More Virgin suckage

[Matthias Fuchs]

Lowest fare of the day or lowest logical fare as it was used to be called in our company is a waste of time and will not yield savings to the organisation. It is a cop out straegy that makes procurement feel like it is enforcing saving approach, but it doesn't and adds cost by the workforce spending hours calculating how they can get around it to end up on the airline they want. As others have mentioned, there are many ways around lowest fare.

The only way to save significant sums on large company corporate travel is to commit to a sole supplier with the only exception being where they literally do not fly to that destination or there isn't a flight within a 3 hour window of need to travel. Yes, there will be times when the preferred airline is more expensive, however at the end of the year the savings will be there, and your staff won't be spending an hour trying to work out how to get around the lowest fare problem.

What is needed is solid leadership around the change in policy.It won't work unless senior management lead the way. Rest assured that in the current environment people won't leave a company becuase of an airline choice. If they do, they should be pleasantly sent on their way. When we changed domestic carriers the excuses heard around why it was a bad idea were humorous. I even had one indicating that the 737s of the preferred airline were an hour slower to Perth than the A330's or 767s of the other.

Ulimately in an environment where employees coffee machines and fruit bowls are being eliminated is it right to stick with the more expensive airline when over 1 mill of savings are on the table with a disciplined sole supplier approach?

I was one of the biggest skeptics around the change. I had over 2 mill FF points on the previous airline, but after time and some good change management it made sense to me and most others in the company. Most people are now content and the preferred airline is doing a great job for us.

 

[equus]

seen no significant saving from the arrangement but plenty of issues....

And employers always seem to look at only the headline fare when comparing BFOD. End up using DJ for a $5 difference - then cop a meal reimbursement claim for breakfast - doesn't work out cheaper then. Plus the hassle (and expense) of processing and reconciling the extra claims doesn't get factored in.

Another brainless idea I saw with a BFOD policy related to lounge membership. Enough flights spread over QF and DJ saw the employer paying for lounges for both QF and DJ - surely consolidating to one would save a single chunk that would largely cover the minor differences on the individual fares.

 

[Matthias Fuchs]

Rest assured that a policy of compulsory use of one airline pays off big time. The cost of food reimbursement is nothing compared to employees loss of productivity when stuffing around choosing flights. Processing costs are negligible becuase it is all paid by company travel cards and so negligible admin for the company but good transparency. We have factored in food costs and the savings are measured at over 1 mill per annum. What people often don't realise is that the savings that the user sees may be $5 in some instances, but this is ignoring the rebate structure that your company has negotiated, which you may not personally see but the company does enjoy.

I think a good test is always. " If it was your own money what would you do"? The same applies for people that raid mini-bars becuase work pays or eat in the 5 star breakfast restaurant for $40 when a better breakfast across the road would cost $15. I have found that travel habits are very much driven by people's personal objectives and motivations.


The ultimnate example of this was at my previous employer where a compulsory international economy policy was introduced. There was kicking and screaming , however when the company then offered a one-off payment/bonus to extensive travellers for them to use as they please for upgrades etc, there was an almost nil take up of business class. In other words they were all happy to take the cash and sit in economy. All of a sudden the pain wasn't so bad and guess what, when it was there own money they rather kept it than spend it on business. A good study in human behaviour .