Three Myths About Sourcing Airlines – Part 2

(See Part 1 in this series here)

Why Buying in Bulk Doesn’t Work

Bulk buying (a.k.a. pre-paying) makes sense for many commodities, but not airfares.  Why? Because it’s complex and expensive.

It’s Complex

Let’s say you want to bulk-buy $1 million in airfares from your primary carrier. You write the airline a check – simple. But now:

Which departments in your firm will be charged for their part of the bulk buy?

Three Myths About Sourcing Airlines – Part 1

Given that air travel is typically a large spend item for most companies, it makes sense for procurement folks to attack it with extra energy and creativity.  Here are three ideas that often come up:

1. Consolidate air spend across a few firms to get better negotiating leverage
2. Buy air travel in bulk
3. Leverage frequent flier miles by stripping them out of the fare price, or by pooling them for corporate use.

Unless you’re the type that likes to take long walks in the hot sun, you can forget about using any of these methods – they just don’t work.  Here’s why: