An aviation consultant’s survey of frequent business travelers disclosed a continuing squeeze on corporate travel budgets
San Francisco, CA -- (SBWIRE) -- 10/24/2012 -- An aviation consultant’s survey of frequent business travelers reveals a continuing squeeze on corporate travel budgets. While trips remain on the rise, travel budgets are not rising as fast. As a result, executives who flew on premium air tickets are increasingly finding themselves handed economy-class ones.
The Ascend aviation consultancy, which surveys business travelers in North America and Europe on travel plans and trends each year, in its 2012 survey found travelers foresee a 1.5% rise in business trips, compared with a 1% anticipated increase in corporate travel budgets. Since fares are seen as likely to keep rising into next year, further tightening of corporate travel budgets is seen to also be in the cards.
For longer air trips, the survey found 61% of executives are traveling on business or first-class tickets, with the rest relegated to economy or premium economy-class seats. Even within the economy classes, the trend is towards the cheaper seats. This year, 25% of the surveyed business travelers are flying in economy, compared with 20% in last year’s survey. Premium economy-class travelers dropped to 14% this year, down from 19% last year. That’s also in line with figures from the International Air Transport Association, which found a 3.5% drop in premium-class travel tickets in Europe, measured on a year-to-year basis, through this July.
According to Peter Morris, the chief economist for Ascend, the squeeze on business travelers offers both an opportunity and a challenge for lower-priced carriers. As corporate travel departments try to meet their needs at a time of escalating costs, lower-priced carriers may be getting a second look from firms which once spurned them. For instance, easyJet, the second-largest budget carrier in Europe, says business travelers now make up 18% of its passengers, and it expects their share to keep on rising. The company has recently signed an increasing number of corporate deals, including one in London with the Houses of Parliament.
At the same time, however, just having low prices may not be enough to bring a major shift in business to the lower-priced carriers. To pick up the business, the budget carriers will have to be able to compete on such key non-price factors as airports used, services provided and the variety and flexibility of their offerings. They will also have to deal with any earlier-negotiated deals their generally higher-priced rivals may have in place more offering competitive rates for business travelers.
In other survey results, 44% of the frequent business travelers identified airport check-in procedures as the most improved feature, pointing to such improvements as online check-ins. The areas where they saw the biggest changes for the worse were lines and delays caused by airport security procedures – also the biggest complaint in last year’s survey -- and in-flight service. Not surprisingly, service was thought to have deteriorated more in economy classes than in premium ones. And 79% of those surveyed predicted global consolidation in the airline industry will mean reduced choice and higher prices.
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