Lions, Tigers, and Fares: Taming the Fares Beast

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Lions, Tigers, and Fares Taming the Fares Beast

• Participants
• Moderator J. Grant Caplan, Consulting Strategies
• Panelist Mark Orttung, GetThere
• Panelist Steve Reynolds, TRX
• Panelist Marian Shapiro, Ingersoll Rand
• Panelist Trey Urbahn, FareChase

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Perspective

• Web fare issue is now less an access issue, and
  more a supplier management and travel policy
  issue
• Online booking technology has proven that logic
  can be built that takes advantage of these fares
  without damaging supplier contracts
• There is now a different access issue
• Different GDSs and travel agencies now have
  access to different Web fares
• How can corporations access multiple GDSs,
  multiple agencies, along with different Web sites
  and still maintain control?

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Whats the best source?

• Suppliers are proactively pricing differentially
  by channel
• Underlying price disparities between channels are
  substantially compounded by exogenous factors
• Result Though prices vary considerably between
  channels, no single source consistently delivers
  the best price

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Recent analysis of 24,000 mega agency customer
requests in 650 individual airport pairs and
multiple date ranges produced the following
Who is competitive with the Lowest Available
Price?
Cumulative benefit of multi site shopping
Suppliers
Aggregators
Any result
Lowest result
Benefit of best in class search technology and
supplier relationship

• Market reach affects competitiveness of the site
• The GDS, individually, was competitive (within
  20) of the best price 62 of the time, vs 68
  for best in class Orbitz
• Only by shopping all of the sites could we
  deliver the best price all of the time

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Probability of finding a better price is directly
related to breadth of consideration set
of time web is lower
Web Savings
Number of Priced Flight Itineraries NYC-DFW
More Choices
Priced Flight Combinations
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Controversy

• Are non-GDS fares a large issue in the large
  corp. market
• Negotiated rates consistently beat web fares
• Recent Topaz study shows better fares in GDS 90
  of the time
• TMC negotiated hotel rates consistently beat web
  rates
• Web fares becoming similar to alternate route
  fares provided by TMCs for years
• Alternate carriers and connections offered but
  seldom taken
• Travel managers reluctant to mandate due to
  inconvenience
• Proven savings potential of 30 or more over
  direct fares
• Usually loaded as a comparison fare for analysis
  and to validate agency fare search

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Case Study Ingersoll Rand

• Ingersoll Rand Company
• A global diversified manufacturing company
  (Bobcat, Club Car, Schlage, Thermo King, Hussman,
  IR)
• 9 billion in Sales 2002, 103 plants worldwide
• U.S. originating air volume 31 million

• Decentralized, non-mandate culture
• Global Travel Redesign in progress

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Case Study Ingersoll Rand

• Our Challenge
• How can we ensure the lowest fares are
  captured ?
• Weve Experienced
• Lots of NOISE? From the top, down
• Facts and Numbers Not Convincing Road Warriors
• Conducted third party airfare audit, and
  Webfare comparison study

• Our Response
• Agency GDS access to major airline Webfares, and
  simultaneous website search
• OBT Access to non-GDS
• fares (popular websites)

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Case Study Ingersoll Rand

• Are We There Yet ?
• Capturing data
• Communicating through every channel, again and
  again
• Shop Til You Drop !
• The lure of the internet is powerful
• Popular Website functionality robust

• Light at the End of the TunnelYes and No
• New robust OBT functionality mirrors popular
  Websites
• GDS ruling January 04 More chaos game
  change?

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Strategy

• Start paying more attention to what the different
  GDSs and agencies are doing and where special
  content is available
• Make sure online technology you use accesses all
  sources so you can pick and choose your content
• If deregulation goes through, this will be even
  more important
• Make sure you are getting credit from your
  suppliers
• Ask for discounts or something else if Web fares
  arent applied to your contracts
• Show suppliers how you can shut off Web fares for
  certain markets in exchange for more favorable
  contract terms

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Thank you!Contact Us!

• J. Grant Caplan -grant_at_consultingstrategies.com
• Mark Orttung morttung_at_getthere.com
• Steve Reynolds steve.reynolds_at_trx.com
• Marian Shapiro marian_shapiro_at_irco.com
• Trey Urbahn trey_at_farechase.com