The Hindu Business Line : Corporates travel light

New corporate travel policies, travel consolidation and stringent travel budgets will dominate the year 2009 at most corporates. According to a recent report based on client activity by FCm Travel Solutions, a corporate travel management consultancy, corporate travel volume has already declined 10-15 per cent and the trend is likely to continue well into the first half of next year.

FCm predicts the next 12 months will see companies increasingly use consolidation strategies to reduce travel costs. The trends include encouraging train travel for short-haul trips of 12 hours, combining meetings where possible to reduce the number of trips and low-cost airline bookings among others.

Travel bookings are being consolidated through a single consultancy to achieve tighter policy control. Companies are also working with consultancies to negotiate volume-based rates with fewer suppliers. And using reporting and data to keep their travel performance in check.

“There is also a stronger emphasis on demand management within companies, to ensure their travel patterns and consumption are better aligned with their commercial goals. The upside is that these processes will give companies more effective policies, an improved travel culture, and more competitive rates and fares,” said Rahul Nath, Managing Director, India, FCm.

He added that a holistic approach would help consultancies generate greater value. “The process involves reviewing each company’s travel policy to achieve efficiencies, educating their people on the policy’s benefits, negotiating regularly with suppliers to ensure year-on-year savings, and controlling costs with effective technologies and reporting,” Nath said.

Keeping it low

Corporate travel trends in 2009.

Lower demand: Corporate travel volume is already down by 10-15 per cent, with many companies likely to further reduce travel spend in the first half of 2009.

Cost-cutting: Companies will place restrictions on international travel, non-essential travel and travel that cannot be billed to clients.

Flexibility: Companies and travellers will be more flexible to ensure bookings on cost-effective flights (For example, take non-direct flights, use non-flag carriers, book more restricted fares and use longer stopover times).

Class changes: The ‘class shift’ already occurring in travel will continue to see the middle and rear sections of planes fuller than before. In the air, travellers are flying economy and premium economy instead of business class. Companies are also more likely to book low-cost carriers, and may also extend the number of flight hours mandated to become eligible for business class travel (For example, eight hours instead of four).

Airfare reductions: Air travel costs are currently holding firm in India; however, prices are expected to come down in 2009 as capacity outweighs demand. There will also be ongoing adjustments in services and schedules and airlines may continue lowering their fuel surcharges.

Hotel savings: Accommodation rates are likely to hold steady during India’s peak tourism season, but are expected to decrease in 2009 as demand falls.

MICE: Travellers will be encouraged to combine meetings where possible to reduce the number of trips. There may also be a change in spend on non-essential conferences and incentives.

Alternatives: For short-haul travel of 12 hours or less, many companies have already moved to rail travel and will continue to do so.

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