Concur Copyright © 2010 Airline Ancillary Fees Ellen Trotochaud Sr. Director, Analytics and Vendor Relations Concur September 9, 2010

Concur Copyright © 2010 Agenda Ancillary Fees – Status Quo Solutions Discussed Your Role Q&A

Concur Copyright © 2010 Ancillary Fees Include Checked bags Onboard internet access In-flight meals & beverages Preferred seating Airline club access Upgrades Standby fees Overhead bin space Pillows & blankets Seat assignment fees Onboard entertainment

Concur Copyright © 2010

The Cost - $7.8B collected in 2009 alone and rising  Prices change frequently  Airlines have different products  E.g. Spirit recently announced fees to use onboard overhead bin space  British Air charges for advance seat assignment  Corporations are trying to understand the impact of these fees  Some studies show that ancillary fees represents only 1% of air costs*, some up to 30%**  Latest Concur study shows the cost at 2.3% of air cost  Many fees are waived for elite flyers  What is considered an ancillary fee?  Are ticket related fees, e.g., change fees, even considered ancillary? * TRX (as reported in The Beat) **NBTA 2010 U.S. Business Travel Buyers' Cost Forecast.  It is difficult to quantify the cost of ancillary fees:

Concur Copyright © 2010 Airlines have unbundled services – Pay for what you use

Concur Copyright © 2010 Bundled Fee Packages - Now airlines are bundling fees  Not all bundled fee packages included the same ancillary charges:  This creates added layers of difficulty for managing policy  Example: United offers several packages today but some include club passes which are typically not allowed in a travel policy. But how would a corporate travel manager know?  Each airlines bundled packages include different fees  Would you like to value size that?

Concur Copyright © 2010 Ancillary Fees – What is the impact on your program? Policy & Compliance Should policy be developed for ancillary fees? Will it prompt travelers to use a service they would not normally use? Once added, do you have the manpower and reporting in place to enforce it? Cost Impact & Budgeting Projecting traveler use of services is difficult Data doesn’t currently associate service purchase with specific trip/project Fees are adjusted frequently Expense Process & Reporting Expense systems must be changed to provide new categories Airlines should enhance reporting for their corporate customers Enhanced Corporate Card reporting to support program needs Source: Deloitte

Concur Copyright © 2010 Everyone is working towards a solution – but not together! Developing EMDs (3Q10) Has introduced standardized codes for ancillary fees Has set a deadline to standardize fees in 2012 GDS’s are working on building merchandizing platforms

Concur Copyright © 2010 Industry Proposed Solution and Alternatives ATPCO File fares with ancillary products Already testing GDS Display options Multiple products ARC EMD TMC Agency Reportin g Two Parallel Paths: PoS and Credit Card Reporting

Concur Copyright © 2010 Considerations Point of Sale Not all buying decisions are made at the point of sale Merchandising can vary by airline Technology needs to support merchandising Industry economics Processing changes/cancellations post-purchase Purchase Data No tie back to the original ticket number Merchant transaction data is inconsistent Current IATA standard not widely adopted Standards do not address all issues Corporate card utilization is critical Will the Government step in?

Concur Copyright © 2010 Data on Fees Provided to Card Companies - CO P. 12

Concur Copyright © 2010 Data on Fees Provided to Card Companies - UA P. 13

Concur Copyright © 2010 Data on Fees Provided to Card Companies - AA P. 14 ?

Concur Copyright © 2010 Concur’s Solution for Reporting of Ancillary Fees Concur identifies a charge coming from an airline based on merchant code or employee entry if not using a card feed If a charge is under a company-defined amount, the expense type is automatically entered into the expense report as “other airline fee” The employee is prompted to choose one of six sub-fee expense types: Baggage, Upgrades, Seats, Airline Club, On Board, Other Policy audit rules can be associated with each of the fee types Fee reporting available

Concur Copyright © 2010 Party of Three – Silver Bullet Collaboration in place between AirPlus, Concur and Continental Airlines to find a solution Weekly calls to discuss changes and announcements Technical calls to review possible solutions Communication strategy to spread the word and get maximum visibility

Concur Copyright © 2010 Critical Components for a Solution P. 17  Standardization across the industry  Airlines sending the data in a standard format differentiating for all types of fees  The data needs to be the same regardless of point of purchase  Ancillary fees need to match to the original ticket  Transparency of services required throughout the buying cycle  Point of Sale support of fees are more complex and may take longer to evolve  Focus on corporate card solution can be a quick resolution

Concur Copyright © 2010 What are your thoughts? Is it important to you to have visibility into these fees? Are all fees of equal importance? What information do you need and what will you do with it? Who needs information regarding fees? Where will the decision to accept a service for a fee be made…during the original booking process, pre-trip, during the trip or on-board?

Concur Copyright © 2010 What are your thoughts? Do you want to be able to charge fees back to a lodged/ghost card? Is it important to you to be able to negotiate these fees? Your average ticket price may stay the same or even decline but the total cost of air may go up. How do you explain that to your CFO?

Concur Copyright © 2010 Voice Your Opinion Remember YOU have a voice Share your ideas with the industry -Talk with your vendors Urge for a common solution to be found to resolve this issue Encourage the development of a total cost calculator to provide greater transparency to what fees would be charged - help make better buying decisions

Concur Copyright © 2010 Things to Keep In Mind Ancillary fees are here to stay This not just a domestic issue, it will continue to grow globally Elite flyers will not be exempt from all of the fees It will most likely get worse before it gets better

Concur Copyright © 2010