Plunging oil prices mean travel buyers operating in the energy sector “have a big responsibility” to drive changes in their policies as companies search for “across-the-board” savings, leading TMCs have told BBT.
Since last summer, the price of oil has fallen from around $100 a barrel to a six-year low in January of around $45 a barrel. This caused share prices at some of the largest energy companies to tumble and resulted in job cuts throughout the oil and gas sector.
Operations director at FCm Travel Solutions Aberdeen, Mairead Hayden, told BBT that travel programmes are coming under increased scrutiny as the fall in oil prices hits the industry.
“Around 90 per cent of our clients in Aberdeen are affected – most oil companies based here have major interests in North Sea oil production,” said Hayden. “The knock-on effect is also affecting companies that specialise in drilling and exploration. Companies are putting a hold on finding new oil and gas sources, as these projects are so costly.”
She added that TMCs who specialise in the energy sector are working closely with their clients to re-evaluate their policies, modify behaviour, and find savings where possible.
“Our account managers have held emergency meetings with buyers to look at their travel programme on a case by case basis. Every client is different in terms of their travel needs and potential for finding savings.”
Wings Travel Management specialises in oil and gas travel, and its CEO Paul East said despite clients asking them to reduce costs by 20 per cent the value of the TMC has never been more important.
“Our account management team is revisiting all current negotiations in place, identifying alternative suppliers, or fare types – do we continue to use oil and gas fares, for example? Or should we get clients to accept restrictive tickets, or look at an alternative client supplier agreement.
“Just as important is making further recommendations on how a client’s travel policy can be adapted – either in terms of process or products and services purchased. All these options are then put into a business plan and documented and then used for benchmarking.”
East said Wings is working closely with buyers to help change traveller behaviour and find cost savings. “Buyers have a big responsibility to communicate and drive the changes in behaviour into their country managers and project owners.
“As you would expect the majority of the buyers in the energy sector are well versed in the industry, as many come from an energy background. These buyers want to work with their Travel Management Company: An agency which manages business travel for a company. to review the recommendations prior to communicating and implementing into their business because while reducing costs is the key focus, safety and security remain the main priority,” said East.
Carlson Wagonlit Travel’s senior director energy, resources and marine EMEA, Tony Berry told BBT there has been a stronger focus on travel costs due to the drop in oil prices although he believes travel bans are unlikely.
“We are seeing increased scrutiny of air fares on high frequency routes and business class travel in particular,” said Berry.
He added: “It is essential that travel buyers manage any change in traveller behaviour through their travel policy which can be a powerful tool, especially when used in conjunction with fare options and a pre-trip approval process.
“CWT’s dedicated programme managers work closely with the client travel team, to provide them with the technology and knowledge to manage traveller behaviour.”
Some airlines have responded to the fall in oil prices by cutting fares although there have been calls for more savings to be passed on to customers. Last month, Australian carrier Qantas said it is to scrap fuel surcharges on international flights.
The move by Qantas followed a similar announcement from Emirates and Qatar Airways.