Study Says Business Travel May Help Airlines Recover from Economic Slump
Monday, September 28th, 2009
Researchers at Oxford Economics, a global research firm, suggest that increases in business travel may help the airlines and the U.S. economy recover from the recent economic slump. The company points out that cutting back on business travel may help companies reduce expenses in the short-run, but over the course of the year, this type of cutback can hurt corporate performance and in turn, reduce revenues overall.
According to Oxford Economics, companies need to maintain some of their travel plans and modify their travel budgets – not cut them out of their monthly expense roll completely – in order to have a competitive advantage in the marketplace in the long term.
The study was commissioned by the U.S. Travel Association, and sheds some light on the issues that many companies are facing today as they struggle to stay ahead of the economic downturn. The recession has left many companies with limited marketing and travel budgets because of reduced revenues, and business travel is usually at the top of the ‘cut list’ for many.
Airlines around the world are expected to post approximately $11 billion in losses for the 2008-2009 year, but there may be some hope for the 2009-2010 year as more travelers return to their pre-recession travel schedules, and companies are no longer afraid to spend money for corporate travel.
As a result of reduced demand for business travel, some major airlines in the U.S. are taking a proactive approach for drumming up business. JetBlue Airlines recently ran a special flat-fee campaign that offered unlimited flying for domestic travel for a 30-day period. Other airlines are rolling out special rewards programs and modifying their frequent flyer incentives to encourage more corporate travelers in the upcoming months. The U.S. Travel Association reports that they do expect a significant increase in demand for leisure and business travel through Spring 2010.
