Following this weakened demand in 2009, Business Travel expects a pent up need for travel and meetings to be unleashed in 2010. Fuel prices, along with sustained signs of a restarting economy, could also generate slight up-ticks in travel category prices worldwide, particularly in Asia Pacific."As the world begins to show signs of emerging from the recession, businesses are adapting to a fundamental shift in thinking focused on proving the value of travel and every employee connection," said Hervé Sedky, vice president and general manager, Business Travel. "Heading into 2010, companies will need to consider the impact of these changes in mindset, particularly as projected rate increases in key travel categories gain momentum."
Holiday Travel Gets Even Pricier
Flying on peak travel dates has always cost more, but this year it’s more expensive than ever, thanks to $10 surcharges several carriers are levying each way on certain dates.
Peak travel surcharge dates, according the fare monitoring site FareCompare.com, are Nov. 29 and 30, Dec. 19, 26 and 27, Jan 2 and 3, March 14, 20, 21 and 28, April 11 and May 28. American Airlines introduced the surcharge, US Airways followed and several others matched. (Source: FareCompare.com.)
Budding Corporate Travel Demand Sparks Airline Optimism
Corporate travel demand is improving, according to executives of the major legacy airlines.
They say corporate clients are taking to the skies in greater numbers, companies are easing restrictions and travelers in some cases are booking closer in to travel dates and increasingly selecting full fares.
"A lot of our corporate accounts are starting to hit the road again," said Delta Air Lines President Ed Bastian, adding that corporate fliers are "starting to move up the price point." Analysts sounded a similar theme throughout the industry's earnings calls. "There is evidence of improving travel demand, including from corporations," said Kevin Crissey of UBS. "All of the companies that have reported have cited this to one extent or another." Source: BTN Online
New Air-Traffic-Control Systems Offer Improved Communications Air-traffic controllers in the U.S., Europe, Canada, Australia, and New Zealand now have modern satellite-based systems that operate over oceans.
With frequent automatic position reporting from airplanes and email-like communications between pilots and controllers, these new systems are designed to fill the kind of communication void that occurred after Air France Flight 447 crashed in the Atlantic Ocean last June.
The new systems offer many other benefits as well. The FAA’s NextGen program is aiming at extending these satellite benefits over land as well as over oceans, replacing the current ground-based communication system. (Source: The Wall Street Journal)
United Offers One-Year, $249 Baggage Fee
United Airlines has put a new twist on baggage fees with Premier Baggage, charging customers a flat price that allows them to check two standard bags at no additional cost every time they fly on a United or United Express operated flight in a year. Customers can purchase a subscription for an introductory price of $249, entitling them to check two standard bags on United and United Express operated flights domestically and internationally, where applicable, rather than paying to check bags each trip.
The annual subscription also covers the standard checked baggage charge for up to eight companions traveling under the same confirmation number as the subscriber.
Mileage Plus Premier members are exempt from first and second bag fees on standard bags. (Source: United press release).
Track Flights on Your iPhone
FlightAware, which has more than two million monthly users using it for flight tracking, has released an application for the Apple iPhone and iPod Touch.
Users can download the free app from the Apple App Store, allowing them to track the real-time status and position of airline and private flights in the United States on their iPhones. (Source: FlightAware press release).
High-Speed Rail Could Ease Air Gridlock
A Brookings Institution study finds that air corridors of 500 miles or less between metropolitan hubs —distances at which trains can compete with planes—are the source of an increasing number of air delays. One reason for the congestion — no alternative transportation.
The delays can be so onerous that they discourage some would be travelers, who opt to stay home. The government is investing billions to improve rail options in some of these markets, but it will be years before they’re ready for consumers to ride. (Sources: Brookings Institution press release).
"Based on foretasted economic conditions for 2009 and the substantial increase in fares already experienced in 2008, it is possible that airfares in 2009 may decrease," said Hervé Sedky, vice president and general manager, Global Advisory Services Business Travel.
Sedky continued, "Considering airfare, car rental and hotel stay, we expect the average domestic trip to increase 2.8 percent, or $31 USD, to a total of approximately $1139 USD. An increase of 4.3 percent, or approximately $147 USD, is expected for international trips to bring the average cost to $3556.
However, if you include the costs of additional travel expenses including baggage fees, dining, airport parking and even package shipping, it can add an estimated $400 to the total trip cost."
Global Airfare Forecast
The proliferation of new fees and a delicate supply and demand balancing act will determine whether airfares remain steady, increase or potentially decrease compared to 2008.
