January 6, 2011
DESPITE the volcanic ash, the snow and the lingering effects of the global recession, 2010 was a qualified success for airlines. Figures from the International Air Transport Association (IATA) show that passenger numbers now top the prerecession peak of 2008. And according to a study by Britain’s Civil Aviation Authority (CAA) there was some good news for business travel too, if not necessarily for business travellers.
Business-class travelbuffeted by the winds of retrenchmentbegan to bounce back in 2010. But some of the big changes to the way business travel is managed may stick:
“As growth returns, business travel will revive, but it is an open question how far some of the economies made in the recession will permanently affect the way companies allow their employees to travel,” suggests Harry Bush, the CAAs Group Director of Economic Regulation.
This could mean bad news for airlines that offer business-class travel. It accounts for 8% of their passengers, but 27% of their revenues, according to IATA. As the numbers flying in business class fellby 25% between 2008 and the first quarter of 2010 on routes from Britainthe costs of doing so rose. Business travellers were increasingly using economy on short-haul routes, but cutbacks to travel budgets and rising costs hastened the trend.
Yet airlines are adapting to their customers’ new approach to travel management. The quality of business services on long-haul route has improved, and the premium-economy cabins have been developed. Fares on short-haul routes are also increasingly unbundled to compete with the budget airlines, which have made successful play for the cost-conscious business traveller.
As for the future, the study makes some interesting forecasts. In spite of lingering questions over whether business class will again become the perk it once was, there is a welcome prediction for the long-legged, long-haul traveller: rising British overseas trade will mean more business-class travel on more routes, particularly to emerging markets. Assuming, of course, that the national and international economies continue their return to health.
Another prediction is that new technology wont make business travel redundant any time soon. With a mite of protective instinct, the CAA argues that videoconferencing cannot replace the personal touch. It reckons that videoconferences might suffice for internal chats, but cannot replace face-to-face meetings where clients are concerned. There is still no substitute for going that extra milepreferably, the frequent flyer will argue, in business class.