Airlines, hotels and car rental companies in the United States reported good to excellent recovery patterns as business travel hit an acceptable stride in the second quarter of 2010. These earnings numbers are supported by worldwide travel agency sales data from Airlines Reporting Corporation, which has shown an average increase of 21.7 percent over the first half of 2010 based on 7.5 percent higher domestic transactions and 11 percent more international transactions when compared to the same period last year. In an online survey of 80 travel buyers and suppliers conducted in late July and early August by AirPlus International, rates of optimism surrounding travel volume increases for the second half of 2010 showed some marked differences for buyers versus suppliers.

The majority of both groups projected business travel volume increases overall, and a larger percentage of buyers than suppliers actually expect to see increases in their company‘s business travel volume in the latter half of 2010 when compared to the same period last year. Suppliers, however, showed somewhat more optimism than buyers when asked about the specific rate of that increase.

Among suppliers responding to the survey, more than 52 percent expected to see travel volume increases overall, with 25 percent expecting a moderate increase of 5 to 10 percent. None of the suppliers surveyed projected increases of less than 5 percent for the period.

That figure contrasted markedly with the nearly 15 percent of buyers responding to the survey, who marked the slower growth category for their company‘s travel volumes. Buyers also differed from suppliers in the percentage that projected more aggressive travel volume growth. A slight percentage of buyers—3.3 percent—indicated volume increases of more than 25 percent, whereas no supplier was willing to go out on this limb.

Buyer and supplier projections were nearly in lockstep in the rest of the growth categories. About 25 percent of both buyers and suppliers indicated that business travel volumes would stay the same in the second half of 2010, when compared to last year. About 12 percent of each group projected a decrease in business travel volume.

For the 59 percent of buyers with positive projections, 33 percent identified sales travel as the focus of the growth. For another 33 percent, travel for new business development was taking priority. While sales travel is a logical area for business travel growth in a recovering economy, the surge in new business development may indicate a driving effort to explore opportunities in emerging economies in Latin America and Asia, where economic recovery has been swift.

In addition, the survey clearly showed that travel managers are feeling the pressure to demonstrate the return on investment for travel. Sales travel and new business development are the two areas where managers could most effectively make an argument for travel ROI by linking the cost of this travel to a company‘s overall revenue generation. Nearly 30 percent of buyers identified “pressure to show the ROI of travel” as their top pressure from upper management as business travelers get back on the road. This pressure was a distant second when compared to the 50 percent of travel managers who identified “pressure to find additional savings” as their top concern.

As a relatively new effort for travel managers, demonstrating travel ROI has clearly entered the main stream, but it is not likely to be an easy task. In particular, measuring the opportunity costs of not traveling and identifying the period for payback for trips taken, will continue to be a challenge to any travel managers tasked with an ROI effort. Is it worth it? The answer will be a resounding “yes” for the industry as a whole if the individual companies are successful at doing so.

Download the free PDF for full survey results.
AirPlus: The Wire August 2010 (PDF, 250KB)

Additional Resources:

U.S. Airlines Surge Back to Profitability

Marriott Preparing Customers for “Meaningfully” Higher Rates

The trend in business travel has remained unchanged for the past few years – Economy rather than Business Class. The reasons include the increasing, and indeed sensible, introduction of travel policies and the acute pressure to economize due to the recession over the past two years. Large companies were the first to react to the crisis; smaller ones followed soon after. However, saving money by booking Economy Class tickets does not necessarily show the whole picture of long- or short-haul flights. The health of the travelers and the potential opportunity costs must also be considered when booking a flight.

Duty of care

Companies must comply with their duty of care vis-à-vis their staff at all times, including during business travel. On one hand, health considerations that apply to certain groups of travelers, such as an increased risk of thrombosis, need to be considered. On the other hand, economic aspects must be taken into account. Will the travelers get enough rest during the flight to successfully conduct negotiations at their destinations? Can they make effective use of flight time to get work done?

Book the class of flight that suits the circumstances

When taking all concerns into consideration, at the end of the day it becomes clear that booking a flight is a mere question of weighing costs and benefits: negative negotiation outcomes resulting from stressful travel may entail higher costs for companies than Business Class flights. In this context it should, for example, be considered whether a flight is taken during the day or the night and whether the traveler takes the trip during his or her work hours but can neither sleep nor work due to lack of space.
Flight classes also make a difference in terms of travel-related concerns, for example, “time is money” applies to the Fast Lanes and priority boarding and deboarding that Business Class travelers enjoy. In addition, Business Class travelers have access to lounges, thus saving time and providing opportunities to make efficient use of waiting times.

