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October 1, 2013

More corporates flying LCCs

COMPANIES’ continued quest to keep travel costs down has resulted in a greater adoption of budget flights among business travellers. 
According to a Carlson Wagonlit Travel (CWT) report this year, LCCs will be used increasingly by business travellers in 2013, and 34 per cent of travel managers in Asia-Pacific intend to extend their programmes to budget airlines to optimise air transportation savings.
Nandan Bhatia, head of Britannia Industries India, said: “According to our company’s policy, we have to book (seats with) the lowest possible fare, so we have to look at LCCs.”
Bhatia, who currently arranges for incentive groups from India to Singapore, Hong Kong and Thailand, said popular LCCs include AirAsia and Tigerair. 
Sharing the same sentiment, Abhimanya Chettri, manager of Robert Bosch Engineering and Business Solutions India, said: “We have been using LCCs since they started because their prices can be 30 to 40 per cent lower (than full-service airlines).”
According to Chettri, he usually holds meetings and incentives in Hong Kong, Singapore and Malaysia for groups ranging from 30 to 300 delegates.
Fred Seow, vice president for marketing of Asiatravel, who has also been recommending LCCs to his clients, said: “Sometimes the total difference in fares can be quite significant and LCCs today also ply the same routes as legacy carriers, so customers have many choices. 
“Company meetings and incentives today are held by organisations of all sizes, types and budgets.”
As companies begin integrating LCCs into their programmes, the CWT report nonetheless highlighted some challenges. 
According to the report, companies need to take into account numerous factors, such as less frequent flight schedules, flights operating from secondary airports, as well as the costs and risks related to bookings outside of GDSs. 
Akbar A Shareef, managing director and chief executive of Rakaposhui Tours Pakistan who chooses only full-fledged airlines, cited seat availability as his reason for not using LCCs. 
Shareef said: “LCCs are driven by their own channels and are always popular with FITs. They don’t give group seats and they also operate smaller planes, so they fill up easily on their own.”

Sunil Shekhar Gupta, regional procurement manager of Freescale Semiconductor India, said: “LCCs are looked upon as a budget (alternative). Therefore, if we are flying our VIPs, we would rather not use them because it does not look good (on us).”
While LCCs are largely available only outside the GDS platforms, Robert Bosch’s Chettri said this is not an issue: “We will usually book directly with LCCs, and since we are buying in bulk with them, there are terms and conditions we can negotiate as well.”
A survey conducted by Abacus this year with the region’s corporate travel management companies has revealed similar findings, with almost three-quarters of the respondents seeing clients adopt budget airlines for more of their corporate travel in a bid to tighten corporate travel spend, mostly as a result of policies governing the choice of lowest fare (77 per cent), but also for alternative flight times (40 per cent) and data capture (40 per cent). 
To ease the booking process for clients, Abacus is currently working with LCCs to make all their fares available on its platform. 
More findings from the Abacus Corporate Travel Practices Survey will be presented at CTW Asia-Pacific on October 2.
In the mean time, AirAsia will be launching a travel programme for business travellers later this week, according to its spokesperson.


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