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Industry outlook

Travel disruption demystified

February 2, 2019

It may be surprising to know travel disruption events are often managed manually. From studying the industry and listening to our customers, we […]

It may be surprising to know travel disruption events are often managed manually. From studying the industry and listening to our customers, we see four leading factors putting pressure on TMCs, airlines, and the corporate bottom line. As these driving forces increase, we are seeing the long-standing, vexing industry issue come to a breaking point. It may help to understand each of these pressures in more detail.

The load factor — Planes are flying full

Travel disruption is any deviation from the original plan of any trip. Disruptors include flight delays, cancellations, and diversions. We also need to consider increases in the average passenger load, which results in fewer empty seats. This then translates into a decrease in re-booking options over time.

Load Factor % vs. Time

Cancelled flights lead to a larger increase in passenger trip delays under high-load rates than under low load rates. Small disruptions may have non-linear, exponential affects in the complex world of operations, with multiple factors converging, such as call centers’ operators, the load capacity and even time of day! Delays late in the day lead to much longer re-accommodation when re-booking options are tighter.

The delay factor — Delay categories

Let’s take a closer look at delay categories and how the nomenclature may lead to misreading the impact of disruption. The US Bureau of Transportation Statistics’ data shows that half of delays are “air carrier delays”, while only 8% are caused by “extreme weather.” However, when we look deeper at those numbers we find they can include things like late arriving aircraft. But why did it arrive late? One of the reasons was probably weather!

Flight Delay Breakdown by Cause

Another category is called ATC weather delays, meaning aircraft were still flying, but delays accumulate. For example, fog at San Francisco is common and dramatically reduces the takeoff and landing rate at SFO. That’s a weather-caused ATC delay.

16% of flights equates to about 3 million delayed or cancelled flights every year globally.

The cost factor — Travel budgets under pressure

Disruption increases costs for everyone, so while flight disruption is not a new problem, it is a very expensive one.

  • Flight disruption costs airlines between $25B and $35B annually – that’s about 5% of airline revenue.
  • If you include the estimated cost to travelers, corporations, and the rest of the ecosystem, that number goes up to $60 billion (about 8% of airline revenue).

Often, the disruption problem spreads virally, because the flight that was cancelled in one city was supposed to provide the aircraft for a departure from another city. We’ve all experienced the consequences of these “viral” delays in the system. But, have TMCs, airlines operation centers and corporate travel managers added in the hidden costs? Some hidden costs of disruption include:

  • Lost productivity and missed business meetings
  • Un-planned hotel stays, meals, rental cars and other expenses
  • Traveler stress & frustration
  • Employee turnover
  • Increased traveler risk

 The human factor — Travelers expect more

Given these hidden costs, unsurprisingly, disruption is a huge source of frustration for travelers. Disruption can become such a headache for business road-warriors that they choose to leave a job to avoid frequent business travel.

A J.D. Power study found that 42% of travelers identified disruption management as the single most important area for improvement.

To look at the impact of all of these factors, this last year we conducted and sponsored surveys, held meetings and looked at the latest research into the disruption puzzle. We’ve identified, with the help of our customers and partners, several key steps to effective disruption management, and they include:

  1. Get the right information, to the right people, at the right time
  2. React quickly and efficiently
  3. Involve your TMC
  4. Make on-time performance part of your program

We plan to go into each of these steps in-depth, so stay tuned! 

So, as we’ve learned, travel disruption is a long-standing issue in the industry. Understanding disruption is important, however, it’s not safe to assume there are optimized solutions to manage disruption related issues. Stakeholders including business road warriors, enterprise travel programs, and, airline and TMC operations’ centers still struggle to communicate during disruption events.

The good news is we’ve recently seen an uptick in innovative approaches implemented, to pro-actively manage disruption. For example, there have been new efforts to audit the hidden costs in corporate travel programs, to then ID those most affected by disruption, and to implement solutions which intelligently connect platforms and stakeholder communications. Stay tuned as we share some of these case studies over the next few months.

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