ACTE PRESS RELEASE
For Immediate Release
Honestly Speaking...About Airline Commission Cuts and Outsourcing Travel Negotiations
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Singapore, 21 December 2004 - The ACTE Executive Forum held on 2nd December in Sydney Australia focused on a topic that has made corporate travel managers unsettled, airlines anxious and travel management companies bothÑthe reduction of revenue flow through airline commission cuts. Included in this delicate discussion were representatives from Qantas, Travel Management Companies (TMCs) and corporate travel buyers. Session length prevented an exhaustive exploration of this topic, but the Forum did serve to establish some understanding between parties and dispelled some misconceptions about the new direction in compensation.
Karina Harris, Asia-Pacific Travel Manager for BP said," It was important that this forum facilitated some "open -palm dialogue" among corporates, TMCs and Qantas on the subject. It sets a precedent for similar moves made by airlines operating in any market."
The Forum included a presentation on the role of software technology to increase the efficiency of meetings management, an activity that has recently been added to some travel managers' list of responsibilities. Among the many points raised is that corporations can no longer afford to allow meeting spend data to remain un-captured if there is going to be efficient cost management. Meeting spend by corporations could actually be much higher than we often imagine and this fact should move us to act immediately to leverage the advantages that such software may offer corporations. According to Grant McPhee of Carlson Marketing Group, cost reduction of between 15-20% can be realised from proper use of such technology.
The Forum ended with a look at the pros and cons of outsourcing travel negotiations. It was preceded by a snap poll on the subject that provided some understanding of the perspectives of the corporate buyers and their supply partners on this topic.
- Most attendees do not believe that outsourcing the travel negotiations leads to a loss of control by the company over potential cost avoidance. 75% of corporates and 84% of TMCs/Suppliers expressed this view.
- Similar concurrence was shared on the statement that outsourcing the travel negotiations may jeopardise the travel manager's value contribution and eventually his/her position in the company. 75% of corporates and 72% of TMCs/Suppliers voted the statement as false.
- However the results were not so clear-cut when it came to ascertaining if top management teams in most companies were uncomfortable with the idea of allowing an external party to have access to such financial data. The average belief that this is true was 53% among the two groups.
- Corporates were unanimous in their belief (92%) that suppliers prefer to deal directly with them and through an intermediary in such negotiations. 68% of TMCs / Suppliers disagreed with this statement.
- 67% of corporates agreed while 76% of TMCs/Suppliers disagreed with the statement, Corporations have greater bargaining leverage by conducting direct negotiations.
- Both corporates (92%) and TMCs/Suppliers (92%) enjoy the negotiations process for many reasons (eg. Relationship building & rapport, new idea generation potential, etc)
ACTE's Executive Forums are made possible by the generous support of Global Executive Forum Supporter, TravelPORT and Asia-Pacific sponsors, Business Travel International, Carlson Wagonlit Travel, Cathay Pacific Airways and Raffles International Hotels & Resorts.
For more information, contact:
Kenneth Phua
Regional Director Asia-Pacific
Tel: 65-6336 4341
E-mail: [email protected]
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