Business travel management consultancy, Advito has recently made a bold statement, saying “the Air RFP is dead”. According to the organisation, digital transformation is revolutionising the way businesses, TMCs and travellers communicate with one another, and the ever-diminishing returns for their efforts that travel managers are seeing today shows that they can no longer rely on the legacy air RFP process to source their suppliers.
The big problem with the air RFP process and a dynamic solution
The way airline contracts are negotiated today is time-consuming and expensive. Also, being tied into a lengthy contract doesn’t make sense in today’s dynamic market. An organisation might expand into new markets or change business operations in existing ones. Even more disruptive are mergers, acquisitions and sales of divisions – and these changes aren’t only occurring on the buyer’s side.
There’s change within the airline industry, too. Big-scale events like bankruptcy, mergers and take-overs are accompanied by smaller-scale events like route and capacity changes.
The new air retailing model that is being implemented by many airlines (NDC/One Order initiatives) means pricing is going to be more personalised and dynamic. This has immediate impact on travel programmes, and if these changes are left until the end of the contract period to address, it can mean monetary loss and inefficiency for the programme and travellers.
Taking a more progressive, holistic approach through Advito’s Dynamic Performance Framework keeps you ahead of a constantly shifting market with real-time analytics, monthly program insights and proactive supplier management to drive savings.
There might be some rare cases where the air RFP process is the right option, however, that doesn’t mean that they should continue to manage the programme with traditional reviews every 2-3 years after the initial sourcing is complete.
Putting travel managers back in the driver’s seat with data-driven programme management
When moving away from the legacy RFP process, it’s important to shift other aspects of the programme to align with the new way of sourcing. With the right data and analytics in place, travel managers will be in the driver’s seat, armed with knowledge such as why an airline isn’t competitive, why they changed flight schedules, why their fares are unavailable, or why their market share dropped. This data also allows travel managers to track corporate performance and see what they need to do to achieve better partnerships with suppliers. And if changes are made to supplier contracts, informing travellers and driving a behaviour shift is the logical next step.
The mindset needs to shift beyond air sourcing alone and encompass the entire travel programme, improving supplier relations and traveller engagement. It recognises how both pieces work together to allow travel managers to make real-time adjustments based on data.
Using data to influence traveller behaviour
Adopting a dynamic sourcing approach to influence supplier contract negotiations is just the first step in modernising a travel programme. It’s important to ensure that traveller behaviour is in line with any new priorities you’ve set.
Traveller engagement helps communicate and explain programme changes and get travellers to make the right decisions for your programme. Make travellers aware of changes and use merchandising and marketing techniques to shift traveller behaviour based on those changes to drive savings. This gives the travel manager a better negotiating position with airlines and increases programme ROI. Advito’s holistic approach to traveller engagement goes one step further to not only drive savings but also motivate and satisfy travellers to build an affinity with the travel program.
Transitioning to the new approach
In this digital world, the industry is headed toward dynamic performance management; a process rooted in real-time data that moves with both market and programme performance. The legacy air RFP cycle will become a relic of a bygone era as organisations shift to make proactive, data-driven decisions – not only in their travel programme, but also in their business operations overall. As the travel industry moves rapidly in this direction, don’t be left behind.