AirPlus: What are the main trends and developments concerning Travel Management in Finland?

Anna-Maria Kirchner

AK: In 2009, the financial crisis has hit Finland as well as all the other Nordic and European countries. The Finnish companies are still hesitant though and are afraid that the crisis is not over yet. Many big corporations have switched from Business Class to Economy Class as we have also realized in other countries. Low cost carriers are going through a boom period and are becoming a big competitor again.

We have also observed that the trends are industry-specific. Most of the companies that have cut business travel costs tremendously are from the automotive as well as other manufacturing industries. However, companies in the pharmaceutical sector, for example, are maintaining the same volume or are even increasing.

In general, the main trend within the last two years has been towards environmental concerns and the focus on corporate social responsibility programs. In these, environment holds a given position especially in matters of business travel. The environmental trend is nothing that comes and goes. This is for sure one of the toughest challenges ever for mankind and will have an increasing influence on travel suppliers and corporate responsibility in company-sanctioned business travel and their travelers’ behavior.

AirPlus: How mature is Travel Management in Finland?

AK: On the one hand, the Finnish Travel Management is one of the most developed Travel Managements in the world in terms of processes and e-billing. There is even a big difference to the other Nordic countries. Finland is the precursor in processes and e-billing. All companies in Finland can only accept electronic invoices and are using different kinds of data consolidators in order to feed their accounting systems. This insures a 100% automated data flow and a major increase in cost savings.
On the other hand, Finland is a medium developed market. Only 20-30 % of all corporate customers are using lodged cards! International operating companies consider TM more and more as an efficient way of cost savings. But, as a majority of Finnish companies, many SMEs are not familiar with the concepts and advantages of TM, yet.

AirPlus: What do you consider to be the biggest chance and the biggest challenge for Travel Managers in your market?

AK: Finnish companies seek for a well-structured travel administration giving a perfect oversight at any given time. In Finland, almost 60% feel that electronic invoicing generates the best savings while about 40% would like to have an internal link between payment services and internal expense account management. A marked difference in the answers to that question is visible in the company size. Big companies are more likely to opt for electronic invoicing and an integration of expense account management. Smaller companies are not as likely to have a receipt apparatus for electronic invoices. Instead, they value a sorted summary invoice and that card and expense account transactions are listed in the same invoice.
Transparency is very important. Therefore, reporting about corporate social responsibility programs such as Co2Emission/ Green Reports will become more and more important.

AirPlus: Where do you see the biggest chances for your customers – where they can gain savings or profit from?

AK: I see the biggest chances in data consolidation. The majorities of all Finnish companies are still using agency invoicing.
Collective invoices enhance flexibility and liquidity, as the customers are not required to pay invoices beforehand. The collective invoices are more transparent for the customer.

AirPlus: Is there an AirPlus U.S.P. or an advantage in competition for AirPlus in Finland?

AK: AirPlus has a major advantage due to our global data consolidation. We consolidate sales data, including international sales data, from across all suppliers, in highest quality. We are offering our customers the markets’ best MIS tool which makes it easy for the TM to negotiate with their suppliers – national or worldwide. As a European company we are delivering the best data quality which is not provided to any 3rd parties such as governments etc.

One of our goals is to optimize the customer’s data flow and deliver additional savings through automation and lower accounting costs (e.g. electronic invoices). Our product is neutral and not tied to any particular travel management company or chain of travel agents. It can therefore be lodged at a travel agency you trust in hereby ensuring that it is always available for use. The main advantage is that the AirPlus Company Account can be used globally in all the world’s key business markets.

AirPlus: What are the main trends and developments concerning travel management in Israel?

PS: The main trends in Israel, which are on a rise precisely due to the financial crisis, are cost cutting and monitoring of travel policy compliance. Companies are attempting to save money by purchasing lower booking classes and by having their employees travel economy class instead of business class. The price of the airfare is more important than ever.

Paula Silva

AirPlus: How mature is travel management in the Israeli market?

PS: Travel management is highly mature in Israel and well perceived by the Senior Management. There is a Travel Managers Forum that is quite active in organizing events and meetings for its members.

