Corporate travel policy - Cost
Updated March 26, 2019 by CJ
Often discussed is the cheapest strategy for personal travellers: Book on a Tuesday Sunday, two three four weeks in advance, use private browsing or an aggregating search engine, include a stop-over fly direct.
What about the optimal strategy for corporate flights? Is it a factor of cost alone, should staff be compensated for inconvenience, or even rewarded for good work?
In this series of posts we look at positives and negatives of different corporate travel policies considering what is important in a corporate setting:
- Cost
- Time
- Productivity
- Employee incentive and wellbeing
Cost
A fictional company is designing its travel policy around the following:
- Headquarters in Singapore
-
Important offices and clients in:
- Amsterdam
- Jakarta
- Hong Kong
- San Francisco
- Sydney
- São Paulo
These travel pairs are chosen to reflect commuting flights, short-haul regular flights, long haul regular flights, and very long haul irregular flights.
This example will present some costs that can be used later to consider the other factors of a travel policy in alignment with the objectives of the organisation.
Travel Policy Rules
Our fictional company has the choice of three travel policies that will be used in this comparison:
-
Option 1:
- All flights in economy
-
Option 2:
- All flights >8 hours, travel is allowed in one class above economy (i.e. Premium Economy if available, otherwise business).
-
Option 3:
- All flights >12 hours, travel is allowed in one class above economy.
-
Option 4:
- All flights in business class.
It also has the following rules:
- Flights should be the cheapest fastest route (according to the cabin class rules);
- Flights should be with a full service airline.
Routes
| Route | Time | |
|---|---|---|
| Singapore to Jakarta (SIN -> CGK) | 1h 50m | Commuting flight, short haul |
| Hong Kong to Singapore (HKG -> SIN) | 4h 0m | Regular route, medium haul |
| Singapore to Sydney (SIN -> SYD) | 7h 55m | Regular route, long haul |
| Amsterdam to San Francisco (AMS -> SFO) | 11h 0m | Regular route, long haul |
| Singapore to Amsterdam (SIN -> AMS) | 13h 35m | Irregular route, long haul |
| San Francisco to Jakarta (SFO -> CGK) | 20h 25m | Very long flight, no direct route |
| São Paulo to Singapore (GRU -> SIN) | 33h 50m | Very long flight with mostly 2 stop options |
- SIN-CGK is flown 4 times per month
- HKG-SIN is flown 4 times per month
- All other flights are flown once per month
Other Assumptions
Unlike leisure travel, travelling for business usually has the following constraints:
- Bookings are made with shorter notice
- Business engagements are usually Monday to Friday
We generated our quotes based on these assumptions, with the short notice period being 8 days.
Costs
Per month costs:
- Option 1: USD 8100
- Option 2: USD 13,240
- Option 3: USD 13,766
- Option 4: USD 36,778
Of course Option 4 carries the greatest cost. In future posts we will discuss the benefits of finding the right balance between direct cost to the organisation, and the benefits of flying in premium cabins.
In this case, the marginal cost of moving from a “flights > 8 hours are in a premium cabin” to a “flights > 12 hours are in a premium cabin” policy is not significant ($500 per month!).
Benefits of more premium cabins include better productivity and staff wellbeing/rewards.