Ask the travel manager: 5Back to Forum
AnonymousGuest4 Feb 2015
Each month, we put questions to the travel manager through the Association of Corporate Travel Executives (ACTE). This month’s topic…
Loyalty scheme changes mean next year I won’t qualify for a tier status offering lounge access. Time to rethink the lowest-price ticket policy?
Travel managers have an ambivalent relationship with loyalty programmes. From one point of view, they are a bad thing. Through the use of incentives (some would say bribes), such schemes try to persuade travellers to book with one supplier rather than another. As such, they may well encourage behaviour that is not consistent with the travel mandate. They are an external force that tempts travellers to book with their own preferred operators, or to book in a way that ensures they get maximum benefit. They distort the market in many ways, and that’s without even getting into the discussion that those rewards ought to be claimed back by the company that paid for the travel in the first place.
On the other hand, travel managers also recognise that, in the past, the most frequent travellers have managed to attain premium tier status that has given them perks that are not only of benefit to themselves, but their company too. To take the example referred to in your question, if someone flew often enough, then even on low-priced tickets they would probably – via a combination of tier points, miles or sectors flown – get lounge access. This would allow them to be productive while waiting for their flights, get free wifi, often be fed and would keep costs down for the corporate.
As you point out, this will change for some, but not all, employees as more and more airlines and hotel groups move to a model in which rewards are based on revenue. For companies that book the most restrictive tickets, it will mean that employees who previously qualified for lounge access, or free internet at the hotel, might lose that privilege. Where that does happen, it then becomes a decision of what value is put on that lounge time or wifi access, and how it is going to be justified if it is to be paid. In the case of the wifi cost, it’s a defined amount, and for larger corporates it will be part of the negotiation with a hotel chain – the RFP process, as it’s known – to have those charges included in the deal. But productivity as a result of lounge access is harder to judge.
Answering your question directly, whatever value is put on it, it’s unlikely to persuade corporates to buy more expensive tickets just so that, over time, the cumulative cost of all of those tickets will add up to a tier level that allows travellers to get lounge access. Whether it’s a restricted ticket in economy or a flexible one, it’s still the same economy seat on the aircraft, so you won’t be any more or less productive on board, or arrive feeling better than you did before (except perhaps psychologically, knowing you earned a few more miles or tier points). Only if we started flying travellers around in premium classes would they notice the difference, and whether that’s a good use of company money is a different argument best left for another time.
I’d also say that many corporates do buy the flexible tickets. They’ve done the numbers and realised that while the price is higher, the total cost is less than that of people changing their plans and the non-refundable ticket being wasted, especially if they then have to buy another seat for a later date – so not everyone will be affected by these changes.
For those that are affected, it’s worth considering whether lounge access ought to be part of the travel programme. Some corporates give travel managers the discretion to pay for lounge access for certain travellers, especially if they have a lot of connections or downtime, but this would be an individual manager’s decision based upon their budgets. It’s also worth bearing in mind that it may well be less expensive to “buy” the perks and benefits as standalone products instead of buying higher priced tickets to attain tiers.
It wouldn’t always work, of course. In the most extreme example, where a terminal is dedicated to one airline, then those who don’t qualify for admission have no other lounge choices available to them – British Airways’ Terminal 5 at Heathrow springs to mind. But that’s unusual, and I should also say that it has been that way since it opened – it only seems to have become an issue in the past month or so among those who feel they are going to lose their silver status in BA’s Executive Club.
Companies also negotiate with airlines for a set number of complimentary status upgrades for different levels of travellers based upon level within the company or frequency of travel, though of course this will depend on how much travel spend your company has, or the ability of your chosen travel management company to access deals such as this. It comes back to the clout the company has with suppliers, and that’s why companies want their travellers to use a limited number of suppliers to increase not only the discounts but the perks available to those travellers.
Finally, while it is a worrying trend for these privileges to be taken away by the airlines, there’s also a strong focus on focus on traveller centricity, by which I mean making travellers more productive in today’s world. So while a company might have blanket across-the-board policies about types of tickets, they are also recognizing that one size doesn’t fit all. That is why companies allow managers to manage their travellers and budgets in such a way to get the most productivity from their travellers and the best ROI for the company. Have a chat with your travel manager and express your concerns in a constructive way. You might be surprised by the result.4 Feb 2015
Perhaps when BA cull the EC sufficiently the north lounge in T5 will be handed over to one of the companies that offers paid access.
Between an EC cull and some long hauls i.e. high volume flights moving to T3 including some A380 operations the footfall in the T5 lounges should reduce.4 Feb 2015
Long haul I fly in Business, so benefit from the airline lounges, but for short haul I normally fly in economy. Membership of Priority Pass has been a real boon – free wifi, snacks and peace and quiet have made it a really good investment.6 Feb 2015
Sister site Buying Business Travel has a regular feature Mystery Buyer
This month the Mystery Buyer gets out from behind the desk and bemoans the inconsistency of the travel experience, particularly with regards to airlines.6 Feb 2015
The travel manager is right – I can’t imagine any companies – or individuals for that matter – deliberately buying a more expensive economy fare category just to reach a tier status. Buying Club or First is another matter – there are other reasons for doing that. But not for an economy seat.
But when s/he says corporates do buy flexible tickets – well yes, but only up to a point. It very much depends on the nature of the trip (and the company and the traveller’s role, of course) – plenty of work trips do not require changes or refunds and the cheap options are the best options for making savings.
On short-haul, I find very little reason to even want a business-class seat. Happy on easyjet – as long as I can select my seat and sometimes use a lounge to work or grab a bite. That’s where LHR T5 is an issue. There’s even more reason now for T5 to install a non-BA lounge in there.6 Feb 2015
Another factor to take into account is the individual company’s corporate values. Do they believe that employees travelling is a fundamental requirement for the business to succeed, and therefore ensure their people travel as comfortably as price allows, or do they see it as a means to an end, like my company does. Which means the cheapest flights if the train is not an option, although business class is allowed for long haul.
What this will have meant for BA following their change to revenue model ,is with lounge access being lost as my colleagues statuses drop, would have seen them jump ship to Virgin. Alas , Virgin are dropping EDI so BA with their monopoly win again.
Another consideration is the build up of perks, that by some companies might be seen as an extension to salary, and because of that I know of a few that bar membership of loyalty programmes whilst on official company business thus ensuring equity between travelling and non travelling employees.
To add to the above point, I’ve had to have a quiet word with a few of my colleagues who boast about how they’ve used points or indeed ” lorded it up” in the lounge or staying in executive suites etc….I’ve no doubt if all my travelling colleagues acted in the same manner , our HR department would write in an exclusion of loyalty program policy, citing our company’s corporate behaviours as justification.8 Feb 2015