How to manage ancillary spend
Ancillary services refers to all the ‘extras’ thing that a person might need when taking a business trip. Travel agents may book you a flight but also they will offer you a wide range of ancillary services to fulfill every aspect of your itinerary, big or small.
Airline ancillaries have been around since low-cost carriers entered the market, and when legacy airlines launched their own versions – remember British Airways’ Go and KLM’s Buzz? – this brought ancillaries into their domain. Nearly two decades later, some of those airlines formerly known as ‘full-service’ are now mining ancillaries as a new revenue stream.
The latest expression of that is British Airways’ ditching of free meals and drinks in short-haul economy class, forcing passengers to buy refreshment onboard or at the airport. Meanwhile, American Airlines’ passengers travelling on its new ‘Basic Economy’ fares are not allowed to use the overhead lockers and must pay for any bags too large to fit under their seat to be put in the hold. Charges for lounge access, fast-track through security, seat choice and more are now also fair game – and none of this is likely to be picked up by TMCs or expense management systems.
PETER SNOWDON, multi-national account manager, FCM Travel Solutions
As airlines increasingly compete with low-cost carriers on front-end pricing, there is an opportunity for additional revenue growth via ancillary services. Examples of this include airline lounge selection, which Emirates offers for US$100. Some airlines allow travellers to bid to upgrade their cabin and Virgin offers an option to pay for chauffeurdriven transfers regardless of cabin class.
Recently, the industry has seen considerable growth in premium economy class, with airlines such as Iberia, Delta and Singapore investing in this product, which appeals to both the corporate and leisure market. This opens up an opportunity for corporates to review policy and consider traveller satisfaction, productivity and budgets, perhaps combining the use of cabin classes: using premium economy on a medium-haul day flight, with business class on the overnight flight, to maintain employee productivity.
Buyers need to work with their TMC to understand additional charges, determine travel policy and take advantage of tools to measure compliance. A key consideration for FCM in moving to the Amadeus GDS platform was to be able to provide richer content and a better end-to-end service. It allows us to book and pay for some ancillary services at the point of sale. Any items added by the traveller through expenses can then be fed into the TMC’s reporting tool with a connector, providing the customer with visibility of the total trip cost.
There is also an opportunity to include ancillaries within the corporate deal, but corporates need to consider the impact on existing fares and what percentage of travellers will use these additional services. Is there a genuine business requirement to include them?
