June 22, 2021

Under control

The complexity of fares and inconsistent product makes managing rail travel spend a challenge, writes Gill Upton, but that needn’t stop you getting it under control

Unsexy’, ‘unglamorous’, ‘less opportunity’, and ‘too complex’ typify the comments on managing rail travel spend. Travel managers quite rightly focus their time on the big-spend items of air and hotel where cost savings are more easily achieved.
Rail is a less competitive sector with less creative savings opportunities which largely involve getting to grips with the more complex area of culture and behaviour change, which is a much more resource-heavy undertaking.

“It takes hours of effort so it falls down the pecking order,” says Raj Sachdave of Black Box Partnerships. Nonetheless, he says that companies can achieve 30% savings with very little effort.

TMCs have not helped as, historically, it’s not been an area of interest for them. The more lucrative 11% commission from a hotel booking compared with just 3% from a rail booking explains much of the indifference.

Defending TMCs is Johan Persson, Director of Account Management UK & Ireland at American Express GBT, who blames the complexity of the rail industry. “The industry has made it harder for clients and TMCs to work with rail than with other modes, in a number of key ways,” he says.

“Rail sells non-standardised products, in the UK and elsewhere in Europe. There’s not much market insight into the business traveller when it comes to booking. There’s a lack of consistency in rail, which makes it difficult to manage. And supply chain leverage is non-existent, because there’s little competition.“

Certainly, the 55 million fares in the system don’t help as it creates a minefield for anyone trying to buy smart. “We’re dealing with old systems that dictate how fares can be applied so there is limited space for creativity,” says Marina Grave of the Rail Delivery Group.

But change is in the air from the increasing focus on sustainability and traveller wellbeing, forcing corporates to look closely at potential modal shifts from planes and cars to rail, switching to rail for Manchester to Glasgow for example. One corporate is known to have mandated European rail travel over flying. Few travellers fly to Paris today, and European capitals such as Madrid and Amsterdam are joining the fray.

Think again

Ticket delivery methods are easier now that there are e-tickets and tickets sent to mobile devices and LNER has a corporate loyalty scheme on the drawing board. The fact that the average ticket price has remained stable at £56.32 in 2018 and 2019 despite a 3.3% mandated fares, increase according to Evolvi figures, shows that corporates are making headway.

But it’s not all about cost today. Rail offers better productivity and an arrival point in the city rather than a journey from an out-of-town airport to downtown. Defra figures pinpoint the carbon savings – in the region of 56% when switching from car to rail although some doubt their veracity. “There is no decent qualitative and quantitative evidence that a train is better than a flight,” says Will Hasler, speaking as part of the ITM’s Industry Affairs Group. “Defra multipliers are out of date; we need granular detail.”

Industry observers believe the tipping point of 3hrs 45 minutes has been reached and is lengthening into four hours and beyond. SNCF, for example, points to brisk business on its Paris-Bordeaux route of almost five hours’ journey time. Hasler believes domestic air will disappear in the long run but perhaps not while the fare disparity is so great.

Cutting a dealThere are deals to be had from the TOCs but not on existing volume. Put new volume on the table from switching modes and then they’ll deal, particularly on long-haul routes.

“Corporates could be more open-minded. We’re looking for something back,” says Mark Plowright, Head of Sales and Distribution at LNER. “It has to be of commercial benefit for us. We’re looking to drive incremental journeys that might have been through other modes of transport.”

The size of the prize will also depend on how many rail and air competitors are on the route and if there are big enough volumes. The reality is far different according to Sachdave. “Don’t expect deals like volume air. Volume deals are few and far between. You can usually do better with advance purchase fares.” He advises negotiating soft benefits such as access to lounges. The starting point to better rail spend should be listing the optimum rail purchasing behaviour in travel policy. Very often rail is overlooked in policy but it must state the detail of ticket types and booking horizons.

“Your travel policy is your platform and everything drives from there. You need to be really specific,” advises Alison Proud, Head of Client Relationships at Inntel. Rail is often absent elsewhere too. Mark Bevan, Strategic Partnerships Director at Business Travel Direct, says that some companies fail to include rail in RFPs and tenders.

Getting travellers to book 14 days before travel can slash up to 30% off the fare. Talk Talk for example, saved 10% off their average rail fares when pushing their eight-day booking horizon to 11 days.

Travellers still find myriad excuses why they can’t book earlier. “People don’t want to book early in case they need to change the ticket but 85% of journeys go ahead as planned and often it’s only £10 to change the ticket so the company will still be saving,” explains Gary McLeod, Head of the Surface Transport Strategy Group at BTA.

