The Biggest Challenge to Corporate Travel’s Recovery in 2021
In March 2020, the global pandemic forced nearly all businesses and industries to come to a grinding halt. The corporate travel sector was one of the more heavily affected industries as even in 2021, many trade fairs have opted to cancel, postpone, or digitize their international events.
Indeed, in the UK, travel agents and tour operators have fared the worst among many other sectors in terms of being fifty percent below what they were in February 2020, according to the Office for National Statistics. Please toward the state for aid specific to different sectors were ignored.
In addition, the pandemic exposed a delicate but brittle payment system whose flow is situated between airlines and customers. In the middle sit corporate travel agencies. As the sector continues to struggle to operate, it may be time to find new ways of surviving.
The trouble can be traced back to March 2020, when airlines were ordered to cease operations in compliance with many lockdowns. Naturally, potential passengers asked for refunds—but these failed to materialize. In effect, travel agency partners were not refunded as well. It seems that the International Air Transport Association will have much to answer for.
According to the UK’s Business Travel Association CEO, “This is in contravention of IATA ruling 824r. These airlines are instead offering vouchers which prevent the BTA’s member travel management companies from refunding their corporate traveler customers.”
The result was enormous cash flow issues. The issues were only exacerbated for those agencies that paid upfront for client travel. Some are of the opinion that even this business practice must change, and the evidence seems to agree with them.
Slowly but surely, the refunds are being processed. But this is just another piece of straw in the airline industry’s haystack of problems. In addition to being accused of being woefully out of touch with the reality of the environment and preparing to face down threats of being sued, the refund issue will have to deal with at a later date by the International Air Transport Association.
The practice of the transaction fee was yet another major issue that became glaringly obvious to the public. Most corporate travel agencies charge a set amount per booking, which is not a point of complaint for corporate clients. Findings of procurement teams indicate that this solves problems regarding budgeting—allocating costs to various departments. Hidden within the fee are all the other services that agencies provide, like admin work, traveler tracking, and policy advice.
The halting of business trips, however, meant a halt for the revenue of corporate travel agencies as well. Worsening the situation was the fact that when they were given financial compensation, many travel agencies could not temporarily let go of their workers. Simply put, staff was needed to process huge amounts of credit vouchers and reclaim their cuts from airline refunds.
As stated before, it seems that 2021 will be the year to find a new payment model, though this comes with a monumental change in mindset and business approach. For example, agencies shouldn’t be afraid of charging the proper amount for their expertise. Even industry titans like Microsoft can embrace new ways of working that support industry partners better. Elsewhere, other businesses are taking on the subscription model. Open booking policies may be the key to kicking out the practice of transaction fees altogether.
There needs to be an earnest discussion about how corporate travel agencies, which are at the mercy of many industry players, can create a more equitable flow of money. Talk of shifting gears from in-person meetings to videoconferencing was all well and good for 2020. But even with the advent of vaccines, new strains of coronavirus will arise. One and all are in this situation for the foreseeable future—it may be time to discuss shifting gears toward new, fairways of earning profits.