Pressure to reduce costs puts focus on compliance for travel and procurement managers

In an effort to reduce costs, travel and procurement managers are focusing on enforcing travel policy – but while they may be driving out costs in some areas, preferred supplier compliance is declining, according to BCD Travel’s 2008 Travel Program Survey.

This year’s survey shows a 23 percentage point increase in companies whose policy enforcement is either “strict” or “moderate to strict,” from 36 percent in 2007 to 59 percent in 2008. But the number of companies enjoying air program compliance levels of greater than 70 percent decreased by eight percentage points from 2007, from 65 percent to 57 percent. Despite aggressive measures to strengthen policy enforcement, they are still struggling, in the face of increasing fares and decreasing capacity, to secure space on preferred carriers.

“Companies are focused on reducing their total cost of travel – but doing so in a way that balances their other top priorities of improving traveler satisfaction and maintaining traveler safety and security,” said Mary Ellen George, general manager of Advito, the independent consulting division of BCD Travel, which provided data analysis and forecasting for the survey and resulting analytical document, Insight on Corporate Travel. “To help support them in this task, they are reducing processing costs through increased usage of online booking tools; they are enhancing policy communication to travelers; and they are enforcing the use of preferred suppliers and the preferred agency.”

European transport ministers have approved a mandate for the European Commission to negotiate with the Rudd Labor Government on a potential ‘open skies’ agreement between Australia and the European Union (EU).

Minister for Infrastructure, Transport, Regional Development and Local Government, the Hon. Anthony Albanese says this is an important step towards a historic open skies agreement which could deliver greater competition, more flights and lower air fares between Australia and EU countries.

“An ‘open skies’ agreement could remove many – if not all – of the existing regulatory limitations on Australian and European airlines operating between our two continents – allowing them to offer more flights and a wider range of services at the most competitive prices,” says Albanese.

“Such an outcome would benefit Australian businesses and travellers.

“Currently, flights from Australia to Europe are limited by outdated bilateral agreements. For example, our carriers are only allowed to offer three flights per week to Paris.

“The agreement will be broader than market access issues, and is likely to address competition, safety and security and environmental protection issues,” he says.

The EU is Australia’s largest aviation market. In 2007, 4.5 million passengers travelled between Australia and the EU – an average of 43,780 passengers each way per week.

Negotiations for an ‘open skies’ agreement will build on Australia’s ‘Horizontal’ air services agreement with the EU.

The Horizontal agreement, signed in April 2008, recognises the existence of a single European market for air transport links to and from Australia.

Source: Supply Chain Review

Qantas has just announced that it will be applying its Premium Economy product to select east-coast services to Los Angeles from the end of the year.

Having successfully rolled out the cabin on its services to Bangkok, Hong Kong, Singapore, Johannesburg and London, Qantas will launch it on select Sydney–Los Angeles services from the 14th of November, 2008.  Melbourne will receive the product from the 19th of December.

“We have been delighted with the complimentary customer feedback on Qantas’ Premium Economy cabin, which demonstrates a clear place for a product of this type and quality,�? said John Borghetti Qantas Executive General Manager.

“[Also] forward bookings show high levels of demand,�? he adds.

With six B747-400s currently offering Premium Economy, Qantas expects this number to hit 18 by the end of the year.

Qantas has already priced LAX return fares (including taxes, levies and charges) from $3,999 ex-Sydney and $4,080 ex-Melbourne.

Qantas’ Premium Economy seats offers a 42″ pitch, 9″ recline, 19.5″ width, with ergonomic cushioning and an adjustable headrest.  Other extras include an in-arm touch screen video monitor, Neil Perry inspired menu with premium wines, and pre-take off refreshments.

Airport extras include priority check-in, boarding, disembarkation, separate cabin crew, and additional hand baggage allowance.
Qantas is also expecting to roll-out the Premium Economy product on services to Buenos Aires, New York and San Francisco throughout 2009.

