Restricted vs Fully Flexible Fares – which is really better value?

Posted by QBT Marketing on 06-Apr-2017 12:52:07

On paper, booking a restricted fare might seem like the obvious choice, especially when your travel budget feels like it’s getting tighter and tighter with every year that passes.

Are Restricted fares really better value

Restricted fares offer significantly cheaper rates for less flexibility, meaning the rates are often non-refundable, non-cancellable or non-changeable. At first glance, it’s easy to be wooed by the pull of lower prices and we can’t blame you for feeling inclined, borderline obliged, to close the deal on these fares and include them as a first choice in your travel policy.

While the costs do look set to save you money on your flights, on the condition that you don’t make any changes, any veteran business traveller will agree that everything doesn’t always go according to plan. Whether a meeting is moved forward or delayed, other work commitments interfere with the schedule or you need to extend or shorten a trip, the truth about business travel is that it can be quite erratic.

However, we couldn’t just leave it at that without investigating it a little further. To help you ascertain whether it’s time to re-evaluate your travel policy, we analysed data, gathered from across QBT’s entire customer base over the span of a year, and posed the following questions…

How many changes to a 'restricted fare' booking does it take for it to become more expensive than a 'flexible fare'?

We were curious to see how many times a restricted fare booking had to be touched to become more expensive than booking a flexible fare in the first place.  On average, for domestic flights, booking a restricted fare or best fare of the day, was significantly cheaper… only until a single change was made.

That’s right, it only took 1-2 changes for the price of a restricted fare booking to soar above that of a 'flexible fare' (including the change/cancellation fees).

Here's an example of such a booking:

Traveller 1 booked a flexible fare for $786. After the traveller made one change, the total cost of the ticket came to $927.

Traveller 2 booked a restricted fare for $470. After the traveller made one change, the total cost of the ticket came to $1,115.

The difference between the two was $188 and the final cost for the restricted fare was over double the price of the original cost.

But wait…there’s more!

In which instances did restricted fares actually save costs?

Only 14% of those booking restricted fares changed their bookings prior to their departure.

This part is no shock - restricted fares saved money when no changes were made and based on our figures, travellers were four times less likely to change their booking with a restricted fare. Even so, the average cost of changing a restricted fare ticket on a major Australian airline flying Sydney to Melbourne was $539, whereas changing a flexible fare was only $85What starts as a way to try to curb costs can, in turn, end up leaving a whole lot of money on the table and blowing your carefully thought out budget out of the water.

So… what now?

In order to find out whether or not you need to re-assess your travel policy, it may be time to use your travel reporting tool to figure out how often your travellers are changing their flights and log the costs of these changes. If you employ the help of a Travel Management Company, your Account Manager will be the best person to reach out to, as they will be able to meticulously observe your company’s spend and analyse your traveller data. In these instances, they will provide you with the best course of action to help you make those much needed changes to your travel policy.

If on the contrary, your travel policy advises against restricted fares and you find travellers are continuously non-compliant and booking this fare type, then here are some great ways to help boost traveller compliance.

If you’re still feeling stuck and need someone to assist you with your travel policy, then get in touch and speak to one of our travel experts.

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Topics: Travel Policy, Travel Management Company, compliance, Business Travel, Procurement, travel expenses, payment solution, Booking Flights