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The Changing Landscape of Business Travel

By Stewart Roy
The ongoing global economic downturn has affected nearly all major industries but the effect has been particularly devastating on the global airline industry which has been grappling with various woes like rising fuel costs, falling revenues and rapidly diminishing demand especially in the premium class of travel. In a recent forecast, the International Air Transport Association director general and CEO Giovanni Bisignani, estimated that global airlines would face a 12 percent decline in revenues for 2009.

These airline industry woes have affected all airlines and both the legacy carriers as well as the low cost carriers have had to deal with this changing global economic scenario. While several low cost carriers like the all business class transatlantic services, EOS, Silverjet and Maxjet have simply shut shop and disappeared into oblivion whereas many airlines have even dropped certain routes or reduced the frequency of service to certain destinations in order to combat revenue losses.

Business travel which is usually associated with the premium cabins of airlines has been especially badly affected by the recession as companies all over the world have gone into cost cutting mode and have eliminated or altered their business travel programs in keeping with their new conservation mantra. A recent survey by the Association of Corporate Travel Executives found that more than 70% of corporations were in the process of cutting down on travel budgets by 10% to 20% this year. Additionally, companies such as AT&T have reportedly reduced business travel by 15% through the use of video conferences and web meetings while consulting giant, Accenture has begun the process of setting a network of video conferencing rooms at its various locations worldwide in an effort to limit business travel.

However in spite of all this, the general consensus seems to be that business travel is extremely essential to the conduct of regular business and cannot be done away entirely with especially in situations that demand interpersonal interaction across international borders or require specialized training which needs to be imparted. Some companies do in fact realize this and are currently leaning on their travel departments to control costs by procuring the best airline and hotel deals for their executives who need to make these essential business trips.

Airlines also realize that these business class travelers are their primary source of revenue and profit and need to be retained at any cost. In order to fill their planes and retain custom they have resorted to offering fantastic discounts on tickets for their cabins located in the front of the aircraft. Recently British Airways had a 2-for-1 sale on business-class seats from the United States to London for travel between June 1st and October 31st 2009. This offer was soon followed by similar sales from airlines such as Virgin Atlantic, American Airlines and Continental.

Stewart Roy

Travel Professional
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