The ACTE Column: Supply and demand

Has the trend for transparency in the industry pushed up prices?

Whilst we can't make a comparison between commodity trading and stripping out pricing, we can ask whether the corporate travel buyer's quest for pricing transparency has unwittingly pushed up prices. Some may say unbundled pricing has made it easier to sell the policies to manage the complex business of corporate travel to internal stakeholders. The cynical might suggest it has simply made things more expensive.

Air passenger duty (APD) rose by a hefty 55 per cent at the end of 2010. Corporate travel buyers may ignore APD as a nonnegotiable element of the cost of travel but, with such significant amounts involved, should the corporate buyer community be so passive about it? APD was initially introduced as a 'green tax' on the basis it would discourage people from flying and cut carbon emissions. It has become a cash cow for two governments, with annual revenues set to rise from £2.3 billion to £3.8bn by 2015. If travel is made less affordable and less accessible for some, however, it will inevitably push the cost up for those who have to travel to do business.

As governments should be called upon to intervene in stabilising food pricing, so they should understand the importance of stable pricing in the global corporate travel community. Business travel itself is, after all, a barometer of the global economy.

Whatever the case, pricing is set to rise as demand surpasses supply. Buyers need to understand how they will sell cost increases after a severe budget, following on from the recession, forced many to cut their company travel spend by an average of 40 per cent. It will be a hard sell in the boardroom.

With mobile technology helping travellers take control, the corporate travel buyer may have to start to justify their role in their organisations. It's not enough to believe you make a difference - you have to be able measure, prove and communicate it.

The global ACTE community can help by sharing trends and information and providing a place for peers to learn from each other to keep on top of their game.

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