Travel buyers appear to be blocking basic economy fares as they show signs of greater flexibility to traveller preference and convenience

While new basic economy fares introduced in the United States of America (USA) may have proven popular with budget-minded passengers and appeal to many travellers due to their low prices, heavy booking and travel restrictions mean they are not proving as popular with corporate travellers, even those with programmes that aim to keep costs to a minimum. In fact, new research from the Global Business Travel Association (GBTA), in partnership with Airlines Reporting Corporation (ARC), shows that almost two thirds of travel programmes never allow basic economy bookings and almost four in five actually hide basic economy fares.


Summary:

  • US Travel buyers appear to be blocking basic economy fares with 63% never allowing basic economy and 79% configuring their booking tool to hide basic economy fares;
  • The findings are from research from the Global Business Travel Association (GBTA), in partnership with Airlines Reporting Corporation (ARC) on how managed travel policies address air travel requirements;
  • It is not surprising to see many business travel programmes shying away from basic economy fares due to their heavy booking and travel restrictions;
  • Beyond shying away from basic economy, shows travel policies are becoming more open to business class and premium economy bookings to support traveller preference and convenience.

The basic economy fares were introduced by the US majors to better compete with their Low Cost Carrier (LCC) rivals. While It is not surprising to see many business travel programmes shying away from basic economy fares, the findings from the online survey of 168 US travel buyers earlier this year, still provides interesting findings on the subject with the exact numbers being 63% never allowing basic economy and 79% configuring their booking tool to hide basic economy fares when travellers are not authorised.

As Michael W. McCormick, GBTA executive director and COO notes, these basic economy fares “pose a challenge for travel programmes, creating difficulty for spend visibility and comparison shopping when add-ons are factored in”. He notes that this in part is due to travel buyers “increasingly factoring in traveller preference and convenience” in bookings as they increasingly “recognise the importance of their role in employee retention and recruitment in a strong economy with low unemployment.”

This viewpoint is supported by findings from the survey which further explored how managed travel policies address air travel requirements. Beyond shying away from basic economy, the research looked at other fare classes and shows most travel policies allow business class in some scenarios. Nine out of 10 (89%) allow it occasionally and these policies commonly do so for lengthy flights, international flights or for senior executives. Many travel programmes are also embracing premium economy fares, which provide extra legroom and other amenities such as early boarding. More than half (58%) of policies always or sometimes allow them and an additional 30% occasionally allow these fares.

The research also looked on the timing of bookings and whether travel programmes should be putting a larger emphasis on advance purchase of tickets. It found that travel programmes almost universally (91%) address the advance purchase of flights with 29% requiring advance purchase whenever possible and 71% recommending it. However, even when advanced purchase is required, 52% of programmes do not require special approval of flights booked after the advance purchase deadline, the findings show.

ARC’s own transaction data shows that booking in advance can mean “significant savings,” and suggests travel programmes may want to consider a stronger focus on advance purchase based on the needs of their travellers. “Even a small advance purchase policy of only a week or so before travel can yield savings versus average ticket prices,” explains Chuck Thackston, ARC managing director of data science and research. “Longer advance purchase is generally better, but balancing the needs of travellers and cost savings opportunities is achievable for most companies.”

The survey also found that the vast majority (82%) of travel programmes address add-ons, yet only one in five say these are commonly purchased through TMC channels. With the growing rate of New Distribution Capability (NDC) implementations, however, ancillaries will become more accessible during the booking and ticketing path and for travel buyers this will present both opportunity and a need for clearly defined travel policies.

The study also highlighted only 3% of travel programmes reward travellers for saving money on air bookings. However, 21% of respondents said they would consider rewarding travellers for policy compliant or low-cost air bookings.