executive briefing: travel ban on -...

Executive Briefing:

TRAVEL BAN ON LAPTOPS & LARGE ELECTRONIC DEVICES

Authors: Bill Rogde, Director Global Air & Lodging Practice Bill Kerr, Chief Marketing Officer Scott Stachowiak, Engagement Manager - Global Air Practice

Impacts, Implications & Opportunities For Organization Programs With Middle Eastern Travel

© Copyright 2017 TCG Consulting Partners, LLC www.tcgconsulting.net

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CONTENTS

EXECUTIVE SUMMARY ................................................................................................ 2 SITUATION ..................................................................................................................... 3 IMPACTS ........................................................................................................................ 4 OPPORTUNITY .............................................................................................................. 6 TCG SOLUTIONS ........................................................................................................... 7 ABOUT TCG & THE AUTHORS ..................................................................................... 8


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EXECUTIVE SUMMARY • Ban on select electronic devices on select

Middle Eastern routes will create both logistical and fare impacts short to mid-term for Corporate Travel Programs

• Company policy + traveler productivity requirements will create traffic pattern shifts

• Alignment will be required between information security policy and travel policy

• The potential traffic shift will disproportionately impact Middle Eastern carrier fares to the downside and European fares to the upside

• Expect a short-term drop of 10-20% for fares in the Middle East and similar percentage increase for European alternate route options

• Capacity adjustments will take time – Europe to ramp up, Middle Eastern carriers reacting to dilemma of new aircraft inventory additions

• Companies will need to assess current state and conduct scenario planning for: A. Opportunity for significant short-term

price cuts B. Policy/risk/productivity implications of

maintaining status quo C. Tradeoffs of new carrier contracts for

alternative routes in a sellers’ market


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SITUATION

The United States and the United Kingdom have instituted a ban on large electronic devices, including laptop computers, for travel from Turkey and some Middle Eastern and North African countries.

• The ban applies to anything larger than a large smart phone (e-readers, tablets, cameras, etc.)

• Nine airlines from eight countries are impacted by the United States ban. The countries are Turkey, Morocco, Jordan, Egypt, the United Arab Emirates, Qatar, Saudi Arabia, and Kuwait. The impacted airlines are Egyptair, Emirates, Etihad Airways, Kuwait Airways, Qatar Airways, Royal Air Maroc, Royal Jordanian, Saudia, and Turkish Airlines. U.S. carriers do not fly from any of the affected airports. Note also that the ban does not indicate what the impact is for travelers using the impacted airlines from non-impacted airports.

Example: Emirates flies to the U.S. from Milan and Athens, but the airline claims that the rule is not relevant to those departure cities. The ban also does not lay out specific size limits. It only mentions laptops and larger electronics with a specific exception for smart phones.

• The U.K. ban applies to six countries: Egypt, Turkey, Jordan, Saudi Arabia,

Tunisia, and Lebanon. The impacted airlines are British Airways, Easy Jet, Jet


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2, Monarch, Thomas Cook, and Thompson. Devices covered under the U.K. ban are larger than 16cm long, 9.3cm wide, or 1.5cm deep. Note: This ban covers some of the larger smart phone models.

IMPACTS • The ban will impact roughly 50 daily direct flights to the United States

Keep in mind that there are also over 1,200 daily one-stops into the U.S. from the impacted airports.

• Travelers may have to avoid impacted airports as a stop-over point in their travels

• Fares are expected to rise in other “heavy connection” airports (Frankfurt, London, Paris, etc.) as a result.


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1. Capacity is disproportionately high relative to demand in the Middle East. This is due to the aggressive expansion of carriers in the region (Etihad, Emirates, and Qatar being most noteworthy). Per IATA, in 2016, Middle Eastern carrier capacity grew 13.7% while load factors (how full the aircraft are) fell 1.3 percentage points to 74.7%.

2. The likely recipient of a traffic shift is

European airports. There 2016 load factors (per IATA) were 82.8% with year-over-year capacity growth of only 5.0%. Airlines generally consider load factors over 80% to be at full capacity. The 82.8% number is also amongst the highest in the world. Put another way, there is little excess capacity in Europe to absorb the short-term shift.

In summary, the potential traffic shift will disproportionately impact Middle Eastern carrier fares downward and European fares upward.

Expect a short-term drop of 10-20% in the Middle East and just the opposite in Europe on impacted routes. Eventually, Middle Eastern carriers will cut capacity to shore up fares; however, given the full pipeline of new aircraft orders, this may take time.

