As securing discounted corporate airfares gets harder

Negotiating the best corporate airfares can be tricky at the best of times. Many external factors are making the task even harder. Ever-tighter profit margins, fluctuating oil prices, and increased competition from smaller and LCC carriers create stricter market conditions for airlines.

In addition, the growing complexity of the ancillaries landscape is leaving legacy carriers with less control over the passenger journey. More minor, low-cost carriers – which can make up to 40 percent of their revenue through ancillary sales – are entering the space with innovative offers and services and flexible options to bundle or unbundle a fare based on individual needs.

This puts immense pressure on traditional airlines to offer the lowest possible fares to get passengers onboard. This makes it harder for TMCs to secure discounted corporate fares and adds another layer of complexity to negotiations. Travel buyers will only confirm a good deal if they prepare the right way, know what to ask for, and can back up their wish lists with reliable data.

In the highly competitive airline industry, real-time insights are critical to ensure that your company is capitalizing on negotiated fare availability and not leaving any potential savings untapped. Consider the following three steps before beginning negotiations, and you’ll be more likely to come out with the best outcome for your company and its travelers.

Benchmark against other airlines & price-track airfares for your most important segments

Before entering negotiations with an airline, understand how its prices compare to those of its competitors. Consider your most popular flight segments and check multiple airlines’ prices on these routes as close to the time of purchase as possible. This way, you can judge whether your business is getting the most cost-effective options, and when you enter discussions and negotiations, you can benchmark against other airlines.

Data is a powerful tool! It arms you with the knowledge you need to approach suppliers convincingly. Pricing trend data is available through online fare-tracking tools and gives you a thorough understanding of past spend and patterns. With this, you can analyze fluctuations in airfares and gain valuable insight into the pricing best practices.

Understand the volatility of your most important segments

Before any negotiations, you should know which segments are most popular with your business travelers and, therefore, the most critical for your business. What are the cities and countries that your employees travel to regularly? Do these routes receive more traffic from your business at a specific time of year? And do they usually require business or economy travel?

Obtain and analyze this data to use it for negotiating suppliers’ best prices. Understanding who travels where and when can help you significantly cut your travel costs.

If you have negotiated a set rate on specific routes, use data intelligence to determine how often the fare price fluctuates under that agreed rate and calculate how much money you may be losing. If the ticket price regularly undercuts your agreed rate, you will have valuable ammunition to negotiate a better rate with your supplier.

Compromise to gain larger discounts

In today’s ever-changing travel industry, it’s essential to approach supplier negotiations flexibly. Airlines are facing tougher competition than ever and therefore may not be able to agree to everything on your wish list. The pressure to offer low fares and restricted tickets to the market at rock-bottom prices means that carriers can be unwilling to provide further discounts for corporate travel.

Therefore, negotiating outside base airfares and discounts can result in a better deal. Depending on your business needs, consider accepting a lesser deal on economy fares in return for a more significant discount on business fares. Or opt for savings on ancillaries and other travel perks instead of on fares themselves.

A more expensive total ticket price that includes regular services such as meals and luggage can yield more significant savings than a cheap ticket with no frills. Such no-frills tickets often require travelers to book and expense add-on services later and often at higher costs to the company.

Work out what your business needs and what strategy makes the most sense. Understanding and adapting to the changing airline landscape, and being creative and flexible in your approach, will mean you’ll be more likely to make those all-important travel & expense savings.

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