London 25th June 2020 - Airlines who operate aircraft with a triple-seat configuration in economy class could offer their customers the option of an Empty Middle Seat (EMS) by introducing an innovative new airfare proposed by travel strategy consultants Globalyse.
John Harvey, former Group Marketing Director at Hogg Robinson plc. and Managing Partner at Globalyse says, “no-one likes the Middle Seat at the best of times, let alone when everyone has been social distancing because of COVID-19”. He asks, “who wants to be squashed up next to a stranger in the Middle Seat or, worse still, find that you have been allocated the Middle Seat?” He continues, “the importance of personal space should not be underestimated. It could stop many people from travelling and hold back recovery for the global travel industry.”
Some airlines have said they may leave the Middle Seat empty to regain customer confidence. However, this appears’ short-lived and offers little guarantee. One airline even described the idea of leaving the Middle Seat empty as ‘idiotic’ because of lack of revenue.
There has been a suggestion that if customers wanted to guarantee more space, they could buy two seats. However, this is technically complex, operationally difficult to manage, and significantly more expensive than it needs to be.
The new idea put forward by Globalyse is simple: it shares the cost of an Empty Middle Seat between two people. This means that for every two passengers who choose to pay a 50% premium on their economy fare, an Empty Middle Seat is fully funded. Airlines could offer what Globalyse call an ‘Economy EMS Fare’, which provides the customer with a Window or Aisle seat and guarantees that the Middle Seat will be empty.
The beauty of the concept says Harvey, is that “individuals could book this fare on their own. They do not need to find a partner, or buddy-up with anyone. This can all be handled within the fare”. Any financial risk to the airline is minimal because they can use a dynamic sales model which scales according to demand.
Imagine it as releasing three seats at a time, starting from the front of the economy cabin, and working backwards. For every two Economy EMS fares sold, the airline is fully funded for all three seats. The maximum risk is only ever one unsold ticket, which only happens if the total
EMS fares sold is an odd number. This one unsold seat could then easily be offered as an upsell option at check-in and the revenue from EMS seating is 100% complete.
In practice, airlines may wish to present the offer as an identified section of the cabin and allow customers to view a seat map. The EMS section can shrink or grow depending on demand. A virtual ‘buffer’ of blocked seating between EMS and Economy can be used during the sales cycle to increase or reduce whichever section is generating the most demand.
There is no physical change required within the aircraft and no additional onboard services needed. Some airlines may see an opportunity to offer additional features to the EMS fare, such as priority boarding or additional baggage, but for most people, the space alone will be the key.
There is no claim that this concept is medically any safer or provides protection against COVID-19. However, just knowing from the moment you make a booking that you are guaranteed an Empty Middle Seat, would be a great relief for many people. Not only could this initiative help with restarting travel – but as a long-term offer could be an attractive option for many customers - and especially business travellers and their companies, who are increasingly concerned about traveller wellbeing and performance.
Harvey concludes, “who wants to arrive at an important business meeting having set off at dawn, been through two airports and spent a couple of hours squashed up next to strangers - with nothing more than a mask on your face? Not me. But I would pay £50 extra on a £100 sector fare to guarantee an Empty Middle Seat. It would make the whole experience less stressful and certainly more comfortable”.
The ‘Economy EMS Fare’ would be an innovative way to make this happen.
- Ends -
Notes to editors
Globalyse are strategy consultants specialising in corporate travel. The company offer advice and strategic support to corporate clients, travel suppliers, channel partners and commercial payments providers. Globalyse founded the Travel Carbon Project www.travelcarbon.com to help reduce the environmental impact of corporate travel and operate the specialist bid management support service, bidteam®.
To learn more visit www.globalyse.com
John Harvey, Managing Partner, Globalyse.
Tel: +44 (0) 7554 114734
We would love to hear from airlines, travel management companies and corporate clients who are interested in developing this proposition.
The Future of Travel Management: Time for Change, discussed why the current financial model for corporate travel is incapable of sustaining the channel in a post COVID-19 world.
