InformationWeek

In the fiercely competitive business-to-business travel market, online purchasing is taking root. Corporate online booking systems such as Sabre BTS, Internet upstart GetThere.com, Oracle E-Travel, and ResAssist connect a computer reservation system to a traveler-friendly graphical interface so business travelers can book their own tickets-but only in accordance with corporate travel policies and preferred supplier arrangements.

While federal regulations mandate that the reservation system on a travel agent's desk must be unbiased and show all flights, corporate systems can be set to highlight the company's preferred airline, hotel, and car-rental suppliers, or to offer only those alternatives. They also can be set to warn travelers when their bookings don't conform to policy guidelines-such as when they request a first-class ticket when they're supposed to fly coach-or to E-mail out-of-policy requests to supervisors or to the corporate travel purchasing manager. GetThere.com and Oracle E-Travel also are building business-to-business travel marketplaces that will feature direct extranet links to the airlines and direct reporting of travel spending data.

Dell Computer now books 20% of its travel online through Sabre BTS, and expects to double that by year's end, says senior manager of global travel Julie Thomte Rabern. Under a new contract, Dell's corporate travel agency, Maritz Travel, cuts 40% off the traditional transaction fee of about $40 per ticket for totally "frictionless" reservations-those booked online and involving no phone time with a live agent-so Dell saves $16 a ticket.

AlliedSignal Inc. has been even more aggressive. The company, which recently merged with Honeywell International, has "moved internally toward an E-commerce culture, and we used travel purchasing as a way to learn some things about E-commerce," says travel reporting manager Patrick O'Halleran. "We're not a firm where everybody's under 30; we've got a lot of stodgy engineers who aren't traditional users of online technology, and the travel project helped put them in an E-business mindset."

Travel purchasing at AlliedSignal has moved from a state of mind to state-of-the-art. Less than six months after rolling out the Sabre BTS system to its travelers' desktops, the AlliedSignal side of the house is booking half of the 60,000 tickets it buys a year online, and will soon double that number as the Honeywell travelers join the program. The goal is to move 70% of the company's $110 million annual air volume online by December.

Automating travel purchasing already has paid for itself, in savings on agency fees and on the cost of an average ticket, which has fallen about 5% for an unexpected E-business bonus of $5 million. O'Halleran credits these savings to travelers who, when presented with a menu showing more options than the travel agency usually offers over the phone, choose cheaper flights on their own.

Even without the lower ticket prices, "over the two-year life of the online travel purchasing project, I identified projected savings of $4 million minimum, and that was without the Honeywell volume," O'Halleran says.

Ford Motor Co., which is busy building a huge auto industry marketplace, is also looking to cut travel costs. Ford spent $122 million on airline tickets and $350 million on travel and entertainment last year, according to Business Travel News. Last month, the automaker began rolling out the GetThere.com system. "We're looking for something that will give us the option of booking all the carriers, whether it's in the CRS, online or through reverse-type auctions of distressed inventory, plus the airline fares that aren't available through the CRS," says director of global travel and events Robert Magnum. "Our commitment is to a 40% savings in transaction fees when we're up and running."

A final online competitor to the airlines may well be their own customer base, as buyers try to form purchasing marketplaces of their own. The largest, the Business Travel Coalition, includes 40 companies with about $1 billion in combined air volume that has been trying unsuccessfully to negotiate discounts since the mid-1990s. Hatched in 1993, a bad revenue year for the airlines, it was at first encouraged by American Airlines chairman Bob Crandall, says coalition chairman Kevin Mitchell. But as revenues rose, Mitchell says, "the airlines wouldn't play."

The coalition is about to take the buyer's marketplace model out for another spin. "Any time you put the customer in the driver's seat, you're going to have pressure on yield," Mitchell says. "The airlines are so loathe to give up perceived control over pricing that you've got to have $3 billion in volume. But they know it's coming, and that they have to be everywhere their customers are."

Mitchell envisions "a lead technology provider that shares our vision of direct connections with suppliers, and can execute on a global basis. In theory, I see Sabre being a very good fit." That might be a whole new E-business model for the CRS that American Airlines built.

return to page 1, 2, 3, 4