There may be cost savings in terms of air fare but what about other costs such as time spent on data collection and passenger tracking? Our resident expert, Andreas Wellauer, lists the pros and cons.

lmost every month we hear of a new low-cost carrier (LCC) starting up somewhere in the Asia-Pacific region. This has caused travel managers and cost-conscious companies to ask themselves if LCCs and the hybrid low fare but full service carriers are a viable option to legacy carriers.

To make an informed decision, the cost advantages and the service limitations must be carefully weighed. Potential problems include traveller buy-in.

The most important and yet most overlooked issue is the cultural acceptance of LCCs within your company. If you are in the banking or medical field, for example, you may be up against a cultural barrier that will prevent you from making such a switch.

It is important to consider many of these carriers cannot be booked on the GDSs, which can cause headaches for both the agency and your online booking tool, including the inability to access or collect data and the difficulty in tracking down the traveller in the event of a crisis (unless your agency makes mirror bookings in the GDS, which would incur some costs).

This will pose problems for companies listed on any of the US stock exchanges and are bound to the Sarbanes-Oxley Act, which states you must know at any given moment where your employees are and how to track them.

Sometimes the loss of booked data can be compensated by using credit card data. However, this will always be “after the fact”.

Also, LCCs do not usually offer interline agreements, which means your travellers cannot make connections with other carriers without reclaiming their luggage and rechecking it.

The last consideration is size of the route network and the fleet. What do you do when the LCC cancels a flight? The fares are usually not endorsable to any other carrier. What if the traveller needs to change his/her destination to one not serviced by the LCC, which has no alliance partners?

But despite all this, LCCs can be a viable option as long as corporate travel managers are aware of their limitations.

Andreas J G Wellauer, CCTE, is founder of GALIANT Consulting, which specialises in strategic travel management (www.galliant.com).

Andreas J G Wellauer, CCTE, is founder of GALIANT Consulting, which specialises in strategic travel management (www.galliant.com).
Mr Wellauer’s articles and comments have appeared in many international publications and he has been a frequent speaker and lecturer at global travel management conferences and seminars.
Mr Wellauer speaks five languages, is a member of the Association of British Travel Agents and ACTE, and a graduate of the prestigious Cornell University’s Certified Corporate Travel Executive programme.
GALIANT Consulting helps companies include safety and security issues, cross-cultural training, government affairs and process-flow analysis into any level travel programme, be it based in procurement, professional services, finance or operations. Headquartered in Berlin, it operates globally and the network includes representation in Sydney, London and New York.