24 Tips to Optimize Airfare Spend and Lower Travel Costs

There’s a commonly held belief that the cost of airfare continues to rise every year and the cost of last-minute travel follows suit. With soaring jet fuel prices, a high demand to return to travel, and pilot shortages all coinciding to drive up airfares, according to Forbes, there’s more to the cost of travel than meets the eye.

To understand the true cost of travel, you must first crunch the numbers to learn how they affect your planning and bottom line. Fortunately, we’ve got the data and have done some of the analysis for you. Check out these 24 tips to optimize airfare spending and lower travel costs.

Ancillary Fees – The True Cost of Air Travel

While the total amount spent on airfare has decreased significantly, travel is starting to come back, and with it, the price per ticket. In 2020, the inflation rate for airline fares plummeted, and as of now, it’s climbed back up into the positive range, rising far above previous years’ inflation rates dating as far back to 1980, according the U.S. Bureau of Labor Statistics. Something else worth noting, fees continue to increase.

Are airfare prices going up?

Why do airfares seem so much higher these days? It’s simple: Airlines have been out of business and are trying to make up for lost time by charging incremental fees for services like extra leg room, checked luggage, and onboard sales of food and beverages. These fees cover things like personal protective equipment, additional luggage, or cabin sanitization recommended by the Traveler and Meeting Standards committee to standardize a way that ensures traveler safety. This ancillary airline revenue amounts to big bucks.

With billions of dollars coming from ancillary fees, it has never been more important for managers to track these costs as part of the price of the overall flight. By creating policies and tracking employee spending, it is possible to avoid surprise charges and have a much clearer picture of travel spending.

TIP #1: We recommend creating a report that tracks these top ancillary fees:

Top Ancillary Fees to Track

1. Baggage charges
2. Seat selection
3. Changes and cancellations
4. Booking changes
5. Travel insurance
6. In-flight entertainment
7. Food and beverage/ meal services

Prepare for the Return of Travel

• TIP #2: Factor in the price of ancillary fees: When considering travel options, travelers need to factor in the price of ancillary fees when booking. Fees to check bags, upgrade a seat and board early, or additional cleaning methods may add up to the price of a first-class ticket on some airlines.
• TIP #3: Seize the opportunity to revisit contracts: Travel managers should seize the opportunity to revisit primary and secondary contracts as prices fluctuate due to macroeconomic factors. Airlines are likely to discount fares but still may include fees for additional cleaning and safety services.
• TIP #4: More volume, more leverage: The more volume your company gives an airline, the more leverage you’ll have when negotiating rates, including ancillary and change fees.

Set Clear Booking Expectations in Your Travel Policy

1. TIP #5: Enforce a travel policy that encourages employees to book at least eight days prior to departure.
2. TIP #6: Booking a one-way ticket based on a known departure or arrival date can help optimize last minute travel costs. For example, in markets where lower one-way fares are an option and only the return date is unclear, it makes sense for the traveler to at least book outbound travel to lock in savings and book the return flight at a premium later.
3. TIP #7: If there is a good chance plans will change, a traveler should consider booking refundable tickets, even on a non-preferred carrier. That way, the traveler will have the ability to cancel and eliminate change fees if a more desirable fare is found later.
4. TIP #8: Reward employees for consistently booking within policy and avoiding booking at the last minute.

Manage Employee Booking Behavior

Even though we live in a completely connected society, advances in technology haven’t helped us become much better planners when it comes to business travel. In fact, planning horizons have remained relatively stable over the past few years.

BOOKING BEHAVIOR OF BUSINESS TRAVELERS [2019 – 2021]

Why is planning travel important?

To nail the best planning window. The data indicates that planning windows aren’t getting any wider, which makes sense considering a fluctuating economy and the need to use last-minute resources to close big sales, win new customers, or address urgent issues in person.

• TIP #9: Our customers here at SAP Concur find that optimizing airfare costs involves using proactive methods to manage booking spend, such as moving a percentage of tickets from the 2 to 6-day window to the 14 to 20-day window, which helps save substantial costs.

Cost premium: Last-minute or just in time?

Last-minute travel is one of those inevitabilities of life. We’d all love to plan our trips far in advance, but sometimes it’s just not possible. So, if we accept that booking at the last minute is going to happen, we can begin to understand the impact of timing on the premiums paid and how to make the most of a less-than-ideal situation.

• TIP #10: We define “premium” as the incremental amount paid over and above the average price paid for a ticket purchased more than 14-days in advance.

The best planning windows

We all lead busy lives, and as time goes by, technology and business just keep moving faster. This means our window for planning keeps getting shorter and shorter.

• TIP #11: If a business traveler has the luxury of advance notice, the best bet is to book at least 14 days in advance of departure and, if that’s not possible, at least 8 days out.
• TIP #12: Booking travel within a week or less incurs a considerably higher premium, but there’s a plus side. If a traveler must book less than a week in advance, the cost savings will be negligible whether the flight is purchased six days, three days, or one day before the flight.

Every Season Has Its Price

Timing is everything. How many days you book trips in advance is a big factor in the overall price of a ticket, but so is the time of year. We know there are certain times of year, like summer and winter holidays, when airfares are almost always higher. But what’s interesting is that the premium paid for last-minute travel during these times is relatively low compared to the overall cost of the flight.

 Consider these tips for seasonal travel:

• TIP #13: When travel is flexible, travelers should opt not to travel during summer months with peak fares, especially if travel costs make up a large portion of your overall budget.
• TIP #14: If employees must travel at the last minute during peak summer months, they will spend less of a premium to travel last minute, which may make it easier to justify the cost.
• TIP #15: When booking large events, consider doing so during off-peak months or in alternative locations.

You Can Still Save, Even at the Last Minute

Booking last-minute travel is just one of those inevitabilities of the modern business landscape. Regardless of whether last-minute travel is the result of true need or poor planning, there are ways to keep costs down and improve efficiency within your organization. Here are some ways to get started:

• TIP #16: Provide rewards for smart travel booking
• TIP #17: Offer ongoing education regarding the best practices for booking
• TIP #18: Establish and enforce travel policies
• TIP #19: Negotiate optimal rates with frequently used airlines and partners
• TIP #20: Use travel booking tools
• TIP #22: Configure settings within your travel booking tool to notify travel managers when employees are booking within a seven-day window
• TIP #23: Use data to identify behavior and target the areas that will provide the most financial impact
• TIP #24: Use mobile apps and self-service check-in kiosks to cut down on travel times

Planning the Next Travel Era

We’re interested in seeing how the airline industry continues to change and adapts to trends in the future. With additional fees becoming commonplace, airline apps becoming more and more sophisticated, and gas prices continuing to fluctuate, the only constant we can count on is change. Use these resources for more information on the next era of business travel:

• Learn more in this whitepaper where industry experts from Acquis, EY, and Huron share their best practices for corporate travel today and beyond.
• Listen to this podcast, join the evolving conversation of corporate travel, traveler behavior, and what it all means for the next generations.
• Watch this video to see how Concur Travel works.
• Use these four tips to re-establish travel at your own organization.