FCm Travel Solutions is going all out to help its Aberdeen-based oil and gas clients reduce travel costs as much as possible in response to the massive impact plunging oil prices have had on revenues for companies operating in the energy sector.
Around 90 per cent of the seventy clients whose travel programmes are managed by specialist FCm staff in Aberdeen have been affected by the squeeze as most have major interests in North Sea oil production. The service sector which provides rigs, drilling equipment and food provisions has also been hit as energy companies are postponing exploration projects and announcing redundancies.
“We are working closely with clients to re-evaluate their travel policies, modify behaviour and find savings where possible, without compromising on safety, which is a critical aspect of travel management for oil and gas companies,” said Mairead Hayden, operations director, FCm Aberdeen. “Our account managers have held emergency meetings with buyers to look at their travel programme on a case by case basis. Every client is different in terms of their travel needs and potential for finding savings.”
Energy clients are still travelling but making changes to policy such as moving a proportion of their air travel from business class to economy. Some travellers can only book business class if the flight is over eight hours for example. They can no longer choose their preferred carrier, if a cheaper fare is available on an alternative airline. Companies are also cutting back on non-essential travel, particularly domestic travel to internal meetings, and opting for video conferencing instead.
“Crews still need to transfer on and off oil rigs at the start and finish of their rotas, but we are looking at ways to find savings where possible, asking questions such as : does the crew member really need a flexible ticket; would a nett fare be better value than a marine fare?” explained Hayden.
“The responsibility falls to our operations staff to offer clients the most cost-effective option, fare, routing, hotel rate, not to wait until the traveller asks for the cheapest fare. If the client declines the lowest fare, then we produce missed savings reports to give travel buyers visibility over which fare was chosen and why, in order to analyse and influence traveller behaviour,” she added.
FCm has also been evaluating opportunities with airline suppliers, benchmarking different deals and driving hotel programmes to provide pricing relief. IATA is predicting that average fares should drop by five per cent in 2015 and some airlines have reduced fares already. FCm expects to see further decreases in fares over the next quarter – all of which will help to ease energy clients’ travel spend.
“Oil prices will recover at some point, because this industry is cyclical, but we just don’t know when,” said Hayden. “For now everyone is tightening their belts and it’s our job as a TMC working in partnership with our clients to help mitigate the impact on their business as much as possible.”