Business Travelers Turn to Internet for Discounts, Bypassing Corporate Negotiations

Strategic Insights -

As air fares continue their upward climb, business travelers are increasingly seeking discounts online, a practice that is causing problems for their employers. A survey by American Express reveals that the average price paid in April by United States corporations for an airline ticket reached a seven-year high, partly due to two across-the-board fare increases by major carriers. To minimize the impact on travel budgets, companies are adopting Web-based booking systems that allow employees to make reservations using negotiated rates and company travel policies.

Key Takeaways:

  • The average round-trip air fare paid by business travelers in April was $600, a 1% increase from March and 5% higher than April 1998.
  • American Express' survey found that corporate travel managers' top problem is employees bypassing company-negotiated rates to find cheaper fares online.
  • Business travel agency giants like American Express and Rosenbluth Travel, as well as companies like Oracle, offer corporations customized Web-based booking systems that enable employees to make their own reservations.
  • Employees of many companies are working around these systems and searching for Internet discounts, often finding lower fares than those negotiated by their employers.
  • The National Business Travel Association represents 1,300 United States corporate travel managers, who reported that the practice of employees finding lower fares online is their No. 1 problem.
  • The association is petitioning airlines to put Internet discounts on computerized reservation systems to provide access to corporate travel managers and their employees.

Statistics:

  • Average round-trip air fare paid by business travelers in April: $600.
  • Increase in average air fare from March to April: 1%.
  • Increase in average air fare from April 1998 to April: 5%.
  • Number of United States corporate travel managers represented by the National Business Travel Association: 1,300.
  • Percentage of managers reporting employees' online scrutiny of fares as their top problem: 75%.
  • Domestic revenue of United States airlines in the last eight months: up only 1%.
  • Number of flights Delta Air Lines operates daily: 2,600.

Sources:

  • "Survey reveals business air travel is at seven-year high" by American Express.