The global Covid-19 virus outbreak demands a rapid but careful response from company travel programmes. Urgent challenges include balancing employee safety with business continuity, handle cancellations and rebookings without taking a major financial hit, and recalibrating supplier relationships.
Coronavirus is having the most dramatic impact on business travel since the 9/11 terror attacks in 2001. In China, where the virus originated, airlines cancelled more than 60 per cent of their flights between late January and late February, while international carriers have suspended nearly all services to the country.
As coronavirus has spread, so have travel cutbacks throughout the world. A survey of 1,095 buyer members of the Global Business Travel Association released on 10 March found that their companies had cancelled an average 43 per cent of business trips for March 2020. Airlines are slashing their schedules in response. Lufthansa, for example, is cutting flights by up to 50 per cent.
The crisis raises four crucial questions for people who manage travel for their business:
Should we travel?
“Business-critical” or business continuity?
Generally, decisions on whether to suspend business travel are being taken right at the top of organisations. Many companies, even including the aircraft manufacturer Boeing, have opted to allow only “business-critical” or “business-essential” travel. Others continue to allow domestic trips but have halted international ones.
Yet governments are not advising their citizens to all avoid travel, or even all foreign travel. Instead, they are generally only advising against non-essential travel to China, Italy and some other destinations.
Therefore, by indiscriminately banning non-critical travel, many companies are acting much more cautiously than their governments. The wish to protect employees is understandable, but switching off travel could affect business continuity farther ahead, for example by slowing sales or research & development pipelines.
If you do reduce travel, make it work
According to GBTA, 55 per cent of its members have instituted new trip approval procedures. That’s an important step to ensure employees can only book journeys which comply with revised policy.
Make sure your travel management company and online booking tool can follow these rules. For example, if your company doesn’t want anyone to travel to Italy, can all flights to Italy be blocked on your booking tool?
Work with other departments to ensure employees have access to alternatives to travel. Do you have the capacity and supplier agreements to handle a sharp increase in virtual conferencing? Do you have the networks and security to enable extensive home working?
Do we have robust risk management procedures?
This is the time when good travel crisis management planning will be paying off. Have you maintained up-to-date contact details for travellers and their families? Does your business have established relationships with travel risk and medical assistance companies? You may need their services at short notice to bring home employees who have contracted coronavirus or assist those who have been quarantined and can’t get home.
What are the financial consequences of postponing or cancelling travel?
Check insurance details
This is an important moment to understand the detail of your company’s insurance policies – not only for cancelled trips but for other contingencies like assisting quarantined travellers. Some of the most important language in the policy will be its clauses governing cover in the event of public health emergencies.
Beware also that insurance companies are unlikely to compensate changes and cancellations for “foreseen events”, and will argue that coronavirus has been a foreseen event for travel booked since late January. Insurance policies are also unlikely to cover cancellations caused by company travel bans unless the planned trip was to a destination where the official government advice is not to travel.
Check too whether your company is covered for schedule airline failures. Flybe, Europe’s largest regional carrier, has already ceased operations, and several more are reported to be on the brink of collapse. Urge travellers to exercise caution about which carriers they book. Remind travellers as well that bookings on a collapsed carrier paid with a credit card will be refunded by the issuer, but bookings paid with a debit card will not.
Check supplier terms and conditions
Many airlines have waived or reduced their change fees but there could be a fare differential to pay if you rebook on a more expensive flight than the one you originally booked. You may be able to negotiate additional customised change or cancellation allowances with preferred vendors at this challenging time.
Understanding cancellation schedules is particularly important for conferences and other meetings, which are substantial investments both for you as the customer and for the venues you use. Check your cancellation schedules for all impending meetings. If you are facing substantial penalties, try to negotiate a reduction because of the exceptional circumstances. Consider what you can offer in return, such as committing to return to the venue at a later date.
Consider buying refundable air tickets
Refundable tickets are more expensive, so in normal times some companies find it cheaper overall to buy only non-refundable tickets and assume a few will be wasted when plans change. However, in the present volatile situation, when a higher proportion of non-refundable tickets are likely to go unused, it may make sense to switch to refundable tickets.
What will be the impact on buying strategy?
Revisit preferred supplier agreements
GBTA expects coronavirus to lose the global business travel industry $820 billion of revenue in 2020. With supply expected to exceed demand for the foreseeable future, especially on the more elastic leisure side, suppliers will be anxious to lock in additional guaranteed business from corporate customers. Therefore, it might be worth negotiating longer-term agreements than usual: 24 months instead of 12 months, for example.
The sudden drop in travel means some corporate clients will struggle to meet their targets for deals with suppliers based on volume. In these cases, talk to your supplier about switching to market-share targets instead.
Weigh corporate discounts versus market prices
The current marketplace is likely to feature many tactical promotions that offer even lower prices than your travellers can book through a good corporate deal. Try persuading your preferred suppliers to recognise the contribution towards volume or market-share deal commitments when your travellers book any of these publicly offered prices with them instead of an official corporate fare or rate.
The TravelpoolEurope perspective – Keep calm and carry on
This is a time for careful, flexible management of company travel programmes. In a fast-changing environment, high-level duty of care towards travellers is going to depend on strong partnerships between internal departments and also with trusted partners such as travel risk and medical assistance providers.
Stay flexible too to minimise the financial impact of business travel over the coming months, including managing cancellation penalties. Cashflow is going to be a critical issue for all businesses, so the more you can do to prevent money being wasted, the more you can help your company through the crisis.