• Travelers must check-in laptops, cameras, iPads, and other large devices • Medical devices will have increased security but will be allowed into the cabin

Two Key Compounding

Factors & Drivers


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• Increased risk of theft or damage – high value electronics are prime targets

Data Security will be of increased importance.

Key concerns include:

• Theft of the device – back-up data before you leave for the airport

• Installation of malware or spyware (key loggers or implants) – passcodes and/or fingerprint locks are suggested

• Data theft – malicious USB devices can remove data in seconds Devices should be completely

logged-off and turned off Sensitive data should also be

uploaded to a secure network/the cloud and removed from the device

Use of data encryption – most operating systems have this feature

Use tamper-evident bags to make sure that the device hasn’t been tampered with

Establish a “Travel-Laptop” program ‒ Clean (i.e. clear of sensitive data) laptops could be checked-in as

needed. Less expensive devices could be used to minimize financial risk. Reasonable amounts of data could be carried on a USB if corporate policy permits.

Use software that can detect if data is being collected from your device

OPPORTUNITY

• Impacted airlines have already hinted that there may be negative repercussions to demand for their services

• Ability to work around the issues associated with the ban creates reduced fare opportunity to or through the Middle East

• Most airlines price their product based on supply and demand model • Less demand for a flight with a Middle Eastern connection looks the same

in many cases as an origin/destination flight to airline revenue management systems - thus fares should come down for some of the strongest amenity flights in the world


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TCG SOLUTIONS

TCG can assist your organization in assessing current state impacts and build a business case to support a data driven response to these changes

• Analyzing the impact that this new market

dynamic will have on your contract targets

• Determine the potential cost increases/ savings to your company of maintaining or enhancing your current usage patterns

• Conducting what-if scenarios to study the potentially higher discounts available from shifting spend toward other carriers


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ABOUT TCG & THE AUTHORS TCG Consulting - Global Leaders for Independent Strategic Consulting, Sourcing & Management Services Across Corporate Travel, Meetings, Payment Systems & Expense Management Quick TCG Facts: • Over 1,200 successful client engagements executed across 163

countries on 6 continents • Global practice expertise - Strategy, Program Design and Integration,

Meetings, Air, Lodging, Payment, Expense & Invoice, Program & Project Management

• Global TCG offices and resources – Charlotte, Houston, Sao Paulo, London, Dubai, Hong Kong, Manila

• Specific experience delivering results for unique industry verticals – Oil/Gas/Energy/Field Services, Pharma, Financial Services, Manufacturing, Technology, Professional Services and many others

• Complete independence – no supplier relationships

Bill Rogde, Director Global Lodging & Air Practice Bill leads TCG’s Global Air and Lodging Practices, delivering optimized and integrated corporate travel category sourcing and management engagements. He brings over 18 years of experience in the procurement and supply chain management disciplines to his role, having held various strategic leadership positions including

Director of Sourcing and Category Management for Cameron International, Global Category Manager for Schlumberger, Senior Category Manager for Halliburton, and United Kingdom Country Manager – Indirect Sourcing for Nokia. He has also served in various procurement leadership roles at American Airlines, General Electric Aircraft Engines, and Lockheed Martin. Bill received a BA in 1992 from Texas A&M University and is also a certified Six Sigma Green and Black Belt.

Bill Kerr, Chief Marketing Officer Bill leads the global marketing & business development functions for TCG, working out of the Charlotte, NC global headquarters office. His 25 years’ experience includes diverse marketing, strategic planning, professional services, client management, and product development leadership roles with Kraft Foods, Wachovia

Bank, Arthur Andersen Business Consulting, and Microban. Bill holds a B.A degree from Roanoke College in Salem, VA and earned his MBA from Duke University’s Fuqua School of Business in Durham, NC.


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Scott Stachowiak, Engagement Manager – Global Air Practice Scott serves as TCG’s Engagement Manager for the Global Air Practice. Scott has over 25 years of industry experience including his most recent role as a Senior Manager of Air Strategy, Global Supplier Relations at American Express Global Business Travel. Scott’s additional experience includes leadership roles with SAS

Consulting, NRG/Reliant Energy Retail and 22 years with Continental Airlines including a position as Director of Distribution Strategy & Analysis.

For questions or more information, contact

Bill Rogde at [email protected], Bill Kerr at [email protected] or Scott Stachowiak at [email protected]

mailto:[email protected]



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