A question of travel policies

Flight class bookings should not be based on corporate hierarchy level, but on distance travelled. However, not all long distances are the same – spending money for an Economy Class ticket plus a night in a hotel may also pay off. To ensure transparency and effectiveness, leeway in the interpretation of travel policies should be allowed. Travel policies should be clearly formulated and, if required, complemented by a world map indicating Economy and Business Class destinations. In addition, travel policies should be reviewed regularly and compliance should be strictly controlled.

Two years ago Anne Richter, a graduate of the Braunschweig/Wolfenbüttel University of Applied Sciences, conducted scientific investigations on classes of business travel. Her study titled “Travel Classes on Long-Distance Flights for Business Travel – Analysis of Travel Policies and Bases for Decisions in German Corporations” is available in German and can be ordered by e-mailing communications@airplus.com.

One of the factors reflecting Europe’s recovery from the economic crisis is the latest business-travel figures: in the first six months of 2010, the number of business flights taken by staff of European companies increased by three percent as compared to the same period in 2009. Moreover, the percentage of business travelers flying Business Class has also grown, from eight percent in January 2010 to 10 percent in June. This figure was last reached at the end of 2008, before the economic slump. In total, companies in Europe spent seven percent more on flights in the first half of 2010 than they did in the first half of 2009. These figures are from the latest AirPlus Business Travel Index, a survey conducted by the leading international provider of solutions for business-travel management, covering the first six months of 2010.

More than 16 percent of all business flights were intercontinental
While companies cut back on domestic business flights by six percent, the number of tickets to European destinations increased by five percent. Intercontinental flights saw the largest growth: 24 percent as compared to the comparable period last year. In the first six months of 2010, 16.4 percent of all flights were intercontinental; in 2009, it was only 13.5 percent. The increase in Business Class tickets and intercontinental flights also upped ticket prices: in January 2010, companies in Europe paid an average of 508 euros, in June it was 554 euros, a nine-percent increase.
The first half of 2010 also saw an increase in train travel. European business travelers bought seven percent more train tickets than in the same period last year. The average price was 96 euros – unchanged as compared to 2009 levels. Hotel stays and expenses also went up for European business travelers, 13 percent for each category in the first half of 2010. Rental cars were used 18 percent more than in the same period last year, and expenses increased by 14 percent.

One out of three travel managers anticipates an increase in air travel
In a survey of travel managers in 20 business-travel markets, more than 33 percent expected the number of flights to continue to rise in the next 12 months. By comparison, in 2009, the crisis year, only 21 percent of Europe’s travel managers anticipated the number of business-related flights to go up. A surge in hotel stays is expected by 25 percent of the travel manag-ers surveyed; 20 percent believe that train travel will increase; and 14 percent anticipate more car rentals.

The AirPlus Business Travel Index is based on the analysis of more than 100 million business-travel bookings per year made by more than 33,000 companies worldwide.

When the eruption of Iceland’s Eyjafjallajokull volcano shut down European air space this past April, it stranded more than 10 million travelers across the globe. As travel management professionals know all too well, it was their company’s responsibility to provide reasonable accommodations during the crises for their business travelers, as well as a safe return home. While most companies worked hard to live up to this responsibility, doing so came at a cost, according to a recent online poll of travel buyers and suppliers conducted by AirPlus International.

With the advantage of hindsight, however, many companies are revising policy and process to reduce the impact of future transportation crises on their travel programs.
Eyjafjallajokull crippled the operations of European airlines, as well as intercontinental flights originating in countries from the United States to South Africa to Thailand. Nearly 100,000 flights were cancelled during the height of the crisis, costing airlines more than US$2 billion. As the volcano continued to choke up ash into May, pockets of additional cancellations and delays rippled through the European airways. The full impact of the eruption on the airlines has yet to be calculated – and the same is likely for the companies whose business meetings were cancelled or postponed.

More than 73 percent of the companies surveyed by AirPlus indicated their travelers or travel management program was affected in some way by the eruption. The majority of respondents indicated that extra travel expenses incurred by stranded business travelers had a significant impact on their travel programs. While additional costs may have been the most widespread concern, respondents revealed several others.