There will be insufficient volume to generate the hidden revenue that TMC’s currently use to help fund services and enable them to make a profit while maintaining the level of travel ‘assurance’ that major clients need.
One opportunity is for clients and TMCs to make a step-change to a ‘Travel as a Service’ model.
… Will anyone take it?
While there are other ways of re-structuring management fees, a TaaS model would be the most innovative. It would break the dependency on transaction volume and remove the curtain of mystery surrounding travel revenues.
TMCs currently make money in five ways: from Fees, Commissions, Overrides, Incentives, and Mark-ups. TaaS would restructure the revenue lines and enable clients to achieve total transparency with 100% visibility.
Travel assurance in a TaaS model is matched to the individual needs of each employee.
For TaaS, think SaaS. Think monthly user fees determined by the user requirement.
Additionally, enterprise requirements can be wrapped into these user fees or taken separately as TaaS ‘plus’ components.
The challenge is whether intermediaries can get over their addiction to supplier revenues and make a step change from travel seller to provider of corporate service? Some may argue they should be able to do both (earn fees from clients and revenue from suppliers), but the opportunity for transparency and sustainability will be lost.
· 100% fee-based corporate services contract.
· Monthly subscription - determined by number and type of users.
· 0% travel supplier revenue retained.
· Maximum benefit directed to the client (travel savings, incentives and rebates).
· 100% transparent – sole source of TMC revenue.
· Geared to the users in the business
Data exists within every managed client for the modelling to be developed and for clients and TMCs to structure requests and proposals. This will enable a base case to be created and for this to be compared against the current contract.
Even if you choose to do something else…Wouldn’t you want to know the numbers?
Travel as a Service…Let’s go!
We would love to hear from TMCs and corporate clients who are interested in developing a TaaS model surrounding their travel management contract
I have been writing about the prospect of a new commercial model for business travel for a while now. However, whilst most people recognise there is an issue with transparency in corporate travel, and many are unhappy with how it’s funded today, there has been been little appetite for change - until now.
I believe the current situation with COVID-19 will force a change to occur because the current commercial model will be incapable of sustaining the channel.
It seems increasingly likely that recovery, when it comes, will not see a return to normal. There will be a ‘new normal’ and the immediate challenge for clients, intermediaries and suppliers will be to predict it and get prepared.
Recovery will not be fast. There will be on-going caution and increased sensitivities producing uneven business and possibly ongoing travel restrictions. There will be lower volume going forwards, especially in the short to medium term.
This means there will be insufficient revenue to fund high-quality travel management services and although the perception may be that intermediaries are funded by client fees, the reality is that most TMC’s make over 50% of their revenue selling travel: earning commissions, volume overrides, volume incentives and mark ups.
Most of this supplier-related revenue is driven by volume. Which won’t be there. Consequently, there will be a lack of funding to support the delivery and development of travel management components.
This circles back to my long-held belief that TMC’s should not be retailers (who make money from the travel they sell). They should change their core intention and become corporate service providers - acting 100% for the client.
Innovation surrounding travel management will become even more important in a post Coronavirus world. There will be increased need for services that enable clients to look after the health, security, safety, tracking, movement and care of staff. Helping the company to avoid all but necessary travel, seek alternatives, manage virtual events and provide data and analysis across all activity.
The opportunity will be to provide a new unbiased interface to the travel supplier market. To help clients achieve not only commercial performance when buying travel - but also on its wider ESG objectives and specifically environmental impact.
The current commercial model cannot support all these requirements.
I believe that now is the time for travel management companies, clients and suppliers to transition into a new model. Reposition the intermediary function to become a true corporate service - funded 100% from the client side - motivated to perform exclusively for the client.
This will also simplify the relationship structure for suppliers and enable them to reduce their own ‘cost of sale’ by focusing all of their commercial offer directly to the client. The client can then determine the proportion of supplier benefit it uses to fund the new interface.
This delivers a win/win/win and establishes a model that is sustainable for all parties.
