Economy

Cut your travel budget

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Now is a good time to think about the 2007-08 travel budget and look for ways to save time and money. Here’s the latest, and a case study on how to reduce stress and cost. By EMILY ROSS

Budgeting for next financial year’s travel makes now a good time to think about how well you are managing your travel budget and look for new ways to save time and money. Here’s the latest news, tips and a case study on how to reduce stress and cost.

By Emily Ross

The battle of the low-cost carriers will move into top gear on Sunday (June 24) when Tiger Airways announces its plans for expanded Australian domestic flights.

From a base at the new Terminal 4 at Melbourne’s Tullamarine Airport, the no-frills service (with no business lounge facilities) will offer record low fares for domestic travel. The taxi to the airport is likely to cost more than the flight, in many cases

Tiger is already offering $8 flights to Singapore from Darwin or Perth. Jetstar is ready for the battle and has ordered more A320s to keep increasing its already record passenger numbers. Bargain hunters can sign up for email offers at http://www.tigerairways.com/home/subscribe.php

The price wars will mean great deals for mainly leisure travelers, but business travellers can also cash in on the savings. Jetstar reports that more business travellers are booking its flights. Now that there is seat allocation on Jetstar flights (hallelujah) and StarClass, more business travellers are prepared to book on the budget airline.

End of financial year travel budget check up

Does your company:

  • Book in advance?
  • Travel to meetings that could be handled by phone?
  • Take alternative, efficient transport?
  • Have an up-to-date, clearly understood travel policy?
  • Have a policy to deal with policy breaches, or are they overlooked?
  • Ensure staff do not “do their own thing” when it comes to travel bookings?
  • Have the ability to assess ongoing travel expenditure?

Book in advance. Where possible, fix your flights at least a week ahead to maximise savings – generally about 25% less for seven days ahead (pay $146 for one-way from Melbourne to Sydney a week ahead, $186 for the same fare the day before the flight) but be realistic about your schedule. Flexi-fares are sensible if you are prone to marathon meetings or find yourself traveling through Sydney at peak hour.

Is the meeting really necessary? Rationalise all travel, try and bundle meetings and events together and look at the value of virtual meetings instead. If the meeting has to take place, consider using airport or nearby hotels for meetings to save on transit costs into the city. In the early days of Barb de Corti’s Enjo business, she used to meet sales consultants at airports and do her meeting and training in waiting areas.

Get into the habit of taking the train to and from the airport to the CBD in Sydney. Airport Link tickets can be booked online www.airportlink.com.au, and there are up to eight trains per hour. It costs $12.20 from the CBD to the domestic terminal and $13 from the CBD to the international terminal. It is not only cost-effective, it is also quicker, particularly in peak times when the city is typically gridlocked.

Consistently deal with breaches of the company T&E (travel & entertainment) policy. Continuously communicate with staff about managing T&E expenses. Set your spending limits so that there is no way employees can say “but I didn’t know”. Make sure that the company travel policy is well known and keep it updated: which hotels, which class of travel, the types of meal budgets and use of other transport. Set it out in black and white. If there is a goal to cut the budget, let everyone know how the company is doing.

Single-desk bookings. For small businesses that do their travel bookings themselves, try and have one person managing the bookings and try and consolidate bookings so that there is a simple reporting system and it is easier to keep track of spending. If five different people are booking trips themselves, this is extremely time-consuming and creates a mountain of paperwork. Seriously look into the benefits of outsourcing travel to a part-time, dedicated professional who can leverage off deals not just for airfares but for hotels and car hire. The fees are likely to pay for themselves. At the end of 2006-07, it makes sense to look at the total travel spend and contact a few potential providers and get a pitch for your business.

Case study

How entrepreneur Leanne Preston from Wild Child saves on her travel costs

The managing director of natural healthcare company Wild Child, Leanne Preston, spoke to SmartCompany.com.au en route from Perth to Hong Kong, Toronto, Boston and London about how she does it.

Preston is leading negotiations for Wild Child to be distributed through a major drug store chain in the US. This is her third major trip in the past six months and there is another capital-raising trip planned for July. She is certainly racking up the frequent-flier points.

Preston’s 10-year-old company exports treatments for head lice and nits, as well as baby care and sunscreen products to 14 countries and sells in major stores such as Boots (UK), Coles and Woolworths. Wild Child has production plants in Poland and Milwaukee, Wisconsin, in the United States. There are more than 150 people directly involved in the Wild Child enterprise, both in-house and through outsourcing arrangements.

As well as Wild Child to manage, Preston is a single-mother of three teenagers. She simply does not have the time to manage her travel bookings. Instead, she relies on her Margaret River-based travel agent with whom she has worked for the past decade. “When we tried to do it ourselves, it cost a lot more,” she says

In general, companies that spend more than $150,000 a year on travel will save by using a savvy travel agent, whose buying power, market intelligence and access to fares and services not available to the general public.

Often trips for Wild Child are last-minute, with Preston on a plane to the US at two-days’ notice. With so little time, sitting on the computer orchestrating an entire itinerary makes no sense, particularly to cities such as Holice, Poland. Preston retained her local travel agent’s services even when Wild Child moved its headquarters from Margaret River to Fremantle.

Preston travels business class (non-smoking sleeper beds are a must on gruelling trips) and has a list of preferred hotels that her agent books for her. With so much international travel, Preston is regularly upgraded to first class. Preston is typical of Australian business travellers who are driving high demand for business class seats on all carriers.

The demand for business class seats in 2007 has seen business class airfares rise 7%, according to the American Express Business Travel in the Asia Pacific Business Travel Monitor. This follows the global trend that has seen major airlines such as British Airways and Virgin Atlantic investigate the feasibility of all-business class planes. (OzJet may have flopped in Australia, but similar carriers in Europe are finding strong market demand.)

The purchase of business class airfares is not as expensive as it could be. Wild Child is able to claim up to 50% of the cost of business class fares through Austrade’s Export Market Development Grant (EMDG) scheme. The checklist is available online

Through the program, which has been running since 1974, approved applicants can claim up to $300 a day on their export trips and there is provision to claim other eligible promotional costs such as marketing and expenses from trade shows and exhibitions.

To be eligible, businesses must have spent $15,000 over two years on eligible export marketing expenses. This year, more than 3500 Australian companies will receive EMDG grants. Companies that have benefited from the grants include Sydney-based Atlassian Software Systems, Gold Coast-based John Cox Creature Workshop, Newcastle-based Nupress Tools and Melbourne-based Dynamic Hearing.

To calculate potential savings, use the formula 50% of (total eligible expenses – $15,000 non-reimbursable threshold amount). The maximum grant available is $150,000 but that figure can decrease depending on the number of valid applicants.

There is also the possibility of a second payment from the EMDG scheme for those with significantly higher costs associated with exporting. A second tranche payment is made at the end of the financial year by the EMDG scheme, based on the amount of EMDG funds remaining in the budget once all recipients’ initial payments have been made. The 2006-07 figure will be announced in the coming weeks at the Austrade website.

Preston is also a member of loyalty schemes and uses her points to upgrade on domestic trips, (she only pays for economy fares on domestic routes) and has recently taken her children to Cambodia using frequent flyer points. There have to be some perks to spending half your life on a plane.

How Perth-based exporter Wild Child manages costs:

  • Outsources complex itineraries, to save time and money.
  • Maximises grants such as Austrade’s Export Market Development Grant.
  • Milks loyalty programs for all they are worth!
  • Uses points for domestic upgrades.

 

For new travel trends including How to get up the pointy end of the plane see growth resources>travel.

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