Low-Cost Carriers for Biz Travel: Can It Work?

Is there a low-cost carrier in your corporate program? If the answer is no, it could be time for a second look. Or not.

Low-cost carriers (LCCs) “are a different landscape in different countries. There are so many carriers with different models that may or may not fit your corporate needs,” cautioned Koby Brice, travel manager, Asia-Pacific and Japan, for EMC International.

“We want the low cost, but we want the traveler tracking and we want the data. Not every LCC is interested in managing corporate travel,” Brice said during a panel discussion at Corporate Travel World, a business travel trade show in Bangkok earlier this month.

Depends on the market
“At the same time, some corporate buyers have been very successful (using low-cost carriers). In India, for example, legacy carriers are losing corporate market share to LCCs. Success is very much market-specific and carrier-specific.”

The traveler experience is just as market- and carrier-specific.

Jet Blue and Virgin America consistently beat their network competitors in customer service surveys. At the other end of the spectrum, Ireland’s low-cost Ryan Air is famed for its spartan facilities in secondary or tertiary airports and its aggressive inflight sales programs.

Inroads in corporate market
While many low-cost carriers focus on the leisure market, some are making inroads on the corporate side.

The fastest-growing airline in the world at the moment is India-based Air Indigo, fueled primarily by corporate programs, said Kris Miller, Travelport business development director, Asia-Pacific.

An Indian travel manager noted that average ticket prices on Air Indigo are 20% below its network competitors flying the same routes.

(In the U.S., the low-cost carrier market seems relatively settled, with Southwest, Jet Blue and Virgin America leading the pack. Worldwide, low-cost carriers’ market share is creeping up, albeit marginally.)

Super barebones product
Not all low-cost carriers are interested in pursuing the corporate market. Australia-based Jetstar has built one of the world’s largest low-cost networks based on a combination of reliable service and bare-bones pricing that includes a seat and little else.

“The low-fare proposition is about giving you a seat and a 10 kg (22 lbs) hand luggage allowance,” said Leslie Ng, Jetstar regional general manager for greater China and Southeast Asia.

“The rest is up to you and your travel needs. That can be challenging in a corporate environment.”

The tracking problem
There’s an even more basic challenge for travel managers, Brice said. Regardless of their business model, low-cost carriers all want to work directly with the traveler.

Some have adjusted their model enough to work with GDSs and a handful are willing to work with travel managers. But most insist on direct sales to the traveler, whether online, on a mobile device, or through some other direct channel.

Direct sales means no or limited tracking of travelers and limited data for travel departments.

“That is one reason we use LCCs as an exception rather than the rule,” she said. “We want to track our travelers, and you can’t do that when they are buying direct.”

Making it work
There are solutions.

Some TMCs are willing to handle direct bookings and input traveler tracking data manually. Direct traveler purchases using a corporate card can provide enough tracking and data reporting for some companies.

GDSs may help in the future.

Miller noted that Travelport is testing a universal desktop with Australian travel seller FightCentre. The new desktop was developed specifically to integrate the dozens of low-cost carriers that do not participate in GDS programs, she said.

A new programming interface (API) searches individual carrier websites and integrates the results with the usual GDS search results.

Convincing travelers
There are also potential problems convincing travelers to give up their familiar and treasured frequent flier perks in order to save the company money.

That raises compliance questions.

“Your traveler is going to be asking, ‘What’s in it for me,’” Brice said. “They lose their points. They lose priority boarding. They lose the feeling that they’re special.

“If you’re going to use an LCC, you are going to have to show your travelers the advantages and convince them that it’s good for them, not just for the company.”