Five steps to …Using travel policy to reduce air costs

Soaring jet fuel prices are forcing air fares upwards at their fastest rate in many years. Companies may be tempted to cut costs in response by permitting only essential travel. Yet blocking “inessential” trips like visiting new and potential customers, or meeting colleagues for research and development, is unhealthy for business growth.

Instead of stopping flying, therefore, a much better way to reduce costs is to fly smarter, a goal you can achieve by making thoughtful adjustments to your organisation’s travel policy. Try pulling these levers to keep your business moving while also keeping your travel spend under control.

Step 1 – Do you really need to go?

An “essential travel only” rule really means “essential-for-short-term-needs-only travel”. Business travel should never happen if it is not essential – but much travel is essential more for the long-term benefit of the company, for example to create products or win new business.

The key therefore is to make sure employees only travel if there is a justifiable purpose with either a valid short-term or long-term goal in mind. State this rule very clearly at the top of your policy, and consider supporting it up by introducing a formal pre-trip approval process, where trips have to be signed off by a line manager or even senior management. You can also require travellers to enter a reason code if they make their reservation through an online booking tool.

Step 2 – Change your business class rules

If your company currently allows business class travel, you could potentially reduce costs by 75 per cent or more by downgrading policy to economy class only.

However, such a severe change could damage employee morale, so consider more gentle changes to business class policy instead. Options include:

·       Downgrade from business class not to standard economy but to premium economy, which is available on many long-haul flights.

·       Allow business class flights only for trips above a certain duration, e.g. seven hours. If you already have a rule like this, extend the duration beyond which business class is allowed, e.g. from seven hours to eight.

·       Allow employees business class only after they have made a specified number of long-haul trips in a year. For example, the first two trips in a 12-month period must be in economy but subsequent flights can be in business class.

·       Require travellers to fly in economy, but give them a day’s holiday at the destination and/or when they return to allow them time to recover.

Step 3 – Book longer in advance

Flights are often much cheaper when booked in advance. How much cheaper varies by season and route, but often flights booked 21-plus days ahead of departure produce major savings, and 90-plus days ahead is even lower. Introduce clear rules that employees must book as early as possible after arranging a meeting, and ia strict approval process for flights booked less than one week ahead.

Step 4 – Fly with preferred carriers

Require travellers to book preferred carriers with which your company has negotiated discounts, unless they can provide a valid reason for choosing other airlines. Delivering more volume to your preferred carriers this year also improves the discounts you are likely to succeed in negotiating for next year.

Step 5 – Book through corporate channels only

Mandate that all reservations must be made through your appointed travel management company or corporate booking tool. This ensures you receive the detailed  data that allows you to verify all the other policy rules are being changed. There are many other strong reasons to mandate booking through official channels, including the ability to track and support travellers in an emergency.