AirPlus: Where do you see the biggest savings and profit opportunities for your customers?

PS: In connection with the information that AirPlus empowers them with: transparent and accurate data that will help them in their negotiations with their suppliers.

AirPlus: What competitive advantages does AirPlus have in Israel?

PS: In general the whole concept of business travel payment is not very developed from the supplier side. Hence the general set-up and product portfolio of AirPlus enjoys a unique position in the market. For instance, in Israel, AirPlus is the only supplier of corporate payment systems. Another strong advantage is that AirPlus includes insurance covering acts of terrorism.

AirPlus: Is there anything else of interest from a marketing perspective?

PS: What is really interesting from a customer perspective is the high level of fragmentation in the airline market: While Lufthansa, British Airways and many other airlines are at 0 IATA commission and TMC’s make their living from transaction fees, El Al, the home carrier still pays agencies 7% IATA commission. Of course this has significant impact on the complexity of travel management as well.

Katinka Balogh

AirPlus: What are the main trends and developments concerning Travel Management in your region?

We are still seeing an economic downturn throughout Eastern Europe. The majority of our economy is export-oriented, so we are highly dependent on the global trade climate and GDP performance. The main trend is managing company costs more effectively and travel management is one of our top priorities. The current situation in the travel industry has given us some opportunities. The average price of a plane ticket has decreased again, seats in lower booking classes are available much longer and airlines prefer to sell at maximum capacity.

Martin Knaisl

At the same time, we can say that the trends are also industry-specific. Most of the companies that have decided to start cutting back on business travel are from the automobile as well as other manufacturing industries; however, companies in the pharmaceutical or IT sector are maintaining the same volume of corporate travel.

AirPlus: How mature is Travel Management in your market?

In particular, multinational companies are ready for new solutions and open to new ideas. I have also noticed that there is a trend for companies to have a manager who has more experience from the “West”. In these multinational companies, management is keen to find solutions to save money not by stopping travel, but rather by searching for new opportunities. There are also companies without a centralized travel process; the management has no information or control over the travel spending. Sometimes there is no one taking responsibility and the company focuses on other priorities. However, with the Travel Management solutions that are available, offered by Travel Management suppliers, the company could save a lot of money, even up to 40% compared to their current travel-related costs.

AirPlus: How is Travel Management perceived by the senior management of your customers?

Travel management is highly mature among all big multinational companies. Travel policy is a standard part of company rules and senior management regularly checks to ensure compliance.

Again it depends on the company. Multinational companies are generally much more focused on TM than national companies or multinational companies where there is no strong oversight from headquarters. A company’s perspective regarding TM is also closely related to the company’s travel spending. For example, in Eastern Europe the average business travel costs amount to only about 150,000 Euros/year, which is significantly less than the average in Western Europe.

AirPlus: What do you see as the biggest opportunity and the biggest challenge for Travel Management in your country/region or area?

The biggest opportunity in our region is our current position of being able to adapt any solutions, new ideas, and/or what has already been tested in other countries. We can already see all the benefits and choose only those programs, processes, etc. that are suitable to our organization without testing them and/or taking too much risk. The challenge, of course, is in changing our perspective. My experience is that, in this critical economic situation, the local employees – even on the management level – refuse to implement new solutions because they have a fear that the new process won’t work and they are worried they might receive negative feedback from colleagues or management or even lose their job. At many companies, I feel that people are focusing on doing their jobs at the highest level, but without taking on any new tasks in order to avoid the associated risk. That is one reason why it is so important to keep in touch with the travel manager, the secretary, the finance team, etc., until everything is going smoothly and the customer no longer needs our daily or weekly support. After sales, consulting is extremely important!

AirPlus: Where do you see the biggest opportunities (Travel Management related) for your customers – where can they find the greatest savings?

Travel management can deliver significant savings. As the general knowledge of modern technologies for travel booking processes and payment instruments is not very high, we can expect a boom in next couple of years. AirPlus is a unique partner that can be integrated into almost all technology systems, e.g., SAP or Oracle.
The most important thing for travel managers will be to have a tool that helps to control and monitor the travel spending. This is what missing in many organizations at the moment. The other opportunity could be that companies are discovering how suppliers such as AirPlus could help them make even their day-to-day business easier. Clients are confirming how much our tools could support them, e.g., automating their accounting and booking work, simplifying their approval process, etc.

