BernardHarropHeadofSustainability,ICARUSEurope,

InstituteofTravelandMeetings

‘NextinCorporateTravel2010’BernardHarrop

TheFutureofCorporateTravel–Today

Abusinessmodelforanewworld……

IGManagement_________________________________________________________________________________

Advisers for Responsible Business Travel

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3+3=?SUCCESS

Today'sGoals

  Todiscussthechangingworldofbusinesstravel

  FocusonEurope

  LookatlifefromapracPcalperspecPve

  Challengeleadership

  Challengeyourself

Today'sObjec0ves

  Sizedoesn’tmaSer!!

  Sameprinciplesapply

  Buyer‐Traveller‐ExecuPve

  Differentscale

  RightapplicaPon

WhereareWeToday?

  Crisisisshort‐termevent–soonreturntonormal

  EconomicrecessionNOTashorttermevent

  …howwilltravellooka\er?

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

  Economic/financialindicatorssuggestworldisre‐emerging

  Future=repairoffinancialsystem&returntogrowth

  Fundamentalindustryrestructuringnowrequired

Sources: D. Swords, NBTA ICARUS…

EconomistsModel:

EconomistsModel:Fix

Fix2008focusoncuDngcosts–damagelimita0on

EconomistsModel:Fix‐Stabilise

Stabilise2009/2010BoMomingout–re‐thinkthestrategy

Fix2008focusoncuDngcosts–damagelimita0on

EconomistsModel:Fix‐Stabilise

Stabilise2009/2010BoMomingout–re‐thinkthestrategy

Fix2008focusoncuDngcosts–damagelimita0on

EconomistsModel:Fix‐Stabilise‐Grow

Grow2010/11‐movetothe‘newnormal’

Stabilise2009/2010BoMomingout–re‐thinkthestrategy

Fix2008focusoncuDngcosts–damagelimita0on

EconomistsModel:Fix‐Stabilise‐Grow

Stabilise2009/2010BoMomingout–re‐thinkthestrategy

Fix2008focusoncuDngcosts–damagelimita0on

Grow2010/11‐movetothe‘newnormal’

 RPKsfell4.5%

 PAXfell5.8%,from346mtoc.326m

 Cross‐bordertrafficinEUwas‐5.3%

 NorthAtlanPc‐5.6%,FarEast‐5.9%

AEAAirlines–20mFewerPassengersin2009

 MiddleEast&AfricawasposiPve

 Loadfactors‐0.3pointsto76.0%

 Capacitydecreasedby4.2%.

Source: IATA/AEA

 Sharpreboundinbusinesstravel

 Downturninpremiumtravelcyclicalandnotpermanent

 Worldtradeisrising&businessconfidencehasregainedpre‐recessionlevels

 Premiumtravelreboundingstronglyat+20%inQ1  Economytravelrecoveredtopre‐recessionlevels

 DifficulttogetthepremiumyieldstogrowatsamerateasPAXnumbers

AEAAirlines–Trafficstar0ngtoreturn

Source: IATA/AEA

 LargevariaPonsbymarket

 Non‐Japan,Asia&‘emerging’eco+10%

 Largedev.economies‐10%

 Asian,SAmerican&MiddleEasternconPnuestronggrowth

 EuropeandacrosstheNorthAtlanPcremainsluggish

 AEAforecastforairtraveltogrow7.1%

 Loadfactorshavereachedrecordlevelsascapacityreturnstothemarket

 OverallesPmateisa2.8%returnoncapitalthisyear

IATA/AEAForecasts–LookPosi0ve

Source: IATA/AEA

“Oursectorhasjustcomethroughanastonishingyear…….”

“Thecrisishasnotreceded–itsrepercussionswillbefeltwellintothefuture….thefaceoftheindustrywillbechangedfundamentally”

Quote:SecretaryGeneraloftheAssociaHonofEuropeanAirlines

  ThestaleandunsustainablenoPonsofthevaluechainareover

‘OLDNORMAL’willbereplacedby‘NEWNORMAL’

TheOld/Tradi0onalWaysofDoingBusinessAreOver

Doesthe‘newnormal’looklikethis?

