Paying more to save money: companies don’t want cheapest airfares
Companies often go to great lengths to keep a lid on costs, but here’s one place where many won’t skimp: airfares. companies and cheap airfares
As CNBC reports, Corporate travel providers said that many of their clients are asking them to block airlines’ basic economy airfares. These are usually the cheapest seats on the plane, where in exchange for the lower airfare, passengers often cannot select a seat ahead of time, upgrade, make changes or get a refund. In some cases, passengers cannot use an overhead bin or check a bag.
Airlines say the fares are aimed at the most price-sensitive customers, who would give up perks that used to be free in exchange for a good price. Airline executives haven’t been shy that they measure the product’s success by how many passengers pay higher fares to avoid basic economy. That companies are opting to block basic economy from travel systems is great news for airlines.
Businesses that haven’t blocked these fares may need to remind travelers exactly what they’re getting as airlines expand these restrictive fares to international routes.
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Getting it wrong could mean both an unhappy employee and getting stuck with a big bill if the traveler’s plans change.
Paying more to save money companies and cheap airfares
Let’s say a meeting runs late or a late-afternoon meeting is canceled. A business traveler on a basic economy would have to purchase a whole new ticket at the last minute, which is among the highest fares. That means that the cheapest fares can end up costing companies a lot.
In December 2016, about two-thirds of American Express Global Business Travel’s clients opted to block basic economy, the company said. That rose to 75 percent by July 2017.
That shift occurred as United Airlines and American Airlines joined Delta in rolling out basic economy airfares. The no-frills fare offered by American and United prohibits passengers from using overhead bins on domestic flights.
Egencia, the corporate travel platform of Expedia, said none of its clients display basic economy fares to their employees. The company estimates that about 11 percent of business travel changes mid-trip.
SAP Concur, which has more than 38,000 customers, estimates that about 42 percent of its clients worldwide have blocked basic economy fares.
Corporate travel managers and travelers themselves who travel internationally aren’t exempt. American, Delta and several of Delta’s European partners recently unveiled basic economy fares for transatlantic flights, which include fees for checked bags.
