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

Posted by QBT Marketing on 6 Apr 2017, 12:52:07

Restricted vs Fully Flexible Fares – which is really better value

Restricted fares are tempting. They are, of course, the best value when you live in a world where everything goes to plan. Unfortunately, the business world is rarely so predictable. 

These 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.  We can’t blame you for feeling inclined to close the deal on these fares and include them as a first choice in your travel policy. 

But as any veteran business traveller can tell you, things don’t always go to plan. Meetings move and schedules change. You may need to extend a trip, shorten it, or cancel it entirely. The truth is, business travel can be erratic, and change is common. 

At QBT we like to do our due diligence. Which means investigating it a little further. To help you decide if it’s time to re-evaluate your travel policy, we analysed data across QBT's entire customer base over the span of a year, and asked ourselves a few key questions. 

How many changes to a restricted fare booking is too many?  

How many times does a restricted fare booking have 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 ... until a single change was made. You read that right. It only took one to two changes for the price of a restricted fare booking to soar above that of a 'flexible fare' (including the change/cancellation fees). 

Here's what that looks like:  

  • 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. 

In which instances did restricted fares actually save costs?

Restricted fares save money when no changes are made. No shock there.  

Based on our data, when travellers do have restricted fares they are four times less likely to change their booking than someone with a flexible fare. In fact, only 14 per cent of those booking restricted fares changed their bookings prior to their departure. 

But for that 14 per cent, there is a lot of money to be lost.    

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 $85.  

What starts as a way to try to curb costs can, in turn, end up leaving a whole lot of money on the table.  

So… what now?

Not sure if you need to reassess your travel policy? Use our travel reporting tool to determine how often your travellers are changing their flights and how much these changes are costing.  

If you have a dedicated account manager, contact them for a deeper dive into your company’s spend and data. They’ll provide you with the best course of action so you can make the necessary changes. 

Still feeling stuck? Get in touch with one of QBT’s travel experts today!  

Contact us

 

Topics: Travel Policy, compliance, Procurement, travel expenses, flexible fares

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