BCD Travel and Advito are providing this report for informational purposes only. The information provided does not constitute legal advice, and statements regarding travel security programs should not be taken as a substitute for a risk assessment conducted by travel security experts.

What is the Corporate Manslaughter & Homicide Act?

On April 6, 2008 a new law came into effect in the U.K., creating new offenses of corporate manslaughter in England and corporate homicide in Scotland.

Under this law an organization can be prosecuted if “a gross breach of a duty of care�? leads to the death of (an) individual(s). Guilt arises “if the way in which its activities are managed or organized by its senior management�? was a causal factor in the death(s).

If found guilty, the organization could be liable for substantial fines (proposed to be between 2.5% and 10% of its annual turnover), and subject to a publicity order requiring it to pay for print and television advertisements announcing details of the conviction.

Even though individual senior managers will not face criminal charges under the Corporate Manslaughter & Homicide Act, shareholders could take action against the directors for a breach of their duty under the U.K. Companies Act of 2006.

What does the new Act mean for companies?

It should be noted that while the Corporate Manslaughter & Homicide Act is U.K law, it also has implications for organizations registered outside the U.K. but doing business in the U.K.

Current discussions regarding actual implications of the law are mainly academic, as the U.K. legal system is based on case law. Case law regulates, via precedents, how laws are to be understood based on how prior cases have been decided. At this time, no one knows how future court rulings are going to shape the law.

The new law may not pose a challenge for companies that already have in place robust, consistent and effective processes, management systems and policies around duty of care and health and safety.

However, for organizations that are not sure about their liability under current legislation or how their practices would stand up in court, the new law may provide a platform to get senior management to review existing practices and close gaps.

What is the implication for travel management?

Business travel has become an integral part of conducting business and, as such, need to be considered in duty of care and health and safety policies.

Even companies with a good track record in safety and security and in-house corporate security departments might need to bridge some gaps in securing the well-being of their employees. Each gap in itself might seem small but could be construed as negligence in a court of law.

Potential gaps include (but are not limited to):

• Travel policy omits safety and security altogether;
• Policy treats senior-level management differently than other employees;
• Company fails to inform and educate their travelers on general and specific travel risks;
• Company does not document when they have advised employees on travel safety;
• Travel security program focuses on high-risk foreign travel rather than including domestic travel (especially those trips not booked via the travel agency);
• Safety and security is not part of travel procurement criteria;
• Risk assessment does not use door-to-door approach, and thus may ignore e.g., the trip to the airport in an employee’s own car or the transfer to the hotel after a long-haul flight;
• Company does not test their crisis management plan regularly.

How can a travel program support adequate risk management in line with implied legal requirements?

The following components are typical of effective travel risk management:

• A travel security policy developed with key stakeholders that is integrated into the travel policy and communicated to all affected parties;
• Training and education programs for travelers, arrangers and managers ranging from online awareness courses on general travel risks and how to avoid or reduce them, to specific country preparation and intercultural training;
• Pre- and on-trip information covering destination risk assessments, medical information and country profiles powered by trusted sources (e.g., BCD Travel’s DecisionSourceTM: Security Manager);
• Traveler tracking system that enables identification of and communication with travelers at risk in crisis situations (e.g., DecisionSource: Security Manager);
• 24/7 assistance services to support travelers in need;
• Incident management to plan, avoid and respond to crisis situations, e.g., providing close protection services, preparing evacuations, dealing with kidnap;
• Insurance program that covers frequent but low-key travel risks (e.g., baggage loss) and provides medical as well as specific security coverage;
• A crisis management plan that is developed with all involved parties, regularly updated and tested.

Where can I get more information?

• For more information on an integrated travel risk assessment, please contact Advito at advice@advito.com.
• For information on BCD Travel’s DecisionSource: Security Manager, please contact your account management team.
• For official information provided by the U.K. government, please see the Ministry of Justice Web site: http://www.justice.gov.uk/publications/corporatemanslaughter2007.htm.