"In response to the record energy prices in 2008, many airlines began charging fees for different services such as checked luggage, in-flight refreshments and aisle seating. To help mitigate the impact of these new charges, which can increase air travel costs up to an additional15 percent per trip, we advise companies to consider increasing their focus on demand management to ensure planned trips meet the guidelines designed to promote the most effective use of their business investment," continued Sedky.
- Capacity cuts are likely to lead to a shortage of available seats at lower price points, while changes in ticketing and minimum-stay requirements, uncertainty surrounding the future price of jet fuel, movement in airline consolidation and alliances and tighter controls over contract performance measurement are likely to drive price increases.
- Prices are predicted to experience downward pressure due to a slowing global economy, improved demand management by corporations and stronger traveler compliance. The expansion of low-cost carriers, more efficient aircraft and airline operations and the continued liberalization of the industry are also expected to mitigate increases.
Global Hotel Rate Forecast
Although Business Travel forecasts some rate growth in the global hotel industry, most regions will likely experience declines in occupancy, which will keep rate increases below the level of those seen in 2008.
- The record oil prices that began in 2008 are expected to continue to impact the hotel industry and airline capacity cuts should drive down demand in some markets
- As new hotels expand global supply and demand decreases in some markets, travel buyers should have increased bargaining power for 2009 rates.
- Companies should revisit their travel policies to ensure that travelers have a comprehensive guide to navigate the current travel environment.
- In addition to a tight travel policy, demand management and an increased focus on traveler compliance can deliver savings.
- Benchmarking that is based on average segment cost or average ticket price is no longer sufficient due to the expansion of airline fees. Companies should benchmark the entire cost of a trip in an effort to minimize expenditures related to business travel.
Meeting and Event Management Forecast
As economic conditions continue to draw attention to meeting and events as a source for savings, senior business leaders are expected to seek further visibility into meetings spending and aim to measure the return on investment of meetings and events for their companies.
- Effective demand management tactics and a movement toward shorter events in more local destinations should help corporations achieve the best return on investment
- Implementing and managing meetings policy is expected to provide companies the ability to drive certain cost-saving behaviors. Based on a recent survey of travel clients, over 70% of companies do not have a stand alone meetings policy
- Technology developments offer cost-effective ways to supplement meetings and events schedules. Teleconferencing and social networking sites are gaining popularity as tools to strengthen the interpersonal relationships created through traditional meetings.
- Leveraging transient hotel programs with a meetings hotel program is expected to enable companies to have visibility in both areas and drive savings. Negotiating packages for the preferred properties will likely simplify the process to drive and support compliance.
(Source: Business Travel)
Cost Containment Strategies for 2009
Companies across the globe are seeking new ways to manage their travel investments and maximize the value of their T&E programs.
Hospitality Industry Confronts Impact of Economic Downturn
Occupancy and revPAR levels for U.S. hotels continue to decline through the first week of November (latest available data) though ten top markets posted brisk growth in occupancy levels, room rates and revPAR through October.
Hotels in the United Kingdom as well as in Europe overall registered revPAR declines based on sliding occupancy levels.
The hotel construction pipeline grew 28% worldwide at the mid-year point (latest available data) although signs point to a developing fall-off and in the U.S., the number of guestrooms under
construction decreased by 5% in October.
Car Rental Customer Satisfaction Continues to Decline Customer satisfaction with renting cars at airports has declined considerably for a second consecutive year, according to the J.D. Power and Associates 2008 Rental Car Satisfaction Study.
The study looks at six factors: costs and fees, pick-up process, rental car, return process, reservation process and shuttle bus/van.
Overall satisfaction declines significantly from 750 points on a 1,000-point scale in 2007 to 734 in 2008. Staffing and operational cuts are hurting service, according to the study. Enterprise ranked highest for the fifth year in a row, followed by Hertz and Alamo. (Source: J.D. Power press release).
Avis Budget Ups Rates $3 Per Day
Avis Budget Group said it is upping its retail car rental rates by $3 per day and $20 per week at all airport and selected off-airport locations.
The company said the rate increase was a response to escalating costs affecting the car rental industry. Hertz raised its rates in the U.S. and Europe at the end of October. (Source: Avis Budget Press release)
Airline baggage fees bug air travelers the most, but many consider general cabin ticket prices and fuel surcharge reasonable, according to a survey by the IBM Institute of Business Value.
- Seventy-eight percent of travelers consider airline baggage fees the biggest rip-off.
- Seventy-six percent considered additional charges to redeem miles another major rip-off.
- But 70 percent called general cabin ticket prices reasonable.
- Half considered fuel surcharges valid.
- Fifty-eight percent prefer to pay the lowest possible ticket price, sacrificing all amenities, including food.
