Choosing the Right Airline Partnership in 2023
The decisions that corporate travelers make when booking trips tend to be made as a result of both personal choice and company policy. For those in the travel industry or for those who face this decision as part of their daily business routine, you will probably agree that balancing the two can be difficult and sometimes conflict.
Personal choice can be driven by a travelers’ home location, the perks he receives, or perceived reliability. But a corporation needs to focus on many individuals acting as one interest. Ultimately, a business travel program seeks to balance individual brand loyalty with smart business decisions that optimize corporate spend and buying power.
KesselRun Consulting has been negotiating and maintaining airline partnerships for clients for 20 years. From our experience, let us offer you some free advice.
Top 5 Things to Consider When Choosing an Airline Partnership
Like Most Things, Follow the Money
No airline partnership should be established without first undertaking a thorough air analysis. This analysis should be twofold: existing spend across all airlines should be reviewed, and discounts should be benchmarked. Obtaining complete spend data is critical to this analysis.
If your company uses a Travel Management Company (TMC), you can readily get a clear view of all of the airlines flown and all of the important particulars required to negotiate airline discounts. In most cases, you will also find some disparity between airline spend booked through a TMC and airline expenditures made directly through an airline website. To the extent possible, you should try to reconcile both sets of data in an effort to provide the airline with the clearest picture of your total spend as possible. Some of this information can be found on corporate purchasing/credit cards or expense receipt information. This disparity in the way travelers book may only increase with the new industry protocol called New Distribution Capability (NDC) which will cause many of the current fares your traveler can see through your TMC to no longer be available.
While it’s important to understand the details behind this content “gap”, the important thing is to refer back to the original headline: Follow the Money. The manner in which airlines distribute their content can have an impact on their costs as a result of incentive payments to various intermediaries. The bottom line for this tip is to make sure you review all relevant data to ensure you have both a clear view of your total spend and understand the levers that help drive your negotiations.
Building an airline partnership means having the best possible data and it improves your likelihood of fulfilling contract requirements.
Air benchmarking is also key. Your discounts should be compared against your prior average spend on flight segments, and, whenever possible, to best-in-class discounts offered for comparably-sized companies. If in need of industry-wide comparisons, keep in mind KesselRun has the power of the largest benchmarking database available at our fingertips.
Even when the percentage discount per route may appear minimal, a correctly-chosen, built, and supported airline partnership can add up to significant savings.
Location is the Key Driver
Where do you fly? Some airlines are synonymous with a certain city. Based on your company headquarters alone, you may already have a natural airline partner in the wings.
Each airline has its own hubs and regions of strength, so consider which airline offers the most options, routes, and nonstops in your own dominant areas. For global or globally-expanding companies, remember that an international Point of Sale, or particularly heavily-flown international routing, can support and even drive an airline partnership that may not seem as likely on domestic alone.
As in all business, it’s also important to keep an eye on the future — where the respective airlines are headed next, and where your company will need to be.
Help your Travelers Help You
How many of your business travelers are frequent flyers and on which airlines? While new GDPR guidelines limit access to frequent flier data, working with your Travel Management Company, you can still establish how many travelers have preferred numbers entered in their profiles, and for which reward programs.
If the majority of your travelers gravitate toward one preferred carrier, and you encourage another, you are more likely to wrestle with program compliance. Building on the strongest existing ties gives your airline partnership a running start and a better chance of success. In today’s environment, airline discounts are not negotiated easily and if you miss your volume or market share agreement, don’t be surprised if the airline takes it away or doesn’t come back to the negotiating table.
Once an agreement is in place, looking at travelers for status matches, which your airline representative can often provide, can greatly support your airline partnership. Identifying and shifting even one high-volume traveler on key routes via status match can significantly impact contract fulfillment.
Don’t Dilute Your Program
Taking every discount possible sounds great, in theory. In actuality, contracting too many airlines is a smart way to ruin a good deal.
Very few companies have enough volume to sustain contracts with all three major alliances. When spread too thin, discounts drop; partnerships end. Based on spend, location, and traveler preferences, decisions need to be made. Elect one, or two, alliances to support, perhaps supporting with a low-cost or more regional carrier contract.
Airline contract terms typically last one to three years, which allows room for choices to change. An airline partnership is not just a one-time decision, but, as with any long-term relationship, one that has to be recommitted to – and only when it continues working for both parties.
A Partnership Should be Treated Like a Partnership
As with any relationship — an airline partnership also requires maintenance.
At times, your travel manager may need to dig into why a particular route isn’t taking, which could be because a flight option doesn’t meet travelers’ time of day or the discount in that location is not competitively low enough. Communication with your airline representative, who can often support initiatives to improve, is your greatest tool in keeping your airline partnership running smoothly.
How KesselRun Corporate Travel Solutions Can Help
If still unsure of where to begin your airline partnership, KesselRun can step into the process at any point. We offer air data analysis and benchmarking, run airline RFPs and contract negotiation, and even provide travel management, keeping the airline partnership working for your company, your travelers, and your airline partner, day to day, year to year.
To engage with KesselRun for corporate travel consulting or other services, contact us online today.