AirPlus: What are the most important strengths of AirPlus in your markets?

The most important benefit of AirPlus in Eastern Europe is the flexibility of our solutions. We are the one and only supplier that first analyzes the company’s processes and expectations and then finds a solution together with management, offering a tailor-made process. Everything is customized with AirPlus and our clients feel that we understand their needs and follow their requests.

We can provide perfect data quality and technology support. With the most important strategy being “save, save, save,” AirPlus can deliver additional savings through automation and lower accounting costs. In every Eastern European country, AirPlus is the partner that has the local knowledge and knows what the main issues and the day-to-day challenges are and what the companies are facing. We are here and ready to help them solve these problems together. We offer local help and local solutions in cooperation with multinational and local travel agencies, airlines and other suppliers to the travel industry and make our clients happy and satisfied with regard to their business travel and its costs.

Norman Gage

Interview with Norman Gage,  Director of Business Travel, Advantage Business Travel

AirPlus talks with Norman Gage from Advantage Business Travel about the many challenges faced and awaiting the TMCs in the UK, new opportunities 2010 will bring, as well as his thoughts on New Year’s resolutions…

AirPlus: How do you look back on the past year, 2009? Has it taught us valuable lessons or has it stood in the way of progress for the BTM industry?

NG: The problem for the travel industry with last year was that it took some time before the impact of the country’s problems started to take affect, it hit about the middle of November 2008 and continued throughout the year. As a consequence we were looking over our shoulder and comparing a tough year with a good year right up to November 2009. Now we can more directly compare. However what has happened has happened, we should learn that budgets, forecasting, etc. should be based on sound judgment of the economic realities and not as a plus or minus on prior year performance.

AirPlus: What are the challenges that lay ahead for TMCs in 2010?

NG: I believe that 2010 will be another roller coaster of a year; it will be like riding it with one eye blindfolded, encountering more ups and downs and with tighter curves. The challenge will be trying to anticipate them in good time, to ensure the ride is as smooth as possible.

AirPlus: Year 2009 saw many companies reinforcing their travel policies. As the economy stabilises do you foresee travel policies becoming more relaxed or just the opposite?

NG: The financial pressures that have driven the pressure on compliance will not diminish during 2010, in fact it will get more widespread and it will get even tighter as the benefit to corporates becomes more apparent.

AirPlus: As a result of the corporate travel decline in 2009, many TMCs have looked at alternative ways to raise revenue. Do you see ancillary services developing as core business activities in 2010 and could you give some examples?

NG: The decline in travel spend should be analysed from three different angles, firstly the TMC: – since the abolition of commission, sales volume has had little significance to the TMC, who gains its remuneration direct from the client through transaction fees. The decline in transactions has been far less than sales volume decline. The corporate: – due to the airlines needing to fill seats, the average price on all routes has fluctuated, the canny corporate who does business with a TMC that is quick on their feet, has been benefitting from spot pricing. This phenomenon has grown in momentum and carries the more vogue title of “demand management”. And lastly the airline:- in the rush to attract travellers, airlines have slashed prices, even though they have, despite the outward signs, maintained a high cost structure, so the loss in revenue has affected them the most.

AirPlus: They say ‘beggars can’t be choosers’, and with travel budget cuts, many corporates had to
make do by replacing face-to-face meetings with conference calls. Do you think the budgets will increase/ decrease or remain flat in 2010, and what does the future hold for business travel?

NG: There is a lot of talk at the moment about bubbles, and at some stage during 2010 I believe that the conference call bubble will burst, we always hear when things go wrong at an airport, a hotel or on the trains, but the disciples of teleconferencing seem to sweep under the carpet the foibles of video conferencing.

AirPlus: Following the UK Government expense scandals, both public and private sectors are tightening their travel policies and looking at ways to become more transparent. In what ways can the corporates become more compliant? Should the TMCs be taking the lead role to drive compliance?

