ACTE site suggests ways to combat caps

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ALEXANDRIA, Va. -- Companies hurt by the international commission caps should try to renegotiate existing airline agreements, move to establish triple net fare agreements and tighten travel policies that emphasize more economy class travel, a report issued by the Association of Corporate Travel Executives said.

ACTE recommended the moves in a new on-line guide to the international caps. The guide provides members with a soup-to-nuts primer on how to survive in an increasingly commissionless world.

The password-protected site, called the International Commission Cap: A Comprehensive Guide to Managing the Change, gives members background on the caps, a step-by-step action plan, spreadsheets to help members calculate the impact of the caps and a question-and-answer area.

The report also provides a comprehensive background and overview on airline commission policies and suggests alternative strategies for travel managers to consider. Suggestions include:

  • Employing "best practices" that will help lower the cost of processing travel arrangements and maximize a company's leverage. These include consolidating travel with as few agencies as possible, preferably one; consolidating to a single corporate charge card to gather comprehensive expense data; establishing preferred suppliers for air, hotel and car, and providing alternatives for booking travel, such as the phone, e-mail and self-booking.
  • Renegotiating deals with existing carriers or driving business to carriers that have not matched the caps.
  • Booking more tickets in economy class and negotiating upgrades from the preferred airline.
  • Assessing triple net fares, in which commissions and overrides are deducted from published rates to get a discounted air fare.
  • Negotiating "unbundled" fees with agencies. These fees would be stripped down for self-booking or e-tickets as opposed to a paper ticket booked through a live agent.
  • ACTE president Earl Foster said the site, developed by South Elgin, Ill.-based consultant R.D. Brown Co., is part of a growing effort to educate members through the Internet.

    "This whole thing on the commission caps is something lots of travel managers have been sticking their heads in the sand about," said Foster. "When we go out and do hot topic tours, the same information doesn't get to everybody."

    R.D. Brown president Ralph Brown said the site will help companies understand how the caps impact their bottom line.

    "[Its] purpose is as an information source," he said. "If there are people who didn't quite understand the ramifications of the commission caps, this will help them."

    ACTE last year announced plans to develop more interactive educational programs for members. There have been concerns that ACTE's membership is growing so fast that it can't adequately educate members: ACTE's membership grew from about 1,800 members in 1997 to about 2,300 members now.

    Foster said many travel managers were still on management-fee or revenue-sharing arrangements with their agencies when the international caps were announced.

    "[Travel managers] always had that check coming in the door," he said. "There was a comfort level."

    Foster said travel managers need to realize that commissions are going to disappear, and companies will need to start writing checks to their agencies. Brown is organizing forums for New York, Los Angeles, Atlanta and Chicago.

    The sessions are scheduled for February and March.

    The site can be reached at www.acte.org and clicking on the International Commission Cap hot link.

    The ACTE member's username and password must be entered to access the site.

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