(Source: IBM press release)
Sheraton Opens at JFK
The Sheraton JFK Hotel, a new build, has opened at New York´s John F. Kennedy International Airport. The 150-room hotel is a full-service hotel with meeting facilities, complimentary shuttle service to and from the airport, a restaurant, indoor pool, business center, fitness center and Club floor. (Source: Starwood Hotels Resorts press release).
Marriott Raleigh City Center Opens The 400-room Raleigh Marriott City Center has opened next to the new 500,000-square-foot Raleigh Convention Center. The 16-story hotel is attached to the convention center and has more than 15,000 square feet of meeting space, a business center, swimming pool and fitness center. It has two Italian restaurants and a 1,400 square foot Starbucks. (Source: Marriott press release).
Avis and Budget Offer Flicks to Go
Avis Rent A Car and Budget Rent A Car are introducing Flicks-To-Go, portable DVD players that attach
to the back of a car’s headrest. They include a choice of speakers for multiple viewers or two high-quality headphones which customers can keep. (Source: Avis press release).
If it feels as though you’re paying more for airfare, there´s a reason. The latest Business Travel Monitor reports that domestic and international airfares hit record levels in the second quarter of 2008. The good new is that companies can save money by emphasizing travel policy compliance.
Among the study’s findings:
- The average one-way domestic fare was $260, up $24 from the same period last year, a 10 percent increase, and up $27 from the first quarter, a 12 percent increase.
- The average one-way international fare hit its highest level since the inception of the Business Travel Monitor in 1999. These fares increased 11 percent over the same period last year, averaging $1,080.
- The percentage of international business class tickets dropped to their lowest level since 2004. Increases in the percentage of tickets purchased for the back of the plane indicate that travelers are trading down.
(Source: press release).
Continental Airlines, Delta Air Lines and United Airlines during fourth-quarter 2007 earnings calls said they have reinstated the Saturday-night stay requirements in select markets.
In fare analysis conducted for Business Travel News, Harrell Associates found the six legacy carriers placed Saturday-night stay restrictions on 4 percent of the 2,813 one way or roundtrip fares evaluated in late January in each carrier’s top 40 routes.
That is slightly up from the 3 percent of restrictions found for the same carriers in the same markets last September. However, the most recent data from Harrell shows that of 763 roundtrip fares evaluated, 13 percent carried Saturday-night stay restrictions.
Robert Mann, President of airline consulting firm R.W. Mann & Co., said the restrictions are “the sort of thing that will, without changing prices, fence business travelers into the higher fare categories—it will also tick them off, but that’s a separate issue.” Not all legacy carriers have joined the Saturday-night stay reintroduction. “We have not done that anywhere yet and frankly don’t see that happening across the industry,” US Airways CEO Doug Parker said in the carrier’s earnings call last month.
AirTran’s reservations system will be capable of handling code share flights within a few months, opening up the possibility that the carrier could take on code-share partners for the first time, said AirTran CEO Robert Fornaro.
American parent AMR Corp. next year plans to divest American Eagle, its regional subsidiary, with a spin-off to AMR shareholders, a sale to a third party or some other form of separation.American Eagle operates about 1,700 daily flights with about 300 aircraft and will generate about $2.3 billion in revenue this year.
AMR said the move would enable American to focus on its mainline business while allowing American Eagle to pursue growth opportunities.
Continental signed up with JetBlue subsidiary LiveTV to bring seatback TV viewing to Continental´s domestic passengers on certain aircraft.In addition, the carrier will introduce Live TV’s in-flight Wi-Fi connectivity for e-mail and instant messaging. Continental expects to charge a $6 access fee in economy.
In January, JetBlue Airways debuted refundable fares, allowing purchasers to change reservations, including passenger name, or receive a full refund for cancellations prior to departures.It said refundable fare pricing would depend on haul length, but would be $50 to $100 higher than its highest nonrefundable fare.
Carriers to add Direct U.S. – China Flights
- American 2009 China-Beijing*
- Continental 2009 Newark-Shanghai*
- Delta 2008 Atlanta-Shanghai
- Northwest 2009 Detroit-Shanghai*
- United 2008 San Francisco-Guangzhou
- US Airways 2009 Philadelphia-Beijing*
- Air China 2009 Beijing-Washington & Shanghai-San Francisco
- China Eastern 2008 Shanghai-Los Angeles1
- China Southern 2008 Beijing-Newark, 2009 Beijing-Detroit
- Hainan Airlines 2008 Beijing-Seattle, 2009 Beijing-Chicago & Beijing-Newark
- Shanghai Airlines 2009 Shanghai-Seattle & Shanghai-Los Angeles