy loyalty, give recognition and fill seats productively instead of dishing them out indiscriminately to those not expecting them.

So. You want an upgrade? You WILL BE LUCKY!