It is not rocket science to use any segment of any market to evaluate the overall economic situation. Business travel being perhaps one of the best indicators, taking a look at travel news seems like a good reason for Everything PR to explore just a little, the current trends of businesses with regard to their position in this area. Recent news reports indicate that business travel is quite healthy all things considered. But, are cutbacks and streamlining in here an indicator or business to come for the foreseeable future?
Businesses large and small have been hit hard at the “bottom line”, where it hurts the most, by the economic situation. This is no secret. However, we do not see specific figures on business’ cutbacks and other “efficiency” efforts within individual operations of business all that often. Layoffs and other economic indicators reflect seemingly long range effects as far as the mechanics of doing business are concerned, but looking at aspects like how Travel is being “reconsidered” may provide an even more clear picture of not only where business is, but changes which may effect us all for far longer than people being hired, laid off or fired. The reason? Layoffs and labor strategy tend to remain rather constant these days, as good business at least has pretty much hammered down personnel needs to a fine line. But for travel and some other business “necessities”, this has not exactly been the case – until now.
Bye Bye Business Class – But Forever?
According to the news and reports out there, man businesses have cut back on their travel by as much as 70 percent. We are not talking about GM execs flying in Lear Jets to Washington here either, but businesses whose doctrine of operation seemingly required travel as part of the course of business. Looking at these numbers, one wonders how many expenditures for travel were justified in the first place. Especially since the advent of digital meetings and technologies which negate the need for “face to face” business. A concise but informative article in the Seattle Times quoted Charles Petruccelli, President of American Express’ Global Travel Services, which handles almost $30 billion a year in corporate travel sales:
“The recession, which is not over as far as I am concerned, has fundamentally changed the traditional business travel paradigm.”
Good Business – Two Steps Forward, One Step Back
Reading over that statement from someone whose bread and butter is business travel says a lot about where all business is at this stage to me. According to this article, and others, businesses are sending out a message with regard to travel expenditures, pretty much declaring war on anything, particularly travel, which does not very positively effect their bottom line. In short, squeeze more productivity out, and make frivolous spending on travel extinct. How does this effect all business? Well, it is not exactly what American Express or the travel industry as a whole wanted to hear, that is sure. But, the long tail for the rest of us just might be more efficient and stable businesses and the market in general. Think of GM or even Wall Street in a situation where excess cannot exist perhaps?
OAG, one of the best business travel solutions providers, compiles perhaps the best statistics with regard to airline trends available. Their recent reports reveal slowing of airline seat capacity, along with interesting trends with regard to regional travel metrics. The metrics are a subject for further report, but it is interesting that OAG reports on the supply side positively, when obviously the demand side is way down? The bottom line on these figures indicating that the low cost carriers (the ones with the slightest win margin) show significant losses. Though arguable, business class passengers may just not be there for the foreseeable future. Running contrary to this statement, IATA Director-General Giovanni Bisignani suggested that global airlines may see an upturn in business class demand by the middle of 2010. But, what if he is wrong? What if business tightens its proverbial belt and then discovers it no longer needs seats on airplanes as a function of operations?
Street Lamps To The Future of Business
The IATA suggests the industry will lose something like $11 billion this year as a result of the current recession. Interestingly, there is no prediction for how some of these business trends might effect the industry in the mid to long term? Digital conferencing and other communications businesses stand to profit substantially given the cost effectiveness indicated in those sectors. It almost goes without saying that business class airfare is going to take a rather permanent hit. The only region really maintaining positive growth for business class fares is China and the rest of Asia obviously, and for obvious reasons. The industry may look a lot more like the image at the left soon, and a lot less like the featured image top right.
So what about Travel as an indicator or business overall? The tail of this actually leads to a more realistic and positive result if you think about it. Better business means a better economy. In a better economy, people have more discretionary spending (right now they are huddled at home awaiting some light at the end of the tunnel). Discretionary spending means more travel, and so forth. If you buy into this argument, the suggested course for airlines and other travel sectors would be to prepare strategies for a market not dependent on business men roaming the globe. This is not a bad thing at all, but perhaps a natural consequence of refined b business practices to keep in time with emerging technologies. So far technology has not invented a way for people to touch a Sphinx, or to dive the Great Barrier Reef. It has however made it possible to talk and plan business at a great distance. Next along these lines. “The Coming Shift In Travel Technology.”
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