Struggling to manage airline baggage fees, some travel buyers are beginning to change policies, leverage preferred status to shield travelers from the fees and find ways to estimate the expenditure for their upcoming budgeting and negotiation processes. Meanwhile, buyers await comprehensive data or management tools from travel management companies, corporate card providers or airlines.
Airline fees introduced this year, including baggage fees, will account for 3 percent to 5 percent on top of base airfare increases in 2009, said Advito vice president of the Americas Bob Brindley.
One Corporate Travel 100 buyer estimated that because of preferred status matching, about 20 percent of its travelers are affected by baggage fees. “They realize that we are going to negotiate like mad on the actual fare, so they will add on wherever they can,” the buyer said. “There is cost avoidance going on, and it all comes down to the relationships that we have with airlines.”
Now that baggage fees are the rule rather than the exception, with Delta Air Lines at press time the only legacy carrier not to charge for the first checked bag, buyers are reviewing polices to see whether any guidelines should be put in place.
This month, after travelers questioned software provider Deltek’s travel department, the company decided to reimburse fees for one checked bag for trips of up to five days. Thereafter, it reimburses for two checked bags.
“We know it’s happening, and we don’t want ticket costs go from $200 to $300 as a result of baggage fees,” said Deltek travel manager Karoline Mayr. “We gave specific verbiage around it because we don’t want to be the ones left holding the bag.” Mayr said there has been little pushback from travelers.
Deltek may be in the minority as many buyers are waiting for some data before making policy decisions. Global project manager of air consulting for CWT Solutions Group Matthew Patterson said he has yet to see corporations directly alter policy to address baggage-fee reimbursement, but expects that to change with the fees’ increased prevalence. “Where the large majority of people are checking bags, they are going to revisit their policy to put the specifics in,” he said.
In a survey released in September by consultancy IdeaWorks, 21 percent and 42 percent of 113 airline executive respondents worldwide said their airline currently charges for the first and second piece of checked baggage, respectively. An additional 12 percent and 32 percent said their carriers plan to add those fees.
Meanwhile, preferred status matching has been the most tangible management of baggage fees for many corporations, and several buyers and travel consultants said there had been little success in negotiating waivers. Deltek garnered more preferred status with United Airlines to exempt a significant portion of its travelers from such fees.
One buyer asked, “How could you negotiate it? We have to be realistic that airlines are doing this because they’re losing millions of dollars on a daily basis. You can’t keep screwing them to the floor because they’re not going to survive.”
Despite airline and travel technology provider efforts to deliver unbundled service and ancillary fee management solutions, there has yet to be clear data for these new spend categories aside from limited card-data transparency. “You can try to capture it as a total airline expense, but it is even more difficult to try and tie it back to an individual trip,” Advito’s Brindley said. “Just like on the hotel side, until we have better e-folio-type data and greater card adoption rates, it’s just hard to break out the total charges on the credit card to the individual things.”
American Express Business Travel Advisory Services developed a tool that evaluates potential baggage-fee expenditures for clients by evaluating historical travel patterns, preferred supplier relationships and published fees, said vice president Frank Schnur.
Siemens director of mobility services Steven Schoen said it’s valid to count baggage fees as part of the total spend with an airline, but “you just need to be diligent in identifying those line items, so that when you are looking for an average fare paid on a citypair that you don’t include non-fare charges.”
Just as uncharted as baggage-fee tracking is the impact into travel buyers’ cost avoidance and savings metrics, especially with something that cannot be influenced at this point in negotiations.
“We go with the whole spend but take out the fees that we don’t have the opportunity to influence or manage,” according to Schoen. “It is so new that we haven’t had the next round of negotiations to realize an effect.”