How can you upgrade your airline RFP experience – Catherine Chetwynd asks three experts for their views?
Airline RFPs are viewed as a time-consuming necessity but as this month’s experts prove, they can be kept to a minimum of time and effort if buyers sort the wheat from the chaff.
Provide enough information about what you spend with airlines and how, and what you require from them, and your RPF can be kept relatively short and clear in the hope of eliciting the necessarily clear and accurate responses. But the experts do not agree on everything, as you will see.
Ruediger Bruss, corporate purchasing, global category manager travel and mobility, Continental Teves
The rates that are offered by the airlines on short-haul routes in a negotiation are absolutely not worth it, unless a company flies so much between two points and in such high booking classes that it makes sense to do so. But negotiations on long-haul routes make absolute sense as long as you can demonstrate that you can shift volume, steer your demand and reward the airlines.
Know yourself, know your policy, know how your policy is implemented. If your policy allows business class on a long-haul flight, but no one is buying that because your business is under so much cost pressure, then it doesn’t make sense to negotiate it.
The travel manager/travel buyer is responsible for ensuring the good of the company, and the best price for what is deemed necessary, taking into account the specifications. You would not need to consult too many people – and preferably not travellers, who will want to fly first class direct. You will get information you can’t act on. The policy in our company is that stopover connections must be accepted.
The TMC’s role is limited. It should provide data through reporting so that the buyer can know where travellers are going. It should be able to advise the buyer: have you looked at new carriers? I’m seeing very little of that; TMCs are not fulfilling the role they should be in providing actionable insights.
For a first-time RFP, you need to know your flights: where they are going and when – including the day of the week because some airlines differentiate the price between mid-week and weekend; class of travel; number and time of layovers.
Our RFP document is effectively three pages. These address where we go, how we travel, what we want, plus legal requirements, due diligence, supplier code of conduct. It is 95 per cent the same as the GBTA has in its redesigned RFP template.
I was extremely happy with what the GBTA did; to my mind, it is perfect. It’s important to validate the data that is provided by the airlines. The quality differs hugely and you might end up making the wrong analysis and then the wrong decisions.
Chris Pouney, consultant, Severnside Consulting
Ultimately customers, particularly those in procurement, want assurances that the spend they have is yielding a better fare in every instance than someone walking in off the street. In my experience, this involves having a matrix of up-front discounts, rebates, corporate mileage schemes, all supported by an effective travel policy that encourages travellers to hunt down the lowest fares.
Spot buying can and has replaced RFPs and contracts on any company’s short-haul programmes, but one area of contention is frequent mileage status. Most airlines have tightened the criteria for travellers to earn status in their own right, so having a deal with a carrier that delivers complimentary card status is often demanded by senior travellers. It is a challenge for many buyers.
The starting point for any RFP is to engage with airlines to make sure they understand what your goals are, work with your TMC to ensure you have the right data and look at your policy to ensure that the internal mechanisms are in place to support any contractual award. It also never hurts to speak to some of your travellers. There is a real opportunity for a TMC to shine in the role of trusted adviser here by providing best practice, meaningful data and sitting at the shoulder of the buyer during complex negotiations.
The pitfalls are creating an RFP process that is so long and cumbersome the market has moved on prior to your implementing. I also think it is never a good thing to over-commit volume, although a number of buyers may disagree with me. I am not a major fan of rates benchmarking either. Context is everything in airline negotiations, and knowing that company X has a rate $10 cheaper than you is ignoring context – such as how much support they give or the fact they support the airline on other routes which might not be key to you.
Negotiation and sourcing is increasingly a small part of the process and by far the most value is to be derived through in-contract demand management initiatives, such as influencing alternate choice of carriers and implementing effective lowest logical fares algorithms.
Chris Vince, director of operations, Click Travel
On short-haul routes there is so much low-cost competition across Europe, it is hardly worth negotiating rates. I don’t think we have any short-haul route deals across our customer base at the moment. Long-haul depends on what the customer wants.
Where customers have done deals, it’s because they have significant volume on routes. If the company is paying the same as best rates on the day, it is about flexibility, maybe extra baggage allowance, a refundable fare, etc. We find airlines are often happy to negotiate on these.
It is important buyers listen to travellers to get their feedback on their experience with airlines when a company is going out to three or four airlines on RFP. A buyer is putting a deal in place to get buy-in from travellers, so if travellers don’t want to travel with that carrier, buyers are doing a lot of work for no benefit.
The TMC has got MI data and knowledge, and if they have been doing similar programmes with other customers, they can share best practice as well. They will know whether an airline is giving a good deal and can advise on whether buyers should be pushing a carrier for a bit more. It’s easy for the buyer to get hung up on price alone, and the TMC can give an all-round picture of the programme.
To write a first RFP, a buyer needs information on volumes. Where there’s more than one carrier, the RFP has to show potential business, so that an airline can see that it has 20 per cent of the volume; but if it puts in a good deal, it can get 80 per cent. The buyer also needs to be able to share cabin-class information and how far in advance people are booking, and how many times they need to make cancellations or changes. Maybe you cannot get as big a discount as you thought, but can negotiate on terms and conditions.
A lot of carriers try to offer complimentary upgrades and status matching because it doesn’t cost them a lot of money. Buyers can get swayed by that, but it doesn’t make that much difference to travellers. It is only important if employees travel with one carrier and have top-level loyalty programme membership status and the organisation is looking at moving them to a different airline.