Corporate travel and the impact of NDC | PhocusWire

Corporate travel
and the impact of NDC

A primer on corporate travel

Corporate travel is a unique segment within the overall travel market with an estimated spend of $1.3 trillion in 2016. For many companies, the travel budget represents the third largest spend category.

On average, corporate travel accounts for approximately 12% of passenger volume – dwarfed by leisure volumes. These volumes obviously vary greatly based on airline, region, seasonality and other aspects.

However, a combination of factors including the likelihood of utilising premium travel classes, short term booking horizons, the need for greater travel flexibility and a natural tendency to peak travel times and routes means that, from a revenue perspective, corporate travel accounts for approximately 30% of revenue.

The average revenue per booking made via indirect corporate channels is 20% higher than bookings made directly through the airline’s ecommerce site. Both passenger volumes and revenues have grown steadily over the last five years and are forecast to continually increase over the next ten years.

Corporate travel has a considerably higher complexity than the leisure travel market. The corporate employer and their travel management company have their roles and objectives - duty of care, cost, control and compliance are all major factors in delivering a successful and satisfying corporate travel programme.

Within the corporate travel value chain, it is in everybody’s interests – the corporate, the airlines and all involved intermediaries – to deliver a corporate travel experience that works for the traveller both as an employee and as an individual.

Regular corporate travellers are likely to be amongst the most valuable employees of a company, often representing the company and the brand externally.

Many corporate travellers are potentially the best customers of an airline, not just from their corporate spend perspective. Their personal disposable income is often high as is their propensity to travel.

This has long been recognised by airline and hotel loyalty schemes, with offers and programme benefits evolving to cater for this customer segment.

Change is in the air

A range of factors is causing the corporate travel industry to look at the way it operates. Some of those are common to other industries, whilst others are born from long standing frustrations with the status quo. The next sections explore these influencing factors.


To optimise revenues and manage costs, corporations must achieve maximum value from their travel spend and policies.

Competition from the low-cost carriers has lowered fares across all travel segments. IATA statistics show a 62% reduction in average prices since 1995.

To deliver lower fares and compete head to head, airlines have unbundled their products, reducing the base fare further and introducing ancillary products, allowing travellers to select additional products they value.

This, in turn, creates additional complexity in the corporate travel market as ancillaries represent a perpetually moving target for corporate policies to consider.

On the other hand, the base fare often includes less in terms of service than previously.


Travellers are more experienced, travelling by air is commonplace throughout childhood and into employment. Traveller expectations and needs have changed and grown.

They no longer wish for the same standard travel experience wherever they are but would rather adapt to their varying needs and to embrace the locality.

Hence, in part, the growth of a travel segment referred to as bleisure – the combination of business and leisure trips. Employees no longer default to loyalty at work or with the brands they use.

They judge the performance and value they believe they are entitled to and react accordingly if they do not believe a relationship is equitable.

This is most notable amongst millennials – the generation which will represent an additional 20% of corporate travellers in the next years.


In today’s digital era, all generations are embracing the possibilities of technology to make their lives easier. In travel, this is both an opportunity and a challenge.

The opportunity is the ability to engage, learn and understand customers better than ever.

The challenge is that customers expect that everything can be done on a smartphone, quickly and easily. Airlines, driven by their leisure markets, have already adapted, investing considerably in their digital platforms.

These provide the basis to directly engage and deliver the personalised experience expected of them.

Inevitably, this contrasts unfairly with corporate travel tools which by design are trying to provide a solution that offers effective cost comparison, overlaidwith company policy and control to drivegood decision making.

The shift to a more digital traveller demographic means that mobile and digital adoption is already critical.


In a world with so much change, no market segment can expect to be untouched. Indirect markets with multiple participants in the value chain are prone to maintaining the status quo and are typically slow to innovate.

The highly attractive corporate travel market is bound to be disrupted. #

The natural tensions that exist in the value chain - costs, service, brand and product differentiation, volume, and loyalty – are under relentless pressure, causing tension between buyers and sellers of corporate travel.

Sponsored by Datalex, this jointly-written paper by Travel in Motion and Festive Road takes a deeper look at "Corporate Travel and the Impact of NDC".

The paper explores the main initiatives underway and considers the viewpoint of each participant in the corporate travel market.

The paper also addresses some of the major tension points and suggest actions to resolve them.

While there may not be an immediate answer to all of the challenges, there is opportunity to progress and push the boundaries.

The alternative is the continued vulnerability to external forces, whether that be discontented employees bypassing corporate policies or viable market alternatives to intermediaries addressing the industry challenges.

To download the full paper, click here.

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