The Airline Ancillary Fees Hype and Concur’s Solution

One of the hottest topics in corporate travel right now is undoubtedly airline ancillary fees. This topic is creating quite a stir and Concur’s doing something about it.

According to a forecast issued by the International Air Transport Association (IATA), the airline industry will take in $58 billion in ancillary fees in 2010. Those fees may include—but are not limited to—the charges for airport club access, checked baggage, seat assignments, extra leg room, on-board meals, entertainment and Internet access; even blankets and pillows that airlines have unbundled from their ticket prices in an effort to find new sources of revenue for an ailing air travel industry. The effort is working: airlines in the U.S. are set to earn $4 billion in baggage fees alone in 2010.

While travelers are forced to purchase these basic flight needs for an additional fee, there’s no consistency in the way in which these fees are documented. Organizations are left in the dark about what these fees represent; only learning during the expense reporting process that an extra charge was made, outside of the airline ticket. With the increase in ancillary fees, how do organizations know what each fee represents and if the charge is within corporate policy? Let alone, how does a travel manager budget and report on these fees?

Concur has invested the time and resources to try and help our clients better manage this new area of spend. In fact, so far, we’re the only technology provider that’s now offering a solution that helps companies automatically identify, differentiate and report on ancillary fees. After all, organizations want to know where budget is spent and need the ability to discern the differences between upgrades, on-board meals, baggage fees, etc. based on what we’re seeing from our clients, on average, more than two percent of the airline fees we process represent ancillary fees, which for some organizations can add up to millions of dollars.

Now, thanks to these innovations, when an expense report is filed with Concur Travel & Expense, ancillary fees are automatically defined – it’s an easy step for travelers that provides a great deal of insight around travel data to organizations. In fact, organizations have the ability to define audit rules that govern airline fees, so travelers always stay in compliance and within policy. As an example, some organizations may set-up audit rules that allow for the reimbursement of baggage fees, but not airline club fees, while others may choose to allow for the reimbursement for on-board meals, but not seat upgrades. Now, organizations have both control and visibility into how travelers are reimbursed for ancillary fees. This increased visibility into airline spend also greatly improves the organization's leverage for airline contract negotiations.

With this new functionality from Concur, ancillary fees are automatically identified with their own expense type category. Travelers are simply asked during the expense reporting process to select what specific types of ancillary fees they incurred – from a seat upgrade, to an on-board meal, to baggage fees, etc. The good news for travelers and their organizations is that as more specific data becomes available, Concur’s solutions are already configured to take advantage of this more granular information and will be able to pre-populate these ancillary fees directly into the expense report for the traveler.

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