Airline Ancillary Fees

1. Airline Ancillary Fees Ellen Trotochaud Sr. Director, Analytics and Vendor Relations ConcurSeptember 9, 2010

2. Agenda Ancillary Fees – Status Quo Solutions Discussed Your Role Q&A

3. Ancillary Fees Include

5. The Cost - $7.8B collected in 2009 alone and rising • Prices change frequently • Airlines have different products • E.g. Spirit recently announced fees to use onboard overhead bin space • British Air charges for advance seat assignment • Corporations are trying to understand the impact of these fees • Some studies show that ancillary fees represents only 1% of air costs*, some up to 30%** • Latest Concur study shows the cost at 2.3% of air cost • Many fees are waived for elite flyers • What is considered an ancillary fee? • Are ticket related fees, e.g., change fees, even considered ancillary? * TRX (as reported in The Beat) **NBTA 2010 U.S. Business Travel Buyers' Cost Forecast. • It is difficult to quantify the cost of ancillary fees:

6. Airlines have unbundled services – Pay for what you use

7. Bundled Fee Packages - Now airlines are bundling fees • Not all bundled fee packages included the same ancillary charges: • This creates added layers of difficulty for managing policy • Example: United offers several packages today but some include club passes which are typically not allowed in a travel policy. But how would a corporate travel manager know? • Each airlines bundled packages include different fees • Would you like to value size that?

8. Ancillary Fees – What is the impact on your program? Source: Deloitte

9. Everyone is working towards a solution – but not together! Developing EMDs (3Q10) GDS’s are working on building merchandizing platforms Has introduced standardized codes for ancillary fees Has set a deadline to standardize fees in 2012

10. Industry Proposed Solution and Alternatives Two Parallel Paths: PoS and Credit Card Reporting

11. Considerations Will the Government step in?

12. Data on Fees Provided to Card Companies - CO

13. Data on Fees Provided to Card Companies - UA

14. Data on Fees Provided to Card Companies - AA ?

15. Concur’s Solution for Reporting of Ancillary Fees • Concur identifies a charge coming from an airline based on merchant code or employee entry if not using a card feed • If a charge is under a company-defined amount, the expense type is automatically entered into the expense report as “other airline fee” • The employee is prompted to choose one of six sub-fee expense types: Baggage, Upgrades, Seats, Airline Club, On Board, Other • Policy audit rules can be associated with each of the fee types • Fee reporting available

16. Party of Three – Silver Bullet

17. Critical Components for a Solution • Standardization across the industry • Airlines sending the data in a standard format differentiating for all types of fees • The data needs to be the same regardless of point of purchase • Ancillary fees need to match to the original ticket • Transparency of services required throughout the buying cycle • Point of Sale support of fees are more complex and may take longer to evolve • Focus on corporate card solution can be a quick resolution

18. What are your thoughts?

19. What are your thoughts?

20. Voice Your Opinion

21. Things to Keep In Mind

22. Questions