Domestic Air Travel Category Procurement Intelligence Report

Several macro changes in the dynamics of overall Business Travel as well as Domestic Air Travel procurement trends are poised to change the business practices and procurement thumb rules. In recent years, the market has witnessed a significant number of strategic collaborations, mergers, and acquisitions. Such developments have enabled the suppliers to expand their portfolio of offerings, geographic presence, and value chain. Moreover, suppliers have also gained access to new technologies and resources.

Consumer markets are underpinned with apps and websites that offer a very friendly experience for bookings and cancellations - an experience that has not yet crossed over to the corporate segments. As executives grow more accustomed to self-planning and self-booking in their personal lives, they expect similar convenience in their business lives as well. In the absence of right tools and technologies, a lot of friction can be generated between employees looking for convenience and travel departments looking to enforce rules and policies.

The availability of advanced technologies has prompted travel and event service suppliers to heavily invest in them to improve efficiencies and customer experience. However, most have learnt that technology alone is not a replacement for the human touch when it comes to customer service. As a result, suppliers are spending on both counts - technology and customer service staff. Till the time a formula for perfect balance between the two is discovered, buyers should expect to bear some of this increased OPEX of suppliers.

Category managers need to take note of the potential of these developments and reassess the changes required in their procurement practices.

Sometimes, procurement functions are unable to timely alter their practices while responding to market conditions. Industry experts acknowledge that periodically reviewing procurement best practices and adopting learnings from across procurement categories can help procurement teams respond to market needs in a more agile way. This report combines our experience of other categories with Domestic Air Travel procurement insights and hand picks best practices that can work for category managers delving in this market.

For example, Category buyers should invite bids from all potential service providers that have the ability to meet the overall requirements. Bids must be evaluated based on pre-defined parameters such as financial strength, reputation, service offerings, geographical presence, and track record. Buyers can use standard scorecards to evaluate service providers and provide necessary feedback to rationalize the given scores. This helps in the effective documentation of decision-making processes.

Buyers prefer to engage with service providers that provide one-stop solutions such as multi-modal travel bookings, accommodation assistance, events listings, ticketing and event promotions.

Buyers should incentivize employees that select cost-effective options by providing them with rewards at the end of the year based on the total cost-savings earned. Incentives can be in the form of free upgrades on airlines, hotels, and car rentals.

Domestic Air Travel procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for Domestic Air Travel procurement. Some examples include: