• Strategy
  • CFO Magazine

A Need-to-Go Basis

How to rein in airfare costs for everyone from road warriors to infrequent fliers.

Executives are replacing same-day trips in particular with videoconferences and phone calls, says Dale Eastlund, a senior director at travel management company Carlson Wagonlit Travel. “If it’s an internal meeting, you stay at home,” he says.

Steps to save on total travel spend

Dale Hosack, finance chief at Western Container Corp., a maker of plastic bottles for Coca-Cola products, says he and his fellow executives began asking more questions about travel last year, when sales began to soften. “We didn’t really publicize it, because we didn’t want to make it seem like the sky was falling,” he says. “We just started asking an extra question about why people were going somewhere.” Executives still visited their plants as scheduled and traveled for budget reviews, but such trips were planned far in advance. “Instead of going to Phoenix for a week and then later going to Seattle for a week, we went to Seattle, San Francisco, Phoenix, and Los Angeles in the same week,” says Hosack.

The company has always traveled on a shoestring, mostly relying on Southwest Airlines, where there is no question of who gets to fly business class because it doesn’t exist. The company is also careful to book in advance to ensure the cheapest airfares possible. Ticketing two weeks ahead, according to a Carlson Wagonlit study, can trim domestic fares by 39 percent and international fares by 6 percent. “If the COO and the CFO do it that way, I don’t think other employees can complain about what we expect,” Hosack says. When Southwest introduced its Business Select service, which allows passengers who pay a fee to board more quickly from a dedicated line, Western Container told employees they were free to use the service — on their own dime.

Going on a Guilt Trip

After determining which trips are truly necessary, the next step is to promote and enforce the travel policy the company already has, says Eastlund. While CFOs have long advocated advance booking, use of nonrefundable tickets, and reliance on certain preferred carriers, “travelers have tended to go off and do whatever they want,” he says.

Today, the economic environment gives CFOs the ability to push compliance and to make policies more stringent. Employers are now more likely to require travelers to use a low-cost carrier, or to book flights that require a stop, and can expect far less grumbling than in the past. “All of a sudden, a stringent travel policy is not something to complain about but is instead seen as sound strategy,” says Raj Singh, president of Concur, a maker of travel-management software.

For companies with software that guides employees through the booking process, there are numerous automated ways to encourage compliance. One of the most popular approaches uses what Sedky of American Express calls “visual guilt.” When employees begin planning a trip, the software will show which carriers and flights are in-policy and which are not. Some companies configure their systems to require an employee to get approval before booking out of policy, while others simply show the employee that there are cheaper options. “When you notify someone that there are alternatives, they feel like they have to do the right thing,” says Sedky. American Express has found that such visual guilt-tripping can save companies 10 to 20 percent of their total travel cost.

Discuss

Your email address will not be published. Required fields are marked *