NG: The TMC should work hand in glove with their corporate clients to ensure that the corporate client’s aims and objectives on compliance are conceivable, believable and achievable, and that the TMC has the process in place to recognise any “maverick” traveller.

AirPlus: Do you see the increasing popularity of social media (i.e. twitter, facebook, LinedIn) merely as a fad or as a new way of communicating and networking with clients and partners? Do you
believe it can bring more business for TMCs?

NG: We discussed these types of communication with our business travel members back in July. They resoundly felt that twitter was a fad, facebook was great for personal use, but LinkedIn had distinct possibilities, by either creating networks for themselves to exchange news, views and ideas, or by setting up a network of say the Finance Directors of their clients, or the Marketing Directors.

AirPlus: What is Advantage Business Travel’s New Year’s resolution and what is your wish for 2010?

NG: When I read the question I immediately thought of two things, the first was that 80% of all predictions will not happen, and secondly a Chinese proverb along the lines of “Be careful of what you wish for “…

Download interview as PDF

Lucy Wang, Country Manager China, AirPlus International

Welcome to the fifth edition of the AirPlus International Travel Management Study. Each year we survey 1,500 travel managers on the state of their corporate travel programs. The respondents are based in 15 countries and cover every continent, so it is arguably one of the most comprehensive and authoritative research into corporate travel on the planet.

We are glad, for the first time, we release the Chinese edition of the AirPlus International Travel Management Study in China this year. It shows our high attention on this booming business travel market. We do hope this Study can be of help for you to get insights for Chinese travel management industry trend.

We at AirPlus have learned a lot from the study too. Our big hope is that next year’s study will show travel resuming its long-term upward trajectory and that the improved professionalism in travel management so evident in this year’s results has become established as normal practice.

Download AirPlus International Travel Management Study 2009 PDF

Volker Huber

The Asia-Pacific region is home to the markets of the future.
Travel managers should diligently follow regional developments. According to experts’ forecasts, the region will experience a monumental upswing after the global economy has recovered.

So far, however, travel managers around the world are hesitant to approach this region because it is so foreign and different. The study conducted by ACTE and AirPlus shows that 72 percent of the interviewees assume that travel managers lack understanding for this region. Due to the different cultures of the individual countries, they said, it is impossible to implement measures that have proven successful in Europe or America (68 percent). In Asia, status and service, for example, are often closely connected. While in western countries, companies save by booking lower service classes, in Asia this means weakening the travel manager’s position.

However, it is not only cultural diversities that require heeding in the region. Travel management in Asia-Pacific is a young discipline and, just like a tender plant, it calls for careful cultivation.

The survey results of the latest ACTE/AirPlus White Paper show that modern travel management is still in the fledgling stages. A mere 34.5 percent of those interviewed in the Asia-Pacific region stated that they are using cost control as a basis for negotiating with service providers. In Europe, this share is 53.6 percent; in North America it is as high as 73.2 percent. The difference in online booking tools is equally as large: 13.5 percent in Asia-Pacific, 26.4 percent in Europe and 64.3 percent in North America.

Nevertheless, we should keep an eye on the region’s power of innovation and use it for our undertakings.

If you wish to establish effective business-travel management in Asia-Pacific, you must know the region’s peculiarities. The following factors are important:

• developing an understanding of its cultures;
• differentiating when addressing people; and
• being patient when changes need to be implemented.

In addition, we should not believe that we know better than them. With the required attention to details, we can contribute to overcoming distances.

Downloads:

AirPlus International / ACTE Whitepaper

PDF Download (1 MB)
EPUB Download (257 KB)
MOBI Download (672 KB)
How-to download e-books

Author: Volker Huber, Executive Director & Senior Vice President of Global Sales & Solutions at AirPlus

The ACTE conference in Prague, Czech Republic, October 25-27 was a hot spot for highly interesting discussions. Will there be a need for a business class on continental flights in the future? Business travel by train is already a well accepted alternative to flight in some European countries! It is not only all about “how to travel” – more than ever travel management stands for demand management. These were some of the current issues which were discussed by travel managers after the release of the latest ACTE/AirPlus White Paper last week titled “Post Recession – Has the Travel Management Landscape
Changed Permanently?”.

