The real value of Non-Profit Airfares

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1 CASE STUDY: The real value of Humanitarian Airfares CASE STUDY The real value of Non-Profit Airfares

2 What s a Nonprofit Airfare? Nonprofit airfares are special fares made available to non-profit (501c3) organizations including NGO s, foundations and churches. Key Travel is one of a handful of direct providers of these fares globally, having helped pioneer them over 30 years ago. Here we examine their real value, not just upfront savings but also the wider benefits they can provide. Key Travel holds nonprofit fares with over 30 airlines. Nonprofit airfares typically offer the following benefits, resulting in savings opportunities: Book early with no financial commitment Flexible tickets free or nominal charges for changes Extra bags free of charge No minimum stay penalties for travelers who don t want to stay over a weekend *Note each airline s conditions vary our consultants can provide details case by case or by each flight quote Upfront Savings and Increased Value Our analysis of over 200,000 international air tickets shows that Key Travel s non-profit customers choose nonprofit fares over 40% of the time compared with other tickets. This is in the context of a market where all regular fares are offered; therefore we can determine that our customers choose nonprofit fares based on an upfront saving and/or the increased value provided almost half of the time. Are Nonprofit Airfares less expensive? Compared with a ticket providing like for like flexibility; nonprofit fares are significantly lower priced (60% on average). They are often also lower than the very lowest available standard published fare (which have much more restrictive conditions). On occasions when they are higher in price, they usually provide much better value overall when incorporating the added benefits available. Our analysis shows that blending nonprofit fares into a travel program provides nonprofit organizations with top line savings of 25-35% annually. What added value do Non Profit Airfares provide? Non Profit fares are much more flexible tickets, both before and after ticket issuance. They also provide added value in terms of extra baggage allowance and further cost saving opportunities through delayed ticket issuance. An overview of these benefits is provided below: Delayed ticketing and no minimum stay Fares and space can be held provisionally with no commitment No fare increases when not staying over a Saturday night Flexible conditions Lower change fees after ticket issuance Refundable when cancelled, even for part- used tickets Refund to organization rather than airline credit to traveler Increased baggage and global fares Up to 3 bags provided free of charge Point to point fares on an airline s global network, meaning fares can be mixed and matched to provide best value

3 How much can I save by taking advantage of delayed ticketing? Our non-profit customers often tell us they are stuck between a rock and a hard place when trying to determine the best time to book their international flights. Either they commit early and risk penalties for changing or cancelling, or leave it late to avoid those penalties but pay more for their ticket because there is then less availability. Nonprofit fares solve this problem; most allow you to hold space provisionally up to 11 months in advance of the departure date and lock in your fare with no commitment to buy, sometimes up until the day before departure! Wall Street Journal study Recently the Wall Street Journal published findings on research about the best time to buy air tickets. Their analysis demonstrates the following: The best time to book the lowest international air ticket is 171 days prior to travel International air tickets start to increase in price considerably 50 days before travel Within 30 days of departure, prices of international air tickets are higher than the average paid Key Travel s research shows that its non-profit customers book international air tickets 32 days prior to departure on average, but tickets aren t issued until 5 days prior. Therefore tickets are held for an average period of 27 days. If the methodology from the Wall Street Journal s analysis is applied to this, the results indicate achievable savings of $561 per ticket. Further savings are clearly available if tickets are held earlier. 150

4 So, what is the real value of Nonprofit Airfares? Every organization is different and has varying profiles, but research tells us that blending nonprofit airfares into a travel program and using them effectively will ensure significant savings on annual travel budgets. The upfront savings are easy to calculate on average nonprofit fares save between 25 and 35% as demonstrated by the analysis above, however there is significant value and further savings available through the wider benefits detailed in this document. The following charts the overall savings potential based on a typical scenario from a non-profit organization. Nonprofit Fares in Action International air ticket scenario for a non-profit organization based on a real life example: Washington Dulles to Entebbe, September 28th returning Oct 2nd; search for fares 32 days before travel STEP REGULAR FARE Nonprofit FARE ROLLING DIFFERENCE Traveler checks ticket price on Aug 27th date of quote $1,720 $1,238 Can be held provisionally until day before departure $482 Traveler cannot commit until 10 days prior to travel Sep 20th $374 Additional cost because price has gone up due to demand No additional cost Ticket is held provisionally $374 Traveler changes travel date because schedule has been changed $225 No fee Ticket is held provisionally only $225 Traveler changes return date mid-trip $225 Change fee + $150 difference in fare $125 fee + $150 difference in fare $100 Traveler needs to take 2 bags 1 free bag, extra bag $150 2 bags included free $150 $2,844 $1,153 $1,331 (53%)

5 What s the bottom line? Many factors dictate the exact savings available through nonprofit fares, and they won t always be the lowest price or the best fit as explained above. But blending them into a travel program has proven that non-profit organizations can make significant cost savings, which can then be used towards their valuable projects. The example above is typical of an NGO (53% savings are achievable) however not every ticket will need to be changed and extra bags won t always be needed; therefore using a more conservative estimate of 35% and applying it to your travel volume will help you understand the potential bottom line savings available: INTERNATIONAL AIR TRAVEL BUDGET TICKET VOLUME (AVG. TICKET $1,700) 40% OF TICKETS Nonprofit 35% SAVING TOWARDS PROGRAMS $500k $70k $1m $138k $3m 1, $414k GERRY WATSON VP FINANCE & OPERATIONS ROCKEFELLER BROTHERS FUND We chose to partner with Key Travel in part due to their demonstrated expertise working with nonprofit organizations. One of the benefits of working with them is their ability to access Nonprofit Airfares, which they negotiate directly with airlines on behalf of the wider nonprofit community. With an overseas trustee engagement trip planned for the fall and already ticketed, I m delighted to see that 40% of the flights we have booked with Key Travel this year are utilizing nonprofit Tickets, enabling us to save on our travel and redirect support to our grant making programs and partner NGOs. We have found the Key team to be excellent partners: responsive and committed to high quality service. They have dedicated an impressive amount of time and resources to developing tech tools to support the process. I d encourage NGOs to work with a travel management company that understands the nonprofit market and is capable of providing special market rates as part of their travel service. LINDSEY LONG TRAVEL MANAGER CATHOLIC RELIEF SERVICES With the unpredictable and sometimes complex nature of our travel, it made sense that we partner with Key Travel to service our agency. As a result, our travel budgets have seen measurable savings over the last few years. Working with Key Travel and utilizing their nonprofit fare expertise has allowed us to focus more time and resources on fulfilling our mission.

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