How Costly are Last-Minute Travel Purchases?
Road warriors travel to sustain client relationships, acquire new business and respond to the needs of their organization. In a perfect world, a road warrior’s schedule would be predictable, organized and booked well ahead of time. But things don’t always go according to plan, and urgent business needs will always arise — often resulting in last-minute trips to meet a client, pitch a proposal, or seize an unexpected opportunity.
Because of the often-unpredictable nature of business travel, it can be difficult for travel program managers to distinguish whether a last-minute booking represents a truly urgent business need, or if it’s the result of traveler procrastination. However, new analysis from ARC and Egencia shows that organizations experience significant cost savings — sometimes exceeding 60 percent — when air travel is purchased at least 22 days in advance.
Cost Savings for Advance Purchase
ARC and Egencia data shows that, as the date of departure approaches, the average cost of an airline ticket increases significantly. Although ARC data shows that most airline tickets bought in the U.S. are purchased at least 22 days in advance, only 29 percent of corporate travel tickets are purchased at least 22 days ahead.
The price of an average U.S. domestic economy ticket spikes 61 percent between 22 days’ and three days’ advance purchase — from $454 to $733 — representing an extra cost of $279 if that ticket is booked three days before takeoff. For U.S. domestic premium flights, that price jumps 37 percent, with a total cost of $1,703 for a ticket that cost just $1,260 19 days earlier.
An even more significant cost increase occurs for premium long-haul flights from the U.S. to Asia. Booked 22 days in advance, the average ticket is $6,494, but booking three days prior to departure increases the cost to $7,450. While only a 15 percent increase in price, the extra cost incurred totals $956.
Advance Purchase Savings: U.S. Corporate Agencies
ARC Transaction data show that booking in advance can mean significant savings.
Does it make sense to take a harder line on advance purchase?
The Value of an Advance Purchase Policy
How can travel program managers shift employee behavior to maximize cost savings? Create an advance purchase policy — and if you already have one, ensure that employees have accountability.
According to Egencia data, if a company has an advance purchase policy in place, the likelihood of travelers booking early increases: With an advance purchase policy, travelers are 15% less likely to book less than seven days in advance for domestic tickets — and for international travel, the likelihood is nearly 20 percent lower.
Education and accountability are key to ensuring compliance, but an advance purchase policy doesn’t have to be severe. You can increase compliance by maintaining clear communication with employees who have booked a last-minute flight. These conversations may lead to further insights or context to inform your travel policy.
In the video below, hear from ARC’s managing director of data science and research, Chuck Thackston, and Egencia’s vice president of global transport supply, Tristan Smith, about how valuable this data can be for travel management companies and corporate travel programs.
For more on this analysis and the cost savings of advance travel, read this article by Egencia’s vice president of global transport supply, Tristan Smith.