Copyright Society for Collegiate Travel & Expense Management. Accounting for Ancillary Fees: Practices for Managing Costs

Transcription

1 2010 Society for Collegiate Travel & Expense Management Accounting for Ancillary Fees: Practices for Managing Costs September 28, 2010

2 Agenda Ancillary Fees Status Quo Solutions Discussed Panel Discussion Q&A

3 Ancillary Fees Include Checked bags Onboard internet access In-flight meals & beverages Preferred seating Airline club access Upgrades Standby fees Overhead bin space Pillows & blankets Seat assignment fees Onboard entertainment

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5 The Cost - $7.8B collected in 2009 alone and rising Airline ancillary fees accounted for 21% of all US revenue in 2009* Prices change frequently Airlines have different products E.g. Spirit recently announced fees to use onboard overhead bin space British Air charges for advance seat assignment Corporations are trying to understand the impact of these fees Some studies show that ancillary fees represents only 1% of air costs**, some up to 30%*** Latest Concur study shows the cost at 2.3% of air cost Many fees are waived for elite flyers Sources: * DOT Bureau of Transportation Statistics * *TRX (as reported in The Beat) **NBTA 2010 U.S. Business Travel Buyers' Cost Forecast.

6 Fees, Fees, Everywhere! P. 6

7 Airlines have unbundled services Pay for what you use Copyright 2010

8 Bundled Fee Packages - Now airlines are bundling fees Not all bundled fee packages included the same ancillary charges: This creates added layers of difficulty for managing policy Example: United offers several packages today but some include club passes which are typically not allowed in a travel policy. But how would a corporate travel manager know? Would you like to value size that?

9 Ancillary Fees What is the impact on your program? Policy & Compliance Should policy be developed for ancillary fees? Will it prompt travelers to use a service they would not normally use? Once added, do you have the manpower and reporting in place to enforce it? Cost Impact & Budgeting Projecting traveler use of services is difficult Data doesn t currently associate service purchase with specific trip/project Fees are adjusted frequently Expense Process & Reporting Expense systems must be changed to provide new categories Airlines should enhance reporting for their corporate customers Enhanced Corporate Card reporting to support program needs Source: Deloitte

10 Data on Fees Provided to Card Companies - CO P. Copyright 2010

11 Data on Fees Provided to Card Companies - UA P. Copyright 2010

12 Data on Fees Provided to Card Companies - AA? P. Copyright 2010

13 Everyone is working towards a solution but not together! Developing EMDs (4Q10) GDS s are working on building merchandizing platforms Has set a deadline to standardize fees in 2012 Has introduced standardized codes for ancillary fees

14 Two Parallel Paths: PoS and Credit Card Reporting Industry Proposed Solution and Alternatives ATPCO GDS ARC TMC File fares with ancillary products Already testing Display options Multiple products EMD Agency Reporting

15 Considerations Point of Sale Purchase Data Not all buying decisions are made at the point of sale Merchandising can vary by airline Technology needs to support merchandising Industry economics Processing changes/cancellations post-purchase Will the Government step in? No tie back to the original ticket number Merchant transaction data is inconsistent Current IATA standard not widely adopted Standards do not address all issues Corporate card utilization is critical

16 ARC to introduce the EMD (Electronic Misc Document) EMD to be introduced in 4 th quarter 2010 GDS merchandising platforms need to be finalized Each airline will have discretion on which fees can be paid at point of sale Agencies will have to adopt new policies, pricing & procedures to facilitate point of sale fees The WHAT IF s. I decide to check a bag after I buy my ticket, who do I call to add a bag? My flight gets cancelled, how do I get a refund? What happens if I am rebooked on another airline, does my fee follow me? P. Copyright 2010

17 Party of Three Collaboration in place between AirPlus, Concur and Continental Airlines to devise a workable solution Weekly calls to discuss changes and announcements Technical calls to review solutions Communication strategy to spread the word and get maximum visibility

18 Critical Components for a Solution Standardization across the industry Airlines sending the data in a standard format differentiating for all types of fees The data needs to be the same regardless of point of purchase Ancillary fees need to match to the original ticket Transparency of services required throughout the buying cycle Point of Sale support of fees are more complex and may take longer to evolve Focus on corporate card solution can be a quick resolution P. Copyright 2010

19 Concur s Solution for Reporting of Ancillary Fees Concur identifies a charge coming from an airline based on merchant code or employee entry if not using a card feed If a charge is under a company-defined amount, the expense type is automatically entered into the expense report as other airline fee The employee is prompted to choose one of six sub-fee expense types: Baggage, Upgrades, Seats, Airline Club, On Board, Other Policy audit rules can be associated with each of the fee types Fee reporting available

20 Things to Keep In Mind Ancillary fees are here to stay This is not just a domestic issue, it will continue to grow globally Elite flyers will not be exempt from all of the fees It will most likely get worse before it gets better

21 Our Panelists Marguerite Gustkey Penn State University Travel Manager Anna Adamo Continental Airlines Manager, Business Development Aaron Kelling AirPlus International EVP, Strategic Partnerships Christopher Juneau Concur Technologies Sr. Director, Segment Marketing

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23 What are your thoughts? How do we track and measure these fees? Are all fees of equal importance? How will this affect our travel policy and budget? How can we utilize data in future negotiations? Where will the decision to accept a service for a fee be made during the original booking process, pre-trip, during the trip or on-board?

24 Voice Your Opinion Remember YOU have a voice Share your ideas with the industry -Talk with your vendors Urge for a common solution to be found to resolve this issue Encourage the development of a total cost calculator to provide greater transparency to what fees would be charged - help make better buying decisions