Travel Market Report: Air Costs: Get Ready for a New All-Time High

Air Costs: Get Ready for a New All-Time High
Air fares took a hike in 2010 - a 7% hike, according to the latest Business Travel Monitor from American Express Business Travel. That left fares just 6% shy of all-time highs in 2008. Continuing fare increases in early 2011 suggest it won’t be long before companies are paying a new all-time high in air fares. “With oil prices rising, airlines are looking to cut their capacity growth plans to combat higher fuel costs,” said Christa Manning, director of research for Global Advisory Services, the research arm of American Express. “Increases in airfares are likely to remain on an upward trend in 2011. So far this year, we are seeing this trend hold true with domestic airfare rates in January up 8% compared to January, 2010.”

Unused Tickets Not Always Money Lost
Unused air tickets don’t have to mean money lost. There are fees associated with changing itineraries and traveler names, but it’s usually cheaper to pay the fee and change a ticket than to discard an unused ticket and buy a new one — if you can keep track of all those unused and partially unused tickets. Carlson Wagonlit Travel said it saved clients more than $850 million on unused travel documents in 2010. The company’s Document Bank recycled 98% of eligible unused travel documents in North America by applying credits against new travel. The system can track and integrate travel documents that are not managed through the Airlines Reporting Corporation (ARC) in the U.S. or the Bank Settlement Plan (BSP) in Canada, as well as documents that are settled through those standard channels. Other travel management companies offer similar programs.

Amadeus Signs Global Deal With conTgo 
Amadeus has become a global reseller of all conTgo mobile solutions. The global transaction processor is integrating conTgo products into its entire corporate product portfolio and pushing them out to current and new customers. For travel managers that use Amadeus, that means the company’s Mobile Travel Assistant becomes immediately available to book and manage corporate travel and corporate travelers. Relevant information available on traveler’s smart phones includes ground transportation and hotel details as well as any location-specific information selected by the traveler’s employer or TMC. The product also provides location-specific and traveler-specific warnings and risk information and lets travel managers communicate directly with at-risk travelers via a map interface based on itinerary filtering and geo-spatial selection. Until this announcement, American Express was the largest TMC to have integrated conTgo into its client offerings. 

Rising Oil Prices Not a Big Deal in the Short Term
You can stop worrying about the impact of rising oil prices on business travel. A short-term spike, even as high as $200 per barrel, would only cut about 2.5% off total business travel spending between 2011 and 2013. The numbers are contained in What Does Triple Digit Oil Mean for Business Travel? which was released by the Global Business Travel Association Foundation earlier this month. The report looked at scenarios with oil above $125, $150 and $200 per barrel through 2011, with a return to baseline by 2013. The conclusion: business travel spending and the number of trips taken will continue to grow even with the spike in oil prices, but projected growth will be reduced. Oil at $125 per barrell would cut projected travel spending growth by $5.8 billion, or 1.5%, and 700,000 trips over the next two years. Oil at $150 per barrell would cut projected travel spending by $6.9 billion, or 1.8%, and 1.8 million trips. Oil at $200 per barrell would cut projected spending growth by $9 billion, 2.5%, and 2.7 million trips.

Disagreement Over Free Checked Air Luggage
The Global Business Travel Association turned thumbs down on a suggestion from the U.S. Travel Association that airlines be required to allow one checked bag in all base fares. USTA said a free checked bag would reduce the burden on TSA by decreasing the number of carry-on bags that need to be screened. That would reduce wait times at security checkpoints. GBTA said in a statement that it does “not support the suggestion that the Department of Transportation require airlines to allow one checked bag as part of the base airfare. Airlines should be able to price their products as the market will bear.” GBTA did agree with USTA’s overall call for updating aviation security, including the creation of a Trusted Traveler program. “Business travelers are looking for a system that can help ensure safety while minimizing long lines and inefficient one size fits all security techniques,” the statement said. 

Large, Small Corporate Agencies Differ in Services, Prices
There are more differences between large corporate agencies and small corporate agencies than size alone. A new survey by the American Society of Travel Agents and The Beat found that larger agencies tend to charge lower transaction fees, while smaller agencies tend to charge less for special services and customized management functions. The Corporate Agency Report also found that 70% of agencies offer clients some sort of mobile booking solution. Some 25% of bookings are made online by travelers, but 16% of those traveler bookings later need some sort of agent assistance. Agencies most often use Concur for online bookings and Trams for management reports. 

Moscow Continues as Hotel Price Leader
Companies that complain about hotel prices in New York or Tokyo don’t know how lucky they are. For the sixth year running, Moscow is the most expensive city in the world for business travelers. The 2010 average price of $415 per night is a 3% decline over 2009 according to U.K-based travel management company Hogg Robinson Group Plc. New York comes in second at $339, followed by Geneva ($325), Paris ($321), and Zurich ($328.) Tokyo is number 18 on the list of 75 most expensive hotel cities at $270, while the cheapest hotel stay is in Milton Keynes, about 50 miles northwest of London, at $112.

Latin America on the Rise
“Latin America has been the up and coming region in business travel for as long as I’ve been in the industry. The latest data show that Latin American travelers and travel managers are moving faster than almost anywhere outside the Asia-Pacific region.” -  Ron DiLeo, executive director, Association of Corporate Travel Executives

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