Now you can read the Whitepaper also with eBook or Blackberry: Please click on ‘Research Center’.

Volker Huber

Corporate travel has certainly changed over the past two years, but are these changes permanent? 

This AirPlus International/ACTE whitepaper examines the current travel management landscape, whether it will return to where it was before the recession started or if it will be forever changed. Further explored are the implications for travel managers today and in the future.

A few questions explored in the whitepaper:

• Will travel volumes recover?
• Is virtual conferencing here to stay?
• How has traveler behavior changed?
• Have companies cut travel too far?

Download:
AirPlus International / ACTE Whitepaper (PDF, 1 MB)

Author: Volker Huber, Senior Vice President Global Sales & Solutions, AirPlus

Julie Oliver, Managing Director

AirPlus talks with Julie Oliver, Managing Director of Business Travel Direct about ways of adapting to changes brought on by the recession and how to embrace the new opportunities that lay ahead for TMCs…

AirPlus: The British Chamber of Commerce recently announced that the worst of the UK’s recession is over – could this mean that we are nearing a possible happy ending to the financial drama that played out over the past year?

JO: I think it is a little early to say that the worst is over. While there is more positive news around, companies still need to see some concrete improvements before considering increasing their business travel expenditure. Overall our clients have followed the general trend of booking less air travel. Coupled with this we have seen an upturn in rail bookings.

AirPlus: In your experience what have been the most common cut-backs in business travel during this economic crisis?

JO: In common with the rest of the industry we have seen cutbacks in business travel overall. Specifically there has been a marked decline in air travel, especially in business class. Even when people have been travelling there has been a drop in the number of trips involving overnight stays at hotels and in car rental, or the purchase of more restrictive tickets.

AirPlus: In your opinion are the recent changes in booking behaviour a temporary measure to save costs, or are companies getting more serious about establishing and enforcing long term travel policies? How does it impact the TMCs?

JO: The shift from business class travel to economy class and no frills airlines had started before the recession especially for short haul flights and was being written into travel policies. The recession has highlighted the need for closer scrutiny of costs and I believe we will see more companies setting up travel policies to help them control costs and improve traveller tracking. I see travel policies as a positive development as they lay clear guidelines for both travellers and TMCs. Having an enforceable policy makes it easier for the TMC to monitor expenditure and, hopefully, deliver savings. In addition we can speed up the booking process by enabling travellers to make bookings through our online portal, which has the policy parameters loaded on it.

AirPlus: Companies that are enforcing travel embargoes may argue that their actions also benefit the environment. Are the topics around the environment and green products increasingly playing a role in companies’ travel policies since the recession?

JO: The environment was a key topic before the current crisis with many of our clients incorporating travel within the organisation’s overall green policy.

In recent times companies have been focusing on the bottom line by cutting travel rather than considering offsetting measures.  I think that once we are out of this crisis companies will once again look at how to make their travel ‘greener’ and perhaps we will see the current switch from flying to rail travel become a permanent measure.

AirPlus: Social media (i.e. twitter, facebook, LinkedIn, etc…) is increasingly being used by hotels and airlines as a way to reach and interact with customers. How do you view the role of social media in the BTM and to what extent can TMCs benefit from it?

JO: I think this is becoming more important not just for interacting with customers, but finding new ones.

AirPlus: Has the economic downturn created more opportunities for networking platforms and sharing the knowledge amongst BTM professionals, or has it brought fiercer competition and less interaction in the industry?

JO: I think as an industry we have always been great networkers and sharers of knowledge. I can’t talk for other TMCs but in times like these, there is much greater opportunity to really prove your worth as a strategic partner and that in itself brings a great amount of pleasure when you achieve the savings result and changes in behavior buying in line with what you’ve set out to do with your corporate nine months beforehand.

AirPlus: Looking into a ‘crystal ball’, do you see any major developments or changes which are likely to affect the current business travel landscape? In your view, what sort of changes are likely to take place?

JO: I think that one big change we will see is that there will be fewer TMCs as some will unfortunately go to the wall and some will merge with larger companies.  I think the crisis will also have forced change on TMCs as they have had to adapt and change the way they do business.