Whatever happens, the key word is assurance. The world has changed and the future is uncertain. I see this as a significant moment in time for existing players to be more innovative.
To step up and offer a more creative solution for the long-term management of corporate travel.
For me, this starts with the positioning of a new commercial model which can deliver the assurance that clients will need.
If you would like to know more about repositioning your client / agency relationship, please get in touch.
Some of the most valuable sales insights you can gain as a CMO or CCO are on the ‘buyer-side’ of your own business, experiencing what it feels like to be on the receiving end of a supplier sales pitch.
Why not hang around the boardroom after your monthly senior exec meeting and see who’s coming up next. Odds on it will be a corporate services supplier who’s been sweating it out in reception waiting for your meeting to finish. They’ll be in shortly, pitching for your business.
…It could be your CFO, reviewing bank partners. CIO, tendering enterprise comms. Chief legal counsel, renewing global insurances or, your CEO meeting with potential new advisors.
Whatever the requirement, there’s a corporate service provider outside - about to make their presentation. Ask if you can stay and observe the session. I guarantee that watching another corporate services sales team in action will provide you with a thought-provoking insight about your own teams’ performance.
[Okay, so hanging around and jumping meetings when you haven’t been invited, isn’t exactly the smartest way to do it – so better still, ask your CPO if you can sit in on an upcoming ‘beauty parade’, where 3 or 4 service providers are pitching on the same day.]
The value of this 180-degree perspective (watching sales teams perform in a live environment), will become clear to you very quickly. As the meeting gets underway, you will find yourself assessing the supplier performance from a buyer’s perspective, but with your added instinct as a sales and marketing leader measuring the impact of their ‘consultative selling’.
· Do they know your team?
· Does your team know them?
· Have they invested in an effective relationship (has your team allowed them to?)
· If not, how well do they manage the cold introduction - do they gain your support?
· Importantly, do they truly understand your business and your current burning issues?
You know your own business so well that it’s easy to measure the depth of understanding that a potential supplier has developed. You will ‘feel’ this when listening to them. You will get a real sense of whether the playback is genuine (and helped determine their service solution) or, is superficial and comes across as false.
· Did they tell you anything about your business, or your market, that you didn’t know?
· Is their own style and culture a good ‘fit’ to your company - did you like them?
· How well did they work as a team - how strong is their leader, did they each take part?
· Are they creative, have they thought outside the box…do you trust them?
· Could you see your two businesses together - gaining value from the relationship?
Notice the lack of technical detail in this initial assessment. Some of this will be assumed (they wouldn’t be in the room if they didn’t have a core competency) and some of it is secondary. In other words, they need to sell themselves and win your trust first - by demonstrating their understanding of you, your business and your requirement - BEFORE they can sell their solution.
As you sit there watching and listening you will be measuring several different things. However, unless the supplier has a ‘killer App’ (a product, service or solution that is unique and only they can provide), you will find yourself being drawn more towards the honesty, integrity, trust and capability of the people you meet. Have they invested in identifying your real need? Can they add value to your wider business? Are they creative and flexible? Will they help you succeed?
Some suppliers may have been brilliant, others distinctly average. No doubt, one will have been shockingly awful and while your incumbent may have come across well, and have the greatest knowledge of your business, they may also be perceived as ‘dull’ or, ‘offering more of the same’ or, ‘living on past success’.
As you reflect on the presentations and the people you have met, imagine being the CEO/CMO of each supplier company and (if they weren’t in the room themselves), how they would feel if they had seen and experienced what you have. Would they be pleased with how their team performed – or would they be horrified? Whatever the outcome of the meetings one thing will stand out to you more than anything else.
· You will now be thinking about your OWN client-facing team
They are also out there today. Doing a similar job to the people you’ve just met. Meeting with clients, developing prospects, presenting their case - representing your company. How well do they perform in a similar situation to the one you just witnessed? How do they compare against your competitors?
Do your teams invest in developing a deep understanding of your client’s needs - to a level that will impress them?
