Enhanced travel policy review is key to improved bottom lines(1)

BEIJING – Despite some positive early signs in the economy, businesses continue to review their travel policies to identify further means to reduce costs. According to American Express Business Travel (Amex BT), the majority of companies throughout the Asia Pacific have made formal or informal changes to their travel policies in the last nine months, with this trend continuing as businesses try to recoup further savings and improve their bottom lines. “Many businesses have put in place formal policy changes that mandate areas of travel such as increased levels of approvals before bookings and more robust economy class policies,” Jonas Borglin, head of advisory services, for Amex BT, Japan, Asia Pacific and Australia, said. “Whatever the approach taken, since the downturn, companies across all industries have changed the way they conduct their corporate travel and this trend continues today,” he added. With businesses being more prudent with their travel spend, data from Amex BT said airlines have responded by continuing to reassess their pricing strategies to continue to attract corporate passengers. According to the second quarter results of the American Express Business Travel Monitor, the published fares for China were down 1% quarter-over-quarter and three percent year-over-year. Business Discount airfares experienced a dramatic drop, falling by 22 percent quarter-over-quarter and 25 percent year-over-year. “These results indicate that airlines are particularly mindful that prices need to be lowered if they are to fill seats. Airlines have responded by making it easier for travellers to access lower fares by implementing more frequent promotional rates and making a wider range of cheaper seats available,” Borglin said. “The popularity of low cost carriers and their expanding presence in the region has also helped to keep airfares low.” Borglin, however, cautioned that airlines might not be able to sustain their current position. “Adjusting pricing strategies has meant that many airlines, including major carries, have lost money. This is forcing many to cut routes, decrease flights and reduce carrier inventory. As a result, we may see prices lift shortly.” To meet the rising pressure from businesses to drive travel savings, Amex has an established global Advisory Services practice to help companies around the world make distinctive, substantial and sustainable improvements in managing their travel policies. Advisory Services enables businesses to optimise their investment in air, car, hotel and meetings spend. It offers companies demand management strategies, assistance with adjusting travel policies to make the guidelines more specific and helps them implement tighter controls and compliance to preferred suppliers. This year, Amex BT is introducing its Five Steps principles for achieving best-in-class travel and expense management. The steps - are designed to allow clients gain deeper insight into their programs, derive more value from their travel investments by enacting smarter measures and empower decision-makers to adapt more readily to a rapidly changing business landscape. Borglin concludes, “Companies that leverage this opportunity to implement strategic travel policies will find themselves well positioned to weather the economic storm.”

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