Communication is key during a crisis and, thanks to technology, most survey respondents (nearly 88 percent) cited adequate communications with grounded travelers. Cell phones proved essential to the effort, with 28 percent of survey respondents indicating they were the most effective method of communication. The company email address was the other essential tool, and with 70 percent business travelers now carrying smartphones, receipt of these messages was likely supported by this type of mobile device.

Still, nearly one-third of survey respondents indicated they wanted to make sure their communications plan during a crisis is more clearly defined and easier to execute. They will be revising their communications policies and procedures in response to the weaknesses in their travel programs.

Download the free PDF for full survey results.
AirPlus…The Wire July 2010 (PDF, 250 KB)

Additional Resources:

Air Industry Experts Discuss Volcanic Ash Lessons

Europe Easing Air Restrictions

The Days the Earth Stood Still

Annette Kussmaul, Product Manager Central Payment at AirPlus responsible for developing and introducing “green” solutions

Social responsibility has become an increasingly pertinent issue in the corporate world. As part of Corporate Social Responsibility (CSR), many companies take a strategic approach to activities in this field. They focus on climate protection, which calls into action their travel management. AirPlus’ “Green Reports” and “Carbon Offset” are two innovative solutions for thorough analyses and documentation of the impact of business travel on our climate and for elective compensation for carbon emissions. This benefits both the environment and, by providing a decisive competitive advantage, the companies.

Without noteworthy additional efforts, today companies can prepare detailed climate-balance statements, for example, with AirPlus’ innovative “AirPlus Green Reports” module, an extension to the Information Manager. Moreover, demand for climate-neutral travel can also be easily met by modern travel management. Compensation becomes possible with a company’s voluntary support of climate-protection projects, while climate-protection organizations are in charge of managing the details. Many climate-protection organizations have developed from scientific projects or institutions. Quite often, emission compensation goes beyond mere climate protection – it follows social, economic and ecologic objectives. One example: equipping canteen kitchens in India with solar energy reduces CO₂ emissions while simultaneously creating jobs.

Furthermore, companies themselves also benefit from climate-protection projects. With successful internal and external communication of their commitment, they boost their reputation. In addition, advancing into the field of climate-neutral travelling can be the stepping stone for other projects that also positively affect a company’s corporate image. These efforts to promote climate protection are generally documented in the company’s annual and sustainability reports.

More and more companies are committing themselves to concrete targets when it comes to reducing their carbon emissions. For travel management, the focus is on the conscious decision to use the most environmentally friendly way to travel. Some important facts:

• With many service providers, business travel makes up the largest share of CO₂ emissions.
• Companies can also benefit financially from optimized travel and travel policies.
• Merely cutting travel budgets is likely to have a negative impact on travel convenience and staff satisfaction.
• Climate-protection projects are a good opportunity to involve the travelers and to foster staff commitment to climate protection by building awareness.

Demonstrable increases were also recorded for expenses made in South Africa. In the first six months, German business travelers spent approximately 47 percent more than in the same period last year. The surge in expenses was particularly high for rental cars (plus 84 percent), followed by hotels (plus 27 percent) and food (plus 12 percent). Compared with the pre-crisis year 2008, current figures are still 18 percent higher. These are the results of the latest AirPlus Business Travel Index, gathered from the latest business-travel figures by AirPlus, the leading international provider of solutions for business-travel management.

A remarkable change was recorded for the year 2010 in terms of travel-booking times: the closer the bookings were to the beginning of the Soccer World Cup, the more trips were booked on short notice. Travelers who booked their flights to South Africa in January took the flights 32 days later on average. In June 2010, there were only 23 days between the bookings and the actual flights.

Moreover, the most recent AirPlus International Travel Management Study 2010 shows that the increase in business flights is not in one direction only: 49 percent of South African travel managers anticipate growth in business flights for the next twelve months. This estimate was the most optimistic among the travel managers of 20 business-travel markets surveyed.

The AirPlus Business Travel Index is based on the evaluation of more than 100 million business-travel bookings per year made by more than 33,000 companies worldwide.

While Linked In users held steady at about 58 percent, use of Facebook increased among surveyed travel management pros by almost 25 percent over last year’s numbers. Use of Twitter, which was employed by 15.5 percent of survey respondents last year, ostensibly doubled its numbers in the 2010 survey. Corporate travel industry blogs were another big performer in year-over-year comparisons, with 20 percent of respondents indicating they participated in this format in 2010 compared to less than 13 percent who did so in 2009, an increase of 50 percent.