Are they always fully prepared? Do they win over their audiences? Do they use their understanding of each client to create solutions that stand out from the crowd?
Would your team rate as brilliant, good, average or shockingly awful?
Do you know?
As a CMO or CCO, there is nothing stopping you finding out.
If you would like to know more about bidteam® and how we may assist in helping you review, measure or increase the performance of your sales and account management team
Travel management is more important to your CEO than you may realise. This does not mean they are thinking about it every day or, have much interest in the procurement process. But they will be considering the value of the programme to your company and, at any moment in time, corporate travel could be the most important issue of your CEO’s day.
1. Safety and Security
2. Return on Cost
3. Wellbeing and Performance
4. Environmental Impact
5. It’s Personal
Understanding the value and risks of corporate travel - from a CEO perspective:
Travel involves your people. Travel involves risk. Add the two together and this explains why traveller safety and security are likely to be the number one item on your CEO’s list. It is easy to manage safety and security when staff are onsite company premises. But, as soon as people travel, the risk increases. And, it can increase significantly depending on where in the world they go. The most successful companies care passionately about their people – this starts and ends at the top. No CEO wants to be at the helm of a business that cannot demonstrate it has done everything to ensure its people are safe and secure when travelling. And no CEO wants the reputational risk of a business being accused of not caring for its people. Traveller safety and security is strategic. It will always be on the CEO’s radar. It will also be on their own personal checklist; recognising that safety and security is as important to the CEO and their family, as it is the value of the business, and its stakeholders.
Corporate travel is a ‘big ticket’ item. Collectively, the overall cost to the enterprise can be significant. In a large global firm, it can run to hundreds of millions of dollars. In the very largest firms, it will top a billion dollars. Now imagine the company boardroom, and in the corner is a special bank of red buttons. One of them is marked ‘Travel Savings’. The CEO knows it’s there and can push it whenever the company needs to take strategic action on costs. (It’s been used a lot over recent years). Some may argue the button is not as productive as it used to be - because it’s been used so many times that the travel programme is now fully optimized. But the button still works. It can be used to STOP or reduce travel. However, going forward, the challenge may be less about savings and more about questioning the return on travel investment. Expect CEOs to focus their attention on assessing the value that the travel programme brings to the organization. Becoming more focused on understanding the drivers that cause travel within the business. Eliminating those that add cost with little return – versus, investing in those that sustain or deliver increased value to the company. Travel is not a commodity purchase of materials. It is a means to an end. Expect CEOs to take much greater interest in the return from that travel investment going forwards.
Wellbeing and Performance is not the responsibility of the travel management team. It is the responsibility of the whole business. Everyone in a company has a responsibility to each other. Colleague-to-colleague, Line manager to staff and functions to their team members. Travel managers have a role to play in ensuring the travel programme delivers travel arrangements that help to keep travellers fit and well – but strategically all lines of wellbeing go ultimately to the CEO. Every captain wants a ‘happy ship’ and if members of the ships-company become unwell or are struggling in any way, there needs to be a positive regime in place that is equipped to help and support them. Travel, and the reason for the trip (visiting clients, making sales, developing new opportunities etc.) combine to increase stress on individuals. How well people perform when travelling is directly affected by their travel experience. This correlation between wellbeing and performance - when travelling - will increasingly be on the CEO’s radar in 2020. This will be driven both internally, by the company becoming more understanding that wellbeing is a corporate issue. And, externally through comparisons drawn across the company’s peer group. Travel managers should expect the CEO to be looking for evidence that the programme is delivering an excellent traveller experience and is helping to ensure that when people travel on business, they arrive in the best condition to perform well – for themselves and for the company.
