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​​AoG travel pricing model

The three AoG travel contracts: Air travel services, Rental vehicles and Travel management services (TMS) follow a pricing model commonly recognised as best practice. The fundamental characteristic of the model is that it removes commissions and similar types of incentive payments from travel purchased by government agencies.

This is different from the way the travel industry typically operates. Travel suppliers such as airlines, hotels, and rental vehicle suppliers generally pay commissions or similar incentive payments to parties that sell their travel. This means travel agents, travel websites, and providers of travel management services usually derive some or all of their income through these incentive payments.

This incentive model is suitable for leisure travel but is not optimal for organisations with significant travel expenditure. Businesses and governments seeking to optimise their procurement, typically adopt Nett-Nett or non-commissionable pricing model.

Benefits of the Nett-Nett pricing model

The three AoG travel contracts follow the Nett-Nett pricing model to deliver several benefits to agencies.

  • Savings: savings in addition to removing the cost of incentive payments.
  • Transparency: make the cost of travel and travel management services clear.
  • Integration: removing financial interdependence means the contracts fit together easily.
  • Optimised purchasing: removes incentives for TMS providers to sell a particular travel service due to its earning potential.

How the model works when using a TMS provider

The AoG contracts for air travel and rental vehicles provide substantial discounts and remove incentive payments. If your agency books travel through a TMS provider, they are required to report and return any incentive payments they receive from other suppliers (i.e. non-AoG suppliers) to the agency.

Allowing for the removal of incentive payment income, provider charges have been agreed through the TMS contract to meet the cost of delivering the services while providing agencies with value for money. Upon transitioning to the AoG contracts, agencies usually change their price agreements with hotels and other frequently used suppliers to remove incentive payments and reduce the price accordingly, creating further savings.

Commissions retained

Although the travel team still recommends Nett-Nett pricing as default, the new TMS contract now allows for an agency to select commissions retained as a pricing model. This provides flexibility for agencies who acknowledge that all incentive payments, rebates and commissions will be retained by the TMS provider in exchange for a lower booking fee. TMS providers need to report each quarter the amount that they earn from all incentive payments, rebates and commissions to ensure transparency.

Purchasing options

Some agencies may consider purchasing travel direct with airlines, hotels, and rental vehicle and similar suppliers.

Purchasing direct can reduce the cost associated with transacting travel. However, it is worth noting that agencies will use more resources self-servicing, than they would if using a TMS provider.

The tables below provide an overview of the two booking options available to an agency when purchasing business travel under the AoG travel contracts. Further information on purchasing direct and/or combining it with travel management is provided in our guide: Managing travel: Travel management services vs booking direct. An agency login is required to access this document in the travel booking guidance section.

Option 1 - Use a TMS provider

Participating agency or school purchases travel through a TMS provider.

AoG travel agreements offering

Other

Travel management services

Air travel

Discounted airfares through 11 suppliers representing 14 airlines (domestic/international)

Rental vehicles

Discounted rental rates and services through four vehicle suppliers (domestic)

No AoG agreement in place

For example, accommodation, trains, ferries, coach

TMS provider provides coordinated management of the agency's travel purchasing, reporting, payment, duty of care, access to preferential accommodation rates, ability to offset carbon etc

Option 2 Purchase direct

Participating agency or school purchases travel direct from airlines, rental vehicle and accommodation suppliers.

AoG travel agreements offering

Other

Travel management services

Air travel

Discounted airfares through 11 suppliers (domestic/international)

Rental vehicles

Discounted rental rates and services through four vehicle suppliers (domestic)

No AoG agreement in place

For example, accommodation, trains, ferries, coach

TMS provider is not involved in travel purchased direct

Agencies/schools can purchase AoG discounted flights for domestic travel directly. Please see the booking travel page for information.

Agency may purchase AoG discounted rental vehicles:

1) Direct from Avis, Hertz, Hirepool, Thrifty

Agency will self-manage accommodation and other types of travel purchase

If purchasing directly with providers, an agency would need to manage all management of the agency's travel purchasing including changes and cancellations, reporting, payment, duty of care, access to preferential accommodation rates etc.

Travel booking guidance

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