On Air: Unused Airline Tickets

This is the time of year that a lot of folks take off on “Spring Break.” So what does this have to do with corporate travel management?

A good travel policy and travel management company helps ensure unused tickets go toward BUSINESS development instead of memories of “that time… in Cancun, when…”

Every company, no matter what the size, should be able to show documentation of how travelers applied unused tickets to current business travel needs.

The process we use to manage unused tickets is the result of a new client coming to us with over $60,000 of unused tickets in 2002. The travel manager and old travel agency ignored unused tickets and it turned into an embarrassing mess.

How to estimate the value of your unused tickets:

First find your ratio of unused tickets. To do this estimate how many unused tickets per 100 tickets purchased. 3 tickets per 100 tickets purchased is a safe conservative estimate. Take 3 divide by 100. 3/100= .03

Now take your company’s average ticket price and multiply it by your ratio of unused of tickets. Let’s use $400 as an average ticket price. So the calculation so far looks like this: .03 x $400 = $12.

Next, multiply the value of unused tickets by the estimated number of annual tickets that your organization purchases. This will find the “raw value of unused tickets.” For this example, let’s use 500 tickets. $12 x 500 tickets = $6,000.

Unfortunately, “raw value of unused tickets” isn’t the value you can apply to future travel because currently the airlines require a $150 penalty fee for applying unused nonrefundable tickets. So calculate the “total penalty” fee value. To do this take annual number of ticket (500), multiply by ratio of unused tickets (.03), then multiply by the penalty value ($150). 500 x .03 x 150 = $2,250.

Lastly, take “Raw value of unused tickets” and subtract the “Total Penalty” to find “True Value of Unused Tickets.” For our example: $6,000-2,250 =$3,750

Hope this helps, and remember – when you see your business traveler with a tan in the spring – if your travel company tracks your unused tickets, no one wonders, “Just who did pay for that airline ticket to Cancun?”

For more information please contact Patrick Linnihan, patrick.linnihan@ganttravel.com, or see www.ganttravel.com

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