South Africa is in a technical recession, and businesses across the board are starting to feel the impact of an increasingly sluggish economy. In times like these, companies tend to scrutinize their costs to eliminate any wasteful expenditure. For many businesses, corporate air travel can be a big line-item in the expenses column and the question is bound to be asked as to whether your company is getting the best deal. Many corporates tend to favour the bigger full-service airlines for domestic travel, and now’s the time to take a closer look at those low-cost alternatives.
Set rate blindness
Full service carriers are often inclined to negotiate set rate agreements with corporates, which tend to close their eyes to alternative airlines. According to results published by Kiwi.com, the average price per 100 domestic flight kilometres in South Africa fell from US$9,94 (R126.89) in 2016 to US$6,71(R85.64) in 2017. A lot of this has to do with tough competition between the low-cost carriers who are fighting for market share and bringing fantastic fares to the market. Given this 32% decrease in the cost of air tickets, it’s quite likely that the set rate you have in place, could be blinding you to better deals in the open market.
A major perception out there is that low cost carriers tend to come with a number of hidden costs, but it’s worth doing the exercise to compare. More than a third of business travellers routinely change their return sectors, which means that change penalties can add up fast. Full-service carriers often argue that they price more flexibility into their fares, but low-cost carriers are coming to the party in this regard too. FlySafair, for example, offers a fare that allows for two penalty-free changes.
The basic full-service airline ticket tends to come with a number of perks including miles, a meal and free seat selection. These are generally charged for separately by the low-cost carriers but with full service tickets being up to 30% more expensive than low cost carriers, it’s hard to justify these built-in perks. A spacious front row seat on a kulula.com flight will cost R120 extra. Throw in walk-in access to a Bidvest Premier Lounge for R234, and you’ve built an experience that rivals any business class solution, saving thousands of rand in the process.
The travel market is constantly evolving and buyers need to keep on their toes to ensure that they’re securing the best deal. Translating the differences between flight offerings can require reading a lot of fine print but a few clever decisions can save a company thousands of rand. If your company tends to favour full-service carriers for domestic travel, do the math to present the low-cost alternative. You’re likely to like what you see.