David Sykes, Corporate Product Manager at FCM Travel Solutions, says last-minute booking is the most common behaviour. “In 2019, 78% of tickets booked by our clients were within seven days of travel, and 35% of that amount was actually within one day. These numbers in 2018 were 77% and 33% respectively.

So, while there’s a lot of conversation in the industry about moving to earlier booking horizons, and advanced tickets, the reality of the last-minute nature of corporate travel has not borne this out.”Behavioural changeDon’t give up! Behaviour change can be tackled by firstly identifying which of the travelling population is out of policy, and what they are doing and why. They may be booking Anytime tickets, booking too close to departure despite the meeting having been scheduled well ahead, for example, or not scheduling meetings to take advantage of off-peak fares.

“Understand the issue,” says McLeod. “One by one you can cross off these objections as to why they don’t want to book early.”

Heaps of data is available from the two main booking tools, Evolvi and Trainline, to identify opportunities. Transactions can be split by cost centre, department or individual. “It’s easy to measure travellers’ efficiency in the booking process as you have fixed points of reference and the data sets available are fantastic from the likes of Evolvi and Trainline,” says BTA’s McLeod. He reckons that by comparison, it’s more difficult to measure people’s efficiency in the booking process of hotels as it’s so fluid. Timed messages on the self-booking tool also helps behaviour change, as does the introduction of pre-trip approval.

Fare confusion

What fares to buy is an absolute minefield. Anytime tickets are the fare types to be avoided at all costs. Advance tickets, taking advantage of dual single tickets and booking a fixed outbound and flexi return are where savings are; the latter can be as high as 26% according to FCM Travel Solutions. Railcards and Two Together cards are worth investigating and new-fangled advance purchase-on-the-day tickets are a good innovation from Cross Country, Trans Pennine and LNER. These offer savings of up to 40% on Anytime tickets.

Split tickets are a contentious issue as the savings are there but not always a positive traveller experience if, for example, the second leg excludes a seat reservation or requires a long wait. Split tickets may be available on Trainline but RDG and the TOCs are gradually reducing their availability. RDG’s Grave refers to them as “a plaster on a system that needs major surgery”.

Grab them while you can. Click Travel’s Vicki Williams, Director of Sales and Implementation, cites a 40% saving on Bristol-Birmingham split at Cheltenham. Classes apartIn terms of class of travel, the majority of rail travel is in standard class and First Class is a rarity, unless the price is right. “A First Class Advance Return can be the same or not hugely different from a Standard Anytime Return,” says Click’s Williams.

Some travellers are allowed to upgrade if they pay the extra themselves or can claim if it’s a working trip. The arrival of disruptor SeatFrog may change the landscape for first class travelling as it offers users the option of sitting in that quiet space to work and enjoy food and a newspaper for a fraction of the true cost. It mops up distressed inventory from the TOCs and re-sells it auction-style. Four TOCs are currently on-board with it, namely LNER, GWR, Avanti West Coast and Cross Country but no TMC as yet, although Capita Travel and Events signed with the company 12 months ago.

There is talk in the industry of a third class – a Standard Plus such as that on Trenitalia and Eurostar. There would be no meal or newspaper but wifi, coffee and a working environment. The Williams Review may well throw up such an innovation.
Rail has been pushed to third party suppliers when it comes to booking tools and the market is dominated by Evolvi and Trainline, both with good functionality. However, better integration with self-booking tools is a constant plea, so too the facility of buying weekly tickets.

Trainline has greater penetration of the TMC community and Evolvi better flexibility in terms of being able to upload travel policy restrictions such as outlawing open return tickets and first class tickets. The system can also introduce time restrictions and identify sub groups of traveller populations with different policy rules.

Click Travel has gone one better and built its own rail booking platform so customers can book rail, hotel and air in one place and with a consistent user experience. Rail bookings work on a tolerance percentage rather than class of travel, giving travellers a choice of fares and guides them using a traffic light system.

“It’s a dynamic rail policy which flags up the consequences of booking red and encourages customers to increase the lead time. The average is 10-11 days so that’s really good,” says Click’s Williams. No third-party costs – such as ticket-on-departure and e-ticket fees – are passed on to customers.

Rail travel is coming into its own. The reforms so badly needed are around the corner. A Code of Conduct being launched by RDG this summer combined with new fleets should pave the way for better product consistency and more seats. Rail could become a real competitor for long-distance domestic travel. However, whether travellers will improve their meetings planning remains the million dollar question.


Best practice tips

1. Get a good clear picture of your travel patterns before you start any review
2. Take control of the booking horizon
3. Take control of your travel policy
4. Take control of your data
5. Use technology to outlaw certain expensive ticket types and frame a booking solution
6. Encourage the widest possible use of Railcards
7. Review your spend and data regularly
8. Communicate policy, progress and benefits across the organisation