Ancillary Fees Create Budget Nightmares for Travel Managersby Fred Gebhart /
“I’d rather walk five miles over broken glass than deal with ancillary fees.”
So says Kevin McGuire, travel manager for intercollegiate athletics at the University of Texas, Austin, and chairman and past president of the National Business Travel Association (NBTA).
McGuire’s statement perfectly captures how most travel managers feel about ancillary fees. The fees effectively add as much as 30% to ticket prices, an increase that can’t be predicted, can’t be tracked, can’t be negotiated - and can’t be ignored.
Some carriers have bought into the idea of bundling baggage fees into a negotiated ticket price, but acceptance is anything but universal.
“Budgeting has become a nightmare,” McGuire told Travel Market Report.
“There is no uniformity from airline to airline or even from airport to airport with the same airline. Some charge all the time, some charge some of the time, some charge half rates, some look the other way. There is no rhyme or reason to the way this is being implemented. It’s a nightmare no matter how you look at it.”
Into your pockets
Confusion and the inability to capture spending data are just part of the problem.
“What carriers really want is to get into passengers pockets and wallets, collect all of their travel and travel preference information for themselves, and cater to our customers directly,” said noted San Francisco-area travel management consultant Al Gilbert of Christopherson Business Travel Management.
“From the travel management company perspective, there’s nothing we can do because everything is controlled by the point of payment. We can only track and negotiate ancillary fees at the point of sale if they are loaded in the GDS, and that hasn’t happened yet. There is talk of a new generation of miscellaneous charge order (MCO) to come, but it hasn’t happened yet, at least not in this market.”
Gilbert said the next best bet is a negotiated fare that includes a dynamic package of ancillary fees such as seat selection, meals, blankets, itinerary changes, luggage charges, wi-fi, inflight entertainment, and other items that carriers add on to the basic fare.
Anything the airlines can package, travel management companies can track, Gilbert said. But most carriers are not yet offering packages, just individual services that may or may not be optional.
The problem is that most ancillary fees are $25 and less. That means they get lumped into the “other” category in most expense reporting systems and largely escape scrutiny.
“It’s like an onion, peeling away all the layers, to see what you’re actually paying for,” said Debbie DeGrendele, global travel manager for Silicon Valley networking gear maker Aviat Networks.
“It’s a muddle we are going to have to live with for a while. If we can’t track the spend, we can’t manage it. That means it generates more revenue for the carrier. There is just no incentive for the airlines to put anything in place to help companies deal with ancillary fees.”
Help is on the way, but it will not be immediate. That new generation MCO already exists; it’s called an Electronic Miscellaneous Document (EMD) and is designed specifically to track and report ancillary fees. But it’s only available to companies in Finland that use Amadeus to buy and track Finnair products.
Amadeus spokesperson Debbie Iannaci told Travel Market Report that Amadeus intends to provide solutions to support ancillary services across all booking channels, including corporate tools, but there are no firm dates for new product introductions.
“Amadeus is typically the first with a new technology product, but they aren’t big in the U.S.,” Gilbert said. “We can only report ancillary fees to the degree that airlines and credit card companies report them to us in a way that makes sense to us and to our clients.”
That’s coming too, but slowly. Travelport is taking baby steps with Galileo, Apollo, and Worldspan GDSs to track ancillary fees. An enhanced version of the Travelport Agencia desktop will include ancillary products during the first half of this year, but only for Air Canada ancillaries and only within Canada.
Restrictions will ease slightly when Travelport releases its Universal Desktop, now being tested in Australia. But the rollout isn’t planned until later this year and so far Air Canada is the only carrier providing access to all fares and ancillary products.