All major companies have the environment on their agenda and there is little doubt it will be a key subject for discussion at board level during the year ahead. The initial focus will have been on the impact that company operations have on the environment. This is now extending quickly to include the impact of the company’s wider activity. Any company that needs to travel to do business, has a challenge. Can it justify its travel? Can it demonstrate it has processes and systems designed to question the need for travel? Does it have a way of avoiding travel or utilising alternatives? If it must travel what is its approach to offsetting and how does it balance the impact of its travel on the environment? CEOs will be expected to have a clear understanding of these subjects and be able to describe to shareholders, investors and the media how the company deals with the situation today - and intends to manage the impact of its travel going forward. CEOs may not traditionally have been interested in the administrative detail of the travel programme - after all, the outside world has never been interested in how the company books travel or, makes an airfare saving. However, if that booking or saving has an environmental impact - then the outside world becomes interested.
CEOs may have special talents, but they are just people. They are also likely to be the one of the most frequent travellers in the entire company. Travelling to wherever the company has operations and to wherever it has clients. Of course, the travel experience may be of a higher standard and there will probably be more assistance from people along the way – but travel is travel and the CEO’s role as a traveller should never be underestimated. They will be away from home, sitting in an airport (lounge), flying on planes, riding in cars, staying in hotels and travelling around foreign cities. Your CEO is exposed to travel and thinking about it more than most people realise. They also know that their own travel experience has a direct impact on their own personal performance. Most CEOs may appear to have a degree of ‘super-power’ that enables them to work longer hours and be less affected by jetlag - or maybe they are just incredibly driven and good at covering it up? My point is that your CEO is leading your company and leading your travel programme from the front. Out there in the field doing what other business travellers do – representing the company, visiting clients, making sales, doing deals and managing the business. Corporate travel will be on their radar in 2020. Just like it’s been every year!
If you are responsible for managing your company travel, talk to your CEO. They probably have more views on the performance of the travel programme than most people realise. They will also be able to offer a unique perspective on the value of travel to your company. And, they will most definitely have a personal view on the corporate travel experience – because they are out there doing it more than most!
For more information on environmental impact, and collective action from the corporate travel community visit travel carbon project
9th November 2019 - Research conducted by Globalyse suggests that 95% of senior stakeholders, across the corporate travel community, recognise there is an issue with transparency in the distribution channel between travel suppliers and corporate clients.
This is important, because all major corporate clients, and most major travel suppliers (except low-cost /direct suppliers) - use this channel to buy and sell travel.
The metaphor; ‘an elephant in the room’ was used during the research, to test for awareness of an issue that everyone knows about but, is reluctant to acknowledge or discuss. The result confirms that an elephant exists - and is probably much larger than most people thought.
This does not mean that everyone is unhappy about the situation. However, the highlight is that a majority of stakeholders: 62% say they are unhappy about the level of clarity and openness of the channel. The level of dissatisfaction increases to 72% when asked of clients only.
Perhaps, more significantly: 73% of all stakeholders, see a direct correlation between transparency and trust - and believe there is a perceived issue with Honesty and Integrity in the corporate travel channel today. This figure increases to 81% when asked of clients only.
The survey was conducted during August and September 2019 as a 'straw poll' across an audience of senior corporate travel stakeholders. The profile of participants who took part is as follows:
Others/advisors etc. (27%)
These results would not have been possible without the support of everyone who has taken part in the survey. Very many thanks to you all.
As a representative sample, the response delivers a 90% level of accuracy when applied to a larger audience of 5000 people.
For a FREE copy of the full results email: firstname.lastname@example.org
To learn more about our survey looking at transparency in corporate travel please get in touch.
In January 2019, John wrote an original ‘guidepost’ in The Company Dime about the next generation TMC model. The article defined the previous two generations, identified where the market is today and discussed the challenges for the industry going forwards.
With thanks to The Company Dime for allowing the opportunity to publish a follow up to the original article, John shared the vision of a new model with the business travel community.
In addition to the publication, some interesting discussion has also been taking place on LinkeIn where some of the views and opinions may be viewed here
The article led to the question of transparency in the corporate travel channel and whether or not senior stakeholders (Clients / Suppliers / Intermediaries / Consultants etc) feel there is an issue that needs to be addressed