Realizing the benefits of an advance purchase policy in air travel

New Egencia and ARC data reveal advance air purchase policy insights.

by Tristan Smith, Vice President of Global Transport Supply

Have you ever been truly lost in the woods? It’s an experience where you could be a few feet from safety, but all you see are trees, trees, trees…  You can’t see the forest for the trees, as the old saying goes. If you’ve tried to discover the true value of an advance air travel booking policy, you may be able to relate. Like the road you just know is a few paces away, but you never seem to find, the true financial impact of advance booking can be hard to articulate.

We all instinctively know advance booking is cheaper, and you probably have some data in your own organization that shows this. But what is the true potential of buying in advance, and how do you take advantage of it to lower the total cost of your travel program? Today we have new insights in collaboration with The Airlines Reporting Corporation (ARC) that prove the link between advance purchase policy and corporate air booking behavior for the first time. Based on research covering US corporate travel advance purchase trends, we can show the actual value of an advance purchase policy for a corporation.

“Saving by planning travel farther out is not new news, but this study gives much deeper insight into the amount of savings that is available,” said Chuck Thackston, ARC managing director of data science and research. “This is vital information for travel managers trying to balance the needs of travelers with the need to get the most for their travel spend.”

Why advance air travel booking works

To understand why airlines offer a discount for advanced booking, know that an airplane is basically a cash-eating monster made of metal. There are huge fixed costs to get each and every plane in the sky. Flying with too many empty seats loses money. So, to reduce their uncertainty about empty seats in the future, the airline offers you an incentive to book ahead. You’re doing them a favor, basically, by reducing their risk of flying with empty seats. They return the favor with a discount.

The facts on booking air travel in advance

The Egencia Travel Policy Insights: Global Air Edition and the ARC data highlight just how much money a company can save if it implements an advance purchase policy for air travel. The information can also help travelers understand how to arrange travel and stay within policy. In some cases, waiting too long to book will result in fares so high the trip won’t even get approved.

Booking more than 22 days in advance is the most common type of advanced travel purchase in the United States. According to ARC, this time interval accounts for 29% of all advanced ticket purchases by corporate travelers. For international travel, the numbers are much higher. Business trips from the US to Asia experience a 48% rate of 22-day advance booking. For European travel from the US, the figure is 52%.

Advance travel booking savings can be significant. For domestic flights, a US economy ticket for corporate travel averages $454 with a 22-day advance. Travelers waiting until the three-day window will pay an average of $733—a 61% jump in price compared to a 22-day ticket.

Premium travel (i.e. first class and business class) presents an even more striking cost differential. For example, a 22-day advance purchase corporate ticket for US domestic premium airfare averages $1,260. The 0-3 day window raises the price to $1,703, a 37% increase over the 22-day fare. For premium travel from the US to Asia, a 22-day advance purchase corporate ticket averages $6,494. In contrast, the same ticket will cost $7,450 in the 0-to-3-day window. Overall, that’s 15% higher than the 22-day fare.

How to save with advance travel purchases

Saving money with advance purchases becomes easier when you have a policy for it and the tools to enforce this policy for all employees at the time of booking. Egencia data[1] shows that the probability of someone booking a US domestic flight within 7 days of the departure date of the trip is more than 15% lower if there is an advance purchase policy in place. For international travel, the likelihood is nearly 20% lower. We’ve written about the importance of having an air travel policy in general in previous articles. Businesses of all sizes can benefit from working with a Travel Management Company (TMC), putting an advance purchase policy in place, and using the right tools to enforce the policy at the time of booking.

We’ll get you out of the woods with a combination of data analytics tools and the technology to help you take advantage of the savings opportunities identified for every single booking. With the right toolset, you will be able to see the benefits of advanced booking in real time. You will also see the opposite, where your travelers may be overpaying by waiting until too late to book. We’re here to give you the tools to get these travelers back on track.

To learn more about global air policy insights, click here.

[1] Egencia data from domestic and international flights purchased on North American site between Jan. 2017 and June 2018.