Why do corporate travellers spend more than necessary on air tickets?

Why do so many people like Coca Cola when there’s Pepsi?
Or save more money by buying the supermarket brand?

Answer:
– personal taste
– a bit of ego
– frequent flyer schemes
– I wouldn’t touch United with a barge pole. Oh wait, my metaphor was about cola.

Ironically Carajillo2Sugarif you book CHEAP flights with BA out of your own hard earned wages , you probably should thank those same corporate travelers who stick rigidly to internal corporate policy for subsidizing your ticket.

And actually if I was to go onto my corporate travel website today to book air travel, the first thing that pops up is a reminder of my companies travel policy stating that British Airways is our preferred carrier and such should be chosen first.

And as I’ve said before on the forum, there are many ways for finance directors to recoup cost of travel. Plus, in my companies case, they would rather I suffer the misery of rail travel rather than the cheaper option of flying to demonstrate our green credentials….

My experience: high costs come from corporate contract signed with corporate travel agency.
When I compare costs of flights and hotels offered on travel website with the costs shown on AF, KL or Expedia sites, the advantage very offen go to the direct booking option. Which is not allowed.
And why the corporate contract is not good : because it has been discussed and signed by corporate purchasers who have no clue what business travelling is about.

I don’t think it’s as simple as the list price for big corporates. Few, if anybody, buys a fully price, fully flexible £4k ticket to NY these days. That would be stupid… It’s a bit like thinking BA paid the list price for each of its A380s – $428m, in case you were wondering

I work for the one of BA’s top 10 customers. We get route deals, which means *significantly* lower fully flex fares on key routes. We have increased flexibility on lower priced tickets. We also get a [many] millions in kickbacks based on our spend at the end of the year. In the rare event that the list price of a BA flight to NY is higher than an equivalent UA flight, the volume rebate and other benefits more than offsets the additional cost – e.g. the ability to be late and get put on the next flight with minimum fuss and no fees; this doesn’t work if there are only 3 flights an evening out of EWR on 757s…

These corporate deals – the ones that fill up the front end of the plane – are critical to the success of airlines, at least in the UK business market. And in return for these deals, we fill the front end of their planes. Win-win!

The company I work for gets a very significant kick back at the end of each quarter based on hitting certain spend levels. Sometimes the fare paid looks higher than the lowest fare that can be booked on line with the airline, but when quarter-end kick back is received (which can easily be a seven figure number) the fares get very competitive.

I don’t think it’s a question of employers being seen as ‘cheap’, more a case of being prudent and showing some common sense when it comes to getting the best value from their travel budget.

From some of the responses so far, I appreciate there are some very good deals for those with a massive spend and who have a route-deal with a particular carrier, but what about those who don’t?

Going back to the example I gave of prices to New York, at the moment both United and American have flexible/refundable fares of around £2.5k inc.taxes, yet we still see many clients paying £2k more to travel with BA. You still get Tier points and Avios on the AA flights, their Business Class is at least as good as BA, so why pay twice as much to travel with BA?

With the right choice, an SME with 24 trips per year to NYC could save around £50k – not exactly small change!

To reply to the OP, it is a classic instance of “economic power”.

If you are one of those people fortunate enough almost to be able to name your terms and conditions of service and who’ve seen your annual take-home rise to 50-150 times the average salary, then throwing around £5K on a fully flexible J or F ticket is neither here nor there. To paraphrase Leona Helmsley: “making savings are for the little people”.

The same principle applies further down a corporate tree except that here it is rather more aligned to self-perceptions of position and status within the corporate pecking order. Despite all the protestation at Snr Mgt’s employer about “staff acting like owners – and cutting costs accordingly”, their new HQ in a plush part of central London was not done on the cheap, never mind the wall art etc. And they fully understand how they could save a fortune by copying her travel pattern (ex-EU doglegs and travelling long-haul in business over the weekend) – but they don’t/won’t.