Business travel will come back as companies will need to travel again in order to secure new business and service existing clients. The big question is what form this travel will take. It may well be that the days of travelling in first or business class have gone.

AirPlus: What motivates Business Travel Direct in the current climate? What is your message to the other TMCs?

JO: Our main motivation continues to be the same: to provide exceptional service to our clients and continue to help clients secure maximum value for their travel budgets. We are also helped by our flexible approach which means that we are quickly able to adapt our service to offer what cleints need in fast changing circumstances.

Like other TMCs we are also looking at alternative areas where we can secure revenue. If we are not booking flights, then we need to look at other services such as airport car parking that we can offer. Travel avoidance is a big thing for corporates and as strategic partners we should be helping them with this, but we need to find a model that rewards us for the work we do when no services have been purchased.

My message to other TMCs is listen to your clients and make sure you are aligned with what they are trying to achieve.

Patrick W. Diemer, Managing Director & Chairman of the Executive Board, AirPlus International

As the managing director for a leading corporate payment provider, I have an opinion about credit card economics that might surprise you. Most of the discussion in the media and amongst corporate customers today focuses on what (and how) the airlines are doing to pass along card fees. However, a fair debate on this subject would require an understanding of why? Now more than ever, airlines are looking for areas to save costs. So it’s logical that distribution and payment would be a part of this savings equation. And while I understand the somewhat inequitable card economics, I think there are smarter ways to leverage the playing field than blanketed surcharging.

I believe the genesis of the merchants’ frustration is that the level of fees charged by most cards exceeds the perceived value. In fact – it is one of the economic realities that the merchants pay the bill: Their proportion is nearly 90 per cent of the total credit card cost – only 10 percent are being paid by the card holder. And this revenue generated is usually used to fund strategic loyalty building with the customer in the form of rewards, rebates and incentives. What’s not always clearly understood in the industry is that not all card companies are alike. Their fees are different, their level of rewards and incentives are different and importantly, their technological capabilities and comprehensive offerings are different. So why should cards all be treated alike?

The new reality is taking shape as I write. In parts of Europe and Asia-Pacific (Hong Kong and Australia, for example) credit card surcharging is already in place. In fact, GDSs in the Netherlands are now technically prepared to handle/display the surcharge fees. And this is not simply related to the major airlines worldwide, but merchants of every size and category from low cost carriers to ferries!

What does this mean for the end user, the cardholder or corporate customer? Certainly regression if they demand that their agencies to revert to paper invoices and manual processes. Customers would then be required to work without the benefits of a credit card-based payment solution to optimize costs and processes related to business travel. They would lose the enhanced invoice data, electronic data integration, global data consolidation and extended payment terms they’ve become accustomed to and have built their travel policy and budget around.

Further discussion is developing in the United States where United Airlines has said it will begin imposing heavy penalties on select travel agencies for continuing to use their merchant contracts after a certain date. These agencies must now become a merchant themselves and bear the credit risk while losing benefits such as improved cash flow and face higher bond liabilities.

So why would United in the US exclude UATP within their decision? First, as a UATP card issuer and merchant, they are well aware of the benefits the UATP card brings. It’s well-known in the industry as the lowest charging corporate payment solution because it’s based on the international airline industry’s own not-for-profit payment platform. As the leading issuer of UATP worldwide, AirPlus has optimized the global data processing and integration and proven to be the preferred partner by multiple airlines worldwide.

To conclude, I’d like to list a few airline benefits from a card-based payment system. These include the outsourced invoice processing, reduction of fraud and credit risk, as well as quick and timely settlement. I believe that airlines benefit greatly from credit card payments and that are indeed prepared and willing to pay for those benefits. Just not at the same scale as they pay today. They simply want to find a fair pricing that fits their cost savings objectives. I believe change is imminent and we’ve been assessing and researching this topic for some time. My proposal is a 50 / 50 share of card costs between the merchants and the cardholder or corporate customer which I believe is a fair allocation of costs. We have proposed that model to airlines and corporate customers alike and their responses are promising. With that in mind , I believe we’ll have new credit card economics which are smarter than surcharging.