Low cost, high value

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The economic crunch saw travel managers finding new and inventive ways of cutting costs. One of these was increasing the use of low-cost carriers.

Now that the recession is officially over and the industry is slowly starting to show signs of recovery, will corporates go back to using legacy airlines, or will more and more switch to low-cost carriers (LCCs)?

“Corporates inSouth Africaare using LCCs, especially on short-haul flights both internationally and domestically, as the corporate travel policies have been amended to ensure maximum cost savings,” says Fathima Syed, Commercial Manager for South African Travel Centre.

She explains that not only will the use of LCCs bring savings on companies’ travel budget, but the growing number of LCC players in the marketplace provides the corporate customer with a choice of product to meet their needs. “Even prior to the recession, the mix of passengers using kulula had begun to change and we began seeing more business travellers on board, and now that the recession has almost forced businesses to venture into the low-cost space, I think they’re seeing that on some low-cost carriers there’s little compromise to be made,” says Heidi Brauer, Executive Manager: Group Marketing for kulula.

According to Rodney James, CEO of 1time, businesses are starting to shy away from ‘costly frequent flyer miles’, towards huge company travel cost savings by using LCCs. He says: “We have seen an increase in corporate travellers, especially by way of corporate travel agreements”. James says businesses are realising that the only extra service, apart from free airline food, is frequent flyer miles which, he adds “are being acquired at great extra cost”.

Mango’s Communication Manager, Hein Kaiser, says LCCs provide effective transportation between point A and B. “LCCs deliver efficiency sans the frills with the benefit of sustained affordable pricing,” adds Kaiser. While LCCs offer corporate rates and agreements, and do compete aggressively for corporate travel, Jim Weighell, Sure Travel’s Corporate Manager, says the assumption that LCCs offer lower fares in all instances in incorrect.

“The corporate travel management systems that Sure Corporate employs regularly shows that legacy full service carriers are price competitive,” says Weighell. He explains that LCC frequency schedules are often not as comprehensive as those of the major network carriers. “Any airfare benefit may be negated by trip timing issues. This can translate into additional cost on the ground,” he adds.

Another challenge LCCs pose, according to Weighell, is capturing LCC sales data for management information for corporates not using a TMC, or TMC supplied travel management system. HRG Rennies Travel, managing director, Kathy Harris, says the number of corporate travellers using LCCs is definitely increasing, but that it depends on the nature of their travel. “There are some corporate travellers who change their plans and this needs to be factored into the overall value to the client,” she adds.

What SA’s low cost carriers offer:

1time:

Depending on whether the corporate meets the minimum spend, 1time offers negotiated pricing, flexibility with change of bookings, changes of name, and recognition at check in for extra baggage.

Currently flying to:

Johannesburg

Cape Town

Durban

Port Elizabeth

East London

George

Livingstone

Zanzibar

Future plans:

1time will be operating five flights a week toMaputoin the next few weeks.

kulula

For larger corporates, kulula offers a service called BIZDEALS which gives corporates access to special fares, some flexibility on admin changes, no advance booking restrictions, and allows for cancellation at a small charge. The airline also offers flights from Lanseria, which is especially convenient for business travellers.

Currently flying to:

Johannesburg(OR Tambo and Lanseria)

George

Port Elizabeth

Cape Town

Durban

Future plans:

Comair was recently awarded rights to fly to Walvis Bay andDar es Salaamand may choose to fly the kulula brand on these routes.

 

Mango

Mango offers two business products, Mango Plus and Mango Flex. Both provide route flexibility without penalties, but Mango Plus includes access to BidAir Premier Lounges, 10kg additional check-in luggage, onboard refreshments to the value of R40, and 10% discount on parking at Executive Carport. All Mango passengers can pre-seat themselves online and use self-service check-in at all airports. There is also a dedicated corporate service desk available.

Currently flying to:

Johannesburg

Cape Town

Durban

Bloemfontein

Future plans:

The airline is investigating several growth opportunities.

 Chana Viljoen