Figure 22: Restricted fares offer savings that outweigh the cost of ticket changes and cancelations Average total cost of fares, including changes/cancelations
Example: Paris-Strasbourg (domestic) economy round-trip, July 2007 Change/cancelation costs outweigh upfront savings from restricted fares
Upfront savings from restricted fares outweigh change/cancelation costs Average ticket price (US$)
Restricted fares requiring booking 10 days in advance (includes change/cancelation costs)
700 600 500
Flexible negotiated fare -25%
400 300 200
Typical change/ cancelation range
100 0 0
20
40
60
80
100
120
140
160
180
% of tickets changed or canceled Source: CWT Travel Management Institute, based on ticket availability at moment of testing (July 2007) and fares negociated for a major French client. Includes impact of both changes to departure dates and cancelations at an assumed ratio of 3:1
How much can companies improve the use of restricted fares? Restricted fares are usually sold on a “first comefirst served” basis. Their availability is therefore limited, which helps to explain why travelers are more likely to use restricted fares the earlier in advance they book, as shown in Figure 23.
Asking travelers to use restricted fares does, however, make a difference. When restricted fares are mandatory and available at the time of booking, travelers use them 58 percent of the time. This figure drops to 43 percent when restricted tickets are simply recommended and to 30 percent when they are not mentioned in the policy at all, as illustrated in Figure 24.