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Prepare for take-off

1 Mar 10

With most airlines now charging separately for ‘extras’, such as putting a bag in the hold, it pays to be on top of the latest pricing developments

by Rachael Jolley

You’ve checked in online so you avoid the queue at that desk, and you’ve snagged row 1 so you’ll be first on the plane and first off when it lands. You’ve mastered the art of packing shirts, spare shoes, papers and pens in one perfectly sized wheeled case, so there’s no need to queue at baggage reclaim. You’ve pre-packed your toiletries in a sealed plastic bag, and you don’t wear a belt with a metal buckle or carry your phone in your pocket.

In short, you’re an experienced business traveller, and you’ve learned all the tricks to make getting through that airport and onto that plane as quick and pain-free as it can possibly be. What you may not have realised is how much extra all that convenience is costing you or your company.

George Clooney’s recent film Up In The Air brilliantly portrays the current pull-push world where the desire of weary business travellers for all the comfort they can get in the air comes into conflict with companies’ needs to cut costs, save money and, ultimately, keep staff from taking trips at all.

Not surprisingly, cost cutting has been the big theme of the last recession-hit 12 months.

This was the year when everyone’s budgets were driven down and the airlines decided cutting all the extras out of their fares, and then asking passengers to pay for them separately, was the way to go.

Of course, Ryanair has been setting the pace on this “menu pricing” for years, and from checking-in at a desk rather than online, paying with a credit rather than a debit card, to wanting to choose a seat or putting a bag in the hold, a variety of airlines will now charge you extra for things that used to be part of the package.

For those who manage staff travel, working their way through the pricing jigsaw can be a time-consuming part of the budgeting process. Software systems capable of working out the total cost of the “bundle” have not yet caught up with the trend, meaning most companies still make travel decisions on the basis of the cheapest headline fare, not noticing the extras that will appear on the final bill. That’s a big mistake, says Paul Tilstone, chief executive of the Institute of Travel and Meetings, a membership body for travel managers and financial officers. Tilstone says that global distribution systems – the massive computer systems which supply details of fares to your travel company – are not yet showing the true cost of a flight (adding in the cost of check-in, carrying a bag, and even using access to the fast security channel) before you make a booking. And with airlines steadily removing these elements from corporate deals, it pays to stay on top of all the new developments.

“This has all moved around in the last four months,” said Tilstone, who believes companies are making decisions on who to fly with before they have the full information, and need to step up their game when it comes to making corporate deals with airlines.

But there are gains to be made if you’re ahead of this game. Andrew Solum, director of consultants Travel Industry Associates, said: “Some savvy travel managers, and there are few full-time travel managers left these days, do count up all of the peripheral costs to show ‘actual cost’ rather than bookable fare.” But he believes there are those who have worked it all out: “For the uber cost-conscious, this unbundling of air travel offers them a perfect pricing menu.”

In the last 12 months, some mainstream airlines have even started charging to allow passengers to choose their own seat, as part of the unbundling process. Last September, British Airways announced it would introduce a set of fees for passengers who wanted to choose their seat more than 24 hours before departure. Charges range from £10 to £60, depending on the length of the flight.

A BA spokesperson maintains that this service gives passengers more control over bookings, but others might argue it is an unnecessary extra charge. Seats in the emergency row, which always have added legroom, can be booked up to 10 days ahead of departure for an extra £50. BA has followed the lead of Virgin Atlantic which introduced the extra fee for emergency row seats a few years ago.

Airlines struggling to make profits in the global downturn have spotted these add-ons as a route to raising extra revenue. Various airlines including Ryanair now charge to check-in bags – but the headache for travellers is knowing which policy applies on which routes and on which carriers, and which bag or case to use on each flight.

Hand luggage is another issue again. With many business travellers wanting to avoid putting their bags in the hold at all, it has come as a shock to find carriers such as Easyjet enforcing a strict limit on the size of carry-on bags.

Another impact of the recession has been the demise of airlines, including business-only carrier Silverjet and Scottish carrier FlyGlobespan, which has left travel managers with a heightened awareness of situations which could leave staff stranded in foreign cities.

