Low cost carriers a much longed-for addition in the GDS
Rising flight and hotel prices led to spiralling travelling costs for many companies in 2007. But despite the increase in the number of employee trips during the year, the travel budget at If remained the same.
Ulf Stenvad is never completely satisfied. His role as Travel Manager means he can never take his foot off the pedal for one moment; he has to be alert the whole time to optimise travel routines and keep costs under control. But after talking to Ulf for a few minutes it is clear that he cannot hide his pleasure over the fact that If has managed so well compared to most others:
“Simplicity is probably the most vital success factor. When users can make their own bookings they see with their own eyes just how large the price differences are. When the screen clearly shows SEK 400 against SEK 2,000 for the same journey it’s difficult to choose the more expensive alternative.”
As there are not that many low cost airlines in Sweden, this sort of deviation is only clear to see on certain routes where the impact has been even greater. On the Stockholm-Oslo route, for example, If has been able to cut costs by 45 per cent during the year through employees themselves choosing cheaper flight.
“My strongest argument internally is that it isn’t our money. Who wants to tell customers “unfortunately we have to raise your premiums because we like to fly business class to Oslo”? Policyholders expect us to be prudent with their money.”
Collaboration with travel agents is also vital. Travel agents are the extended arm of the company and their task is to encourage users to book on the portal. Travel sellers at the agents could find this strange as they are used to helping their customers, not turning them away, but Ulf Stenvad does not want users ringing the travel agents. He would rather they call online support when they need help to book by themselves. He therefore holds continuous meetings with travel agents to ensure they are directing users to the booking tool:
“The most difficult thing is being adaptive. That is where we have to focus all the time. When we see the online figures dropping, it’s then we have to act. You have to be active the whole time. It goes without saying that I can’t tell a customer they have to wait two hours at an airport to save money. Common sense must prevail. In practice it often entails an LCC flight to the destination and a cancellable regular flight for the return journey.”
Regular airlines like SAS and Finnair are still the natural choice. They have a much larger line network and a good service level that attracts people, and there is no earthly reason for being ‘foolishly stingy’,” says Ulf Stenvad, and goes on to say that he is convinced that low cost carriers have come to the GDS to stay:
“As a customer I naturally appreciate competition on the market. If there were no competition, the price situation would be quite different. For example, Stockholm to Åbo in Finland is very expensive. This is because only one airline operates on that route.”
From a customer perspective, there is a further positive effect of LCC flights now being available on the GDS. According to Lennart Björling, vice Chairman of the Swedish Business travel Association (SBTA), it is all about rationalisation:
“There is one underlying process that is vital for us, namely bringing all the payment flows together as much as possible. This is facilitated by everything being bookable on the same GDS.”
But Lennart Björling goes on to say that there is still much to do. Sweden does not have that many low cost carriers and he feels that some of them must become better at adapting their offering to business customers. He also stresses that the price is not the only factor for the customer:
“The price, destination and timetable have long been the three vital factors for us, and still are.”
Ulf Stenvad’s 4 success factors
1 Have management on your side.
2 Close collaboration with travel agents.
3 Travellers must book by themselves online to see the costs.
4 Draw up a clear and concise travel policy.
