LONDON--(BUSINESS WIRE)--According to the latest procurement intelligence report from Technavio, the global air travel services market is expected to grow at a CAGR of close to 4% over the next five years due to the increase in corporate traveler spending.
The research report titled ‘Global Air Travel Services: Procurement Intelligence Report 2016-2020’ provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“Rapid pace of globalization and rapid expansion of large organizations into emerging markets such as China, India, and Brazil have increased the need for air travel. Growing demand from corporates is a major driving factor. The corporate travel sector is expected to grow at a CAGR of 5% through 2017,” says lead Technavio procurement expert Angad Singh for category spend intelligence.
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Cost saving opportunities in air travel services
Adoption of various cost optimization levers allows buyers of air travel services to not only realize direct cost savings but also enhance category management and value benefits (such as reduction in procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the air travel services market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology saving aspects
New types of seating, including economy smart seats with fixed headrests for sleeping and 6-inch adjustable reclining capabilities for spine support, were introduced to enhance ergonomics and differentiate services effectively.
Big Data allows managers to make data-driven decisions and respond appropriately to the fast-changing dynamics in the air travel sector. Smart, analytical tools help marketing and finance departments to sort data rapidly before converting them into actionable insights.
Optimization of procurement practices saving aspects
The performance of suppliers can be linked to a portion of their fee and can be paid upon rendering of services in a satisfactory manner. It is important for category managers to track and measure the performance of suppliers against a set of defined KPIs (that are agreed upon by both parties during the contract negotiation phase).
Before the commencement of contract-related discussions with suppliers, category managers must ensure that they have clearly identified and listed down potential negotiation levers.
Bundling of services saving aspects
Bundling of services allows buyers to mitigate the risks involved in managing multiple aspects of travel management such as booking of hotels, and local transit and destination management. This offers buyers visibility on spend and allows them to negotiate costs better.
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Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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