OrThis?

OrThis?

  ThestaleandunsustainablenoPonsofthevaluechainareover

‘OLDNORMAL’willbereplacedby‘NEWNORMAL’

  The‘newNormal’,bynecessity,requiresanewcorporateapproach

‘PUTTHETRAVELLERATTHEHEARTOFTHETRAVELPROGRAMME’

‘CREATEREALVALUEFORYOURCOMPANY’

TheOld/Tradi0onalWaysofDoingBusinessAreOver

IsYourGlassHalfFull–OR–HalfEmpty??

TheNewModel……‘Crea0ngValue’

‘CUSTOMERORIENTATED’V‘COMPANYINTEGRATED’

‘FocusontheWHYoftravel’then……

‘TheHOWoftravel’

Product

Policythatdeliverssustainable&responsiblepracPcesforstakeholders

andemployees

Contract

Aprogrammethatispurelycostdrivenwith

noregardforthetravellersorcustomers

ImprovedBusinessEfficiency

Policyisinwardlooking&

completelyignorestheneedsofstakeholders

ABalanceBetween

PolicythatdrivestrueshareholdervalueandmaximisestheefficiencyoftheorganisaPon's

resources

UlPmategoal:ProtectandIncreaseCompanyValue

Movefrompricevs.qualityStrivetocreate'absolutevalue’tomeetwiderresponsibiliHesto

employees,suppliers,clients,communiHes&theenvironmentatlarge.

TheNewWorldOrderis‘ValueBased’

HowistheRightBalanceAchieved?‐Scorecard

Copyright: IG Management

TightlyManagetheFinances–Measureyourperformance

Score = 60%

Savings: 9%+ Value: Shareholder Value, Employee satisfaction,

Copyright: IG Management

ManageTravellerCompliancetoPolicy

Score = 30%

Savings: 8%+ Value: Efficiency, Control Process Management etc.

Copyright: IG Management

EnsureBusinessEfficientTravelPolicy

Score = 50%

Savings: 15% Value: Efficient use of resources

Copyright: IG Management

ImplementSustainable&ResponsiblePrac0ces

Score = 20%

Savings: 9% Value: Risk Management, Well Being, Repatriation etc….

Copyright: IG Management

HowDoYouRank?ExampleScore:Average=40%.......

Score:60%

Score:20%

Score:50%

Score:30%

Savings: € +

Value: Shareholder

and

Employee satisfaction

Copyright: IG Management

HowisValueDelivered?

Copyright: IG Management

CONTROLANDINFLUENCE=HIGHERCOMPLIANCE&LOWERCOSTS

  Control   Enforcepoliciesthrough

  Enforceablepolicy   Process/datamanagement&reporPng

  Influence   Topdownleadership   Influencebehaviour

byeducaPon&communicaPon

  Twinapproachenables:   Improvedcompliancetopolicy   Engageemployeesto‘want’tosupportthe

company’sapproachtoanewBusinessEfficientandResponsibletravelprogramme

TheKeytoDeliveryisControlandInfluence

‘OLDNORMAL’willbereplacedby‘NEWNORMAL’

‘FocusontheWHYoftravel’then……‘TheHOWoftravel’

‘PuttheTRAVELLERATTHEHEARTofthetravelprogramme’

‘CUSTOMERORIENTATED’V‘COMPANYINTEGRATED’

‘AchieveabalancebetweenPRODUCT&CONTRACT’

‘CreateREALCompanyVALUE’

Conclusion:TheOldWaysofDoingBusinessAreOver

Summary–ReviewofToday'sGoals

  Todiscussthechangingworldofbusinesstravel

  FocusonEurope

  LookatlifefromapracPcalperspecPve

  Challengeleadership

  Challengeyourself

  +3personalobjecPves……..

Summary

Thankyouforlistening

ThoughtExchange

IGManagement_________________________________________________________________________________

Advisers for Responsible Business Travel

THANKYOU…