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Travel 13th June 2019 - 5 min read

Flight disruptions and business travel

By Joni Lindes

You are waiting at the airport. As you glance at the departure board you see the red digits spell out a word – delayed. We can safely say that neither travel managers nor travellers are fond of it. Flights need to be rescheduled, meetings need to be pushed back, work piles up and the company’s money gets depleted on expensive last minute alternative arrangements. Flight disruptions have a price and we are only beginning to understand and acknowledge it in our data.

What are the airline’s responsibilities in the face of disruption?

Canada very recently legislated carriers into compensating passengers for flight disruptions that are within the airline’s control, just like the European Union currently does. Companies like Paxfour and many others have realised that, with disruption, a lot of money gets left on the table. They provide a service that will use this legislation to claim that money back.

In the face of disruption, getting the money back is not always guaranteed. Even progressive legislation like the European Union’s Flight Compensation Regulation 261/2004 and the new Canadian Transportation Agency’s Air Passenger Protection Regulations have some contentious issues. In Canada, there was a debate over whether airlines should be exempt from compensation for delays and cancellations due to mechanical malfunctions. Airhelp’s Chief Legal Officer Christian Nielson believed that airlines would exploit the cause. It still made its way into the legislation, defining mechanical malfunction as a malfunction that is not picked up during scheduled maintenance. In either jurisdiction, compensation is also not provided when disruption is due to poor weather conditions.

This leaves a lot of money on the table, and, even if the compensation goes through, the company itself is not refunded. In the EU, only the air passenger can apply and claim compensation, no matter who booked and paid for the ticket. The compensation is not defined as a refund and its purpose is to make up for the trouble caused to the passenger.

The price of flight disruptions

We all know flight disruptions have consequences. Productivity slows down, flight tickets go unrefunded and hours spent waiting in the airport add potential costs in overtime pay, additional meals and hotel bookings into the equation. Although the airlines are legally required to compensate for many of these expenses, travellers have to wait in long queues for hours – something a busy corporate employee may not want to do – especially if it’s not their money on the line. All this leads to a figure that we know is there but hasn’t become a price we can truly acknowledge.

In 2018, PredictX worked with Genentech’s US travel programme’s Senior Procurement Manager Daryl Keiper to calculate the price of disruption. We examined 18 months of data covering $150 million in air spend equaling to almost 142 000 tickets. 14% of these flights were disrupted.

The cost of these disrupted flights totalled more than $3 million, that is 5 to 6% of Genentech’s total air spend. This price included measured lost productivity, last minute hotel bookings, exchange fees applied even when waivers were available and unused plane tickets that did not get refunded.

The analysis was taken from a standard PredictX data analysis involving consolidated TMC, credit card and expense management data to provide a total trip cost. Flight operational data was then gathered from global aviation community news website Flightglobal to pinpoint the flight disruptions and link them to the associated spend.

What are the non-financial costs of disruption?

Flight delay compensation legislation recognises that, while there is a financial cost, a lot of the aggravation and negativity is experienced by waiting in the airport and the disruption to the day’s plans.

While the company does absorb the time cost of the traveller on the clock, the frustration and the poor experience is absorbed by the traveller alone. Programmes aiming to improve the traveller experience will find flight disruptions can cause damage to this objective.

What can we do about it?

Just as travellers sometimes feel out of control as they sit stranded at the airport, the unpredictable and uncontrollable nature of flight disruptions sometimes feels like something we can do little about.

Travel managers can start by gaining better data-driven insight on disruptions and the bills they rack up. Once we measure the cost, we can start looking at managing it. If a certain carrier is frequently disrupted on a particular route it may be a smarter policy decision to not give the carrier preference on that particular route. Keiper discovered during the analysis that the routes and carriers with the most disruption were not part of the company’s top routes. This insight may also come handy for scoring a better deal during sourcing negotiations with frequently disrupted carriers.

Daryl Keiper also recommended, in a BTN article, that we should look at the travellers most impacted by disruption and find a way to help. This proactive engagement will improve the profile of the travel team in the face of a seemingly uncontrollable situation.

New metrics for a new era

All these actions call for new data-driven insight.

First, travel managers need to rely on more than just TMC-only data so no disruption slips through the cracks. Next, flight operational data needs to be collected from airports and, perhaps,  airlines, to be used with standard spend data.

Some airlines have been proactively looking at a way to analyse disruption. A bit further back in 2018, Delta revealed new metrics analysing the rate of disruption. These included the ‘trip fulfilment factor’ that measures the likelihood of a traveller experiencing a disruption-free flight as well as the ‘trip on-time factor’ that measures the probability of a corporate traveller reaching their final destination at the planned time in the itinerary. This allows travellers to be able to pick the ticket with the least chance of disruption.

As the tools we use to measure data become more advanced, seemingly invisible and uncontrollable flight disruptions can become more manageable. It all starts with looking at the right data and incorporating it into the programme.

Joni Lindes
By Joni Lindes
5 min read

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