Overall, a higher percentage of survey respondents cited use of social networking sites this year. Just under 72 percent of respondents indicated they were using social media cites either personally or professionally last year. That number increased to 77 percent in the 2010 survey.

Survey respondents indicated that traveler use of social media sites for travel-related recommendations and/or services has also been on the rise since last year. Forty percent said that their travelers had increased use of social networks for travel-related research, while less than 5 percent thought that it had decreased.

As a new generation of business traveler enters the workplace with plugged-in lives and consumer-style expectations for enterprise technologies, managed travel programs would do well to explore the options now.

Download the free PDF for full survey results.

AirPlus…The Wire June 2010 (PDF, 250 KB)

Additional Resources:

5Q With Travel Manager Michelle De Costa

10 Top Travel Management Tactics for 2010 (webinar)

Reinventing the Water Cooler: Buyers and TMCs Exploring Social Networking

Is Tech Driving the Traveler-Centric Future? Managers Fear Loss of Control

The Winner of the tournament will receive a 8GB high definition Flip Cam – valued at approx. $200 plus a surprise Italian ‘goody’ basket! The cut-off to join this tournament is 5pm EST on Wednesday, 10 June 2010, however the fundraising site will remain open until the tournament completes.

And remember, when we reach our fundraising goal of $1,000, AirPlus will MATCH your donations- thereby doubling the impact of your giving!

To participate, we simply ask that you follow the two easy step below:

1. Submit a donation of any amount to our chosen charity, the Care&Share organization by visiting: http://www.firstgiving.com/airplusfifaworldcup2010 All donations are secure and sent directly to Care&Share India by FirstGiving, who also will email you a printable record of your donation. *No donation is required to participate in the bracket challenge, but we hope you will consider donating something to this great organization, and know that no donation is too large or too small!!!

2. When donating, please include your e-mail address. You will receive an email from Firstgiving and Italys’s AirPlus International Srl Managing Director Diane Laschet with the simple directions to pick your brackets online on website kicktipp.de. Only the first 300 people who respond will be able to participate…so sign up now!

Remember, the Winner will receive a 8GB high definition Flip Cam – valued at approx. $200 plus a surprise Italian ‘goody’ basket. Many thanks for your support and feel free to invite your friends and colleagues to also participate!

For more information visit: Care&Share

The Department of Transportation in early May released final figures for 2009 airline ancillary fee revenues. The report showed that as a group United States airlines pulled in $7.8 billion in ancillary fees, a large increase over the $5.5 billion collected in 2008. That increase alone makes it clear why more than 72 percent of respondents to AirPlus International’s The Wire survey last month chose airlines as the supplier category most affecting their travel budgets with fees. DOT numbers, however, do not tell the entire story.

 
The $7.8 billion as tallied by the government agency does not include many of the fees that continue to vex travel managers. For DOT, ancillary fees include baggage fees, reservation change fees and miscellaneous operating revenue. The revenue pocketed from seating assignments and on-board sales of food, drink, pillows, blankets, entertainment, or any other ancillary items are reported as transport related revenue and cannot be identified separately.

That’s a situation that travel buyers know all too well and they are looking to airlines, their travel management companies and, particularly, credit card partners to help them break ancillary charges out of the total ticket price in order to gain visibility and begin to manage the fees. Indeed, wherever buyers are challenged by unbundled fees – whether from airlines, hotels, car rental, payment or TMCs themselves – there is a clear opportunity for suppliers to fill the travel management gap.

Among survey respondents, half indicated that their travelers have no visibility into ancillary fee charges at the time of booking a business trip through their travel management company. Nearly 29 percent of respondents said their TMCs outline all the fees associated with a given trip at the time of booking. Under 8 percent, however, responded that their TMC partner is able to outline the fees and help manage them, while more than 13 percent of respondents did not know if possible airline, hotel or car rental fees were addressed in any way at the time of booking a trip.

Indeed, the AirPlus survey showed that nearly 38 percent of travel buyers found their supplier relationships more difficult to manage as a direct result of the complicated fee landscape. An equal number of respondents said that fees have eroded supplier value propositions, and more than 27 percent said they have considered shifting share away from fee-heavy suppliers or dropping them altogether. Respondent comments indicated that share shifting, at least, had gone beyond the consideration stage to taking action.

Download the free PDF for full survey results.
AirPlus…The Wire May 2010 (PDF, 265 KB)

Additional Resources:
Ancillary Fee Implications Vex Travel Pros
http://www.management.travel/news.php?cