The past couple of years have brought a degree of turbulence to the aviation sector. The academic and corporate markets have searched wider for lowest fares, and government regulations have forced greater competitiveness. But has the shift to ‘open skies’ made airlines more open for negotiation on all fare types?
The blue sky revolution
Historically, major airlines have been government owned and structured around national ‘flag carrier’ status, holding the majority of their national market share. As a result, air fare pricing has been driven on a market by market basis, or on what a national market has been willing to pay.
We have also seen major airlines:
- micro manage pricing on a route-by-route basis
- keep pricing buoyant on less competitive routes
- increase pricing competition on the more competitive routes, which generally hold a mix of major carriers and their low cost carrier (LCC) off-shoots
- pull out of certain routes altogether and leave their LCC off-shoots to serve that route.
These changes have clouded the opportunities for the academic sector to secure truly competitive fares, which has highlighted the advantage of specifically negotiated academic fares with airlines.
Over more recent years, government imposed deregulation of the aviation industry in many parts of the world has helped establish more balance, while challenging traditional (and often inefficient) airline management structures and systems.
Deregulation has fuelled greater access for airlines into new markets and in doing so, opened up the competition. National carriers have become more aggressive in their pricing tactics outside their home markets, while non government-owned carriers have delivered Increased choice and lower fares. This in turn has put the spotlight on pricing transparency, which has brought further benefits to academic travel buyers.
The challenges subsequent to the downturn
2009 was a tough year for the aviation sector, with academic and corporate travel demand and volumes dipping significantly in most regions.
Airline capacity was reduced to better accommodate the shifting demand levels. Unviable routes were cancelled and various carriers dropped their first class services as corporates reviewed their travel policies to replace J (change to business) class bookings with Premium Economy or Y (Economy) class. Airfares were slashed and low cost carriers gathered momentum.
For universities, these conditions created a powerful environment in which to procure air travel. With a stronger focus on optimising their return on investment, many reviewed their travel policies. In some cases they stepped away from using one or two preferred suppliers, in favour of opening up to more suppliers in their quest to find the lowest fares. In doing so, many universities reduced their average ticket prices on flight bookings.
Open skies opened our eyes
Through the events of 2009 and the open skies evolution, travel management specialists like Campus Travel emerged as the power brokers. Armed with supplier relationships specific to the needs of universities, as well as technology and a strategic approach to travel procurement, we demonstrated our ability to source the most competitive airfares.
Smart supplier relationships
Campus Travel has specifically focused on building long-term relationships with a diversity of airlines rather than a select few. This has been a proven strategy in generating the highest savings for universities. And cost reduction benefits have come hand-in-hand with a wider and smarter choice of suppliers.
By continuously working at positive supplier relationships, Campus Travel can negotiate competitive fares for our clients at all times – whether conditions are positive or negative. As the only Australian travel company dedicated solely to academia, we can also negotiate industryleading airfares based on higher volumes of business.
By understanding our suppliers and the factors impacting their industry and pricing, we not only negotiate in a more knowledgeable manner for better outcomes. We can also regularly benchmark those suppliers with others, to ensure their flight schedules and fares are always among the best for your university staff. Additionally, we can stay abreast of the frequent changes in their industry and keep you informed about impacts on fares, schedules and routes.
Over the past five years in particular, travel management companies have boosted their investment in travel technologies to coincide with the Internet providing access to airfares around the world. With the ability to tap into global databases of air inventory, Campus Travel can source the lowest fares worldwide by comparing available fares in different markets.
We also use technology that enables your university to track expenditure effectively and benchmark your progress, so you can regularly identify the areas for potential savings. In addition to cost reduction, our technology gives you valuable time savings with faster and easier fare searching, booking and ticketing. Campus Travel works with a number of providers to ensure the best online booking tools are available to your particular university’s needs. Plus, you have the added convenience of knowing you have a TMC to provide added assistance, should you require.
Without a strategic approach to travel management, airfare negotiation has no overarching direction. There is no goal to strive for, no key performance measures, and no long-term plan of attack on cost reduction. Campus Travel addresses this by looking at your university’s:
- travel patterns and culture, to identify the areas of inefficiency and anticipated travel volumes
- travel policy, to determine where savings can be made by improving and/or tightening your policy
- travel suppliers and preferred supplier contracts, to understand whether other suppliers can offer you better solutions as a whole
- levels of policy compliance and how these can be increased through improved education, enforcement and transparency.
A travel strategy and cost reduction targets must be in place for negotiation with airlines to be most effective. Without these elements, universities cannot properly identify which airlines will best meet their needs in terms of traveller convenience, safety, and cost. Your university also needs to follow /commit to its travel strategy to reap the rewards and ensure airline deals are providing a return on investment.
Open for negotiation
In this powerful technology-focused environment, which is now the driver of airlines’ pricing strategies, open skies does mean open for negotiation.
With Campus Travel playing a lead role in aggregating airfares from the global market, global distribution systems and the Internet, airlines are more conscious of pricing than ever before. But does this mean prices will stay low? Not necessarily. As demand for corporate air travel starts to increase again, so will fares.
How can universities ensure they continue to receive the most competitive airfares?
Working with an academic travel advisory such as Campus Travel, which has relationships with airline suppliers representing all sectors of aviation, in all parts of the world, is imperative. We will continue to negotiate the best academic rates available to all university travelling staff. This industry nous, understanding and negotiating strength cannot be equalled by any other methods of travel procurement. And coupled with technology and strategic direction, it offers your university better savings from smarter choices in travel.