A UK Government consultation is under way to reassess the financial protection for passengers when airlines go into receivership. The current system was devised at a time when most travel was purchased as a package – a hotel and a flight and possible car hire – and most protection was via a bond scheme run by travel agents. The massive rise of unpackaged travel and direct bookings over the internet has left travellers less well protected if an airline fails, unless they booked with a credit card. Debit cards do not often include this insurance, so although many airlines will charge an extra fee to book via card, it can be a charge well worth paying. Check with your company credit card company to see if they offer financial cover for airline failure, and if not, consider changing to one that does, particularly in this economic climate. Other financial back up is available if the airline is covered by the ATOL protection scheme, but this applies only to bookings made via a travel agent.

ITM’s Tilstone points out that all companies should have a health, safety and security plan in place which covers travel, repatriation and emergencies. This should spell out to all staff exactly what the procedure is if an airline does fail while they are out of the country, and who to contact.

The usual point of contact is the 24-hour helpline run by the corporate travel agent, but it is obviously essential that travellers carry this information with them on all trips.

Other trends in the past year are perhaps more obvious. Jeremy Bull, chief executive of travel management company Hillgate Travel, said many firms have reduced, and in some cases banned, travel from one office to another overseas, with the expectation that staff can use tele or internet conferencing instead.

Companies have also moved some and, in many cases, all, staff out of business class back into economy seats and for that reason, “the back of the bus is very, very full,” says Solum. Meanwhile, with airlines struggling to fill business class cabins, there are deeply discounted deals to be had on those seats if your company is still willing to pay.

Airline bmi has an answer for those that always wondered what the point was of flying business class on short flights. It removed business class from UK and Ireland routes in January, offering an economy plus service instead, which includes lounge access and separate check-in. It remains to be seen whether firms will opt to pay the economy plus fee for those services, but based on the success of premium economy services in long haul over the past few years, bmi obviously thinks they will.

As expected business-related air travel dropped significantly in 2009, compared with the previous year. Research from the Guild of Travel Management Companies (GTMC), released at the end of 2009, showed a reduction in flights made by business travellers of 15 per cent, with a cut back in bookings showing just as dramatically in budget carriers as traditional airlines. The GTMC pointed out that its research flew in the face of theories that business travellers were switching to low-cost carriers.

Car hire and hotel booking relating to business trips also reduced, the GTMC research found.

As a result, some airlines have been reducing services, as well as adding more economy and premium economy seats. For instance, Lufthansa services, operated by Swiss carrier Privatair, has moved from being business class only to a mix of business and economy.

Research from the GMTC rated one of business travellers’ biggest grumbles as wasting time queuing. Some airlines and airports have responded with premium level services to beat the queues. Both Edinburgh and Luton offer a fast lane through security for passengers willing to pay extra, while bmi allows business class passengers at Heathrow to check-in as late as 30 minutes before their flights.

Technological advances also continue to allow business travellers to save time at airport – with advances in online check-in, self-printing boarding passes, and now boarding passes that can be carried on your mobile phone, without ever being printed.

Extreme weather in December caused travel disruption across all modes of transport, with airline and rail cancellation. Passengers were also worried by announcements of an impending BA strike, which was later cancelled. In the New Year, BA staff announced plans for a strike for the Easter period unless negotiations between the airline unions and BA management were successful.

Not every airline was cutting its routes. US carrier Continental Airlines has announced it will increase its services between New York and London Heathrow this year, adding an additional service in March, and a further service in October, giving it five daily departures on the route.

And German carrier Lufthansa – which last year was named “Europe’s leading airline” at the World Travel Awards – has announced plans to restart services to Baghdad, 20 years after it pulled off the route.

Meanwhile, recent figures show indications that firms are starting to let staff travel again. In the final months in 2009, passenger numbers started to show slight upturns, and analysts also reported a softening in companies’ travel policies.

Colin Matthews, chief executive of UK airports group BAA, said: “2009 was a difficult year for our airline customers. Towards the end of the year, we saw signs of improvements.”

Passenger numbers for Heathrow started to bounce back at the end of the year with a 1.2 per cent rise in December, despite weeks of disruptive snow. This could be an indicator of increased levels of business trips.

In December, passenger levels at Stansted were the highest since March 2008. Overall for 2009, passenger numbers dipped at both Glasgow and Aberdeen airports, but interestingly Edinburgh bucked the trend seeing a 0.6 per cent rise in passengers across the year.

As in Clooney’s film, business travellers are getting back on the plane, but as far as the long-term future goes, the way that the business picture will change over the next decade remains less clear than a cloud-free sky.

RACHAEL JOLLEY is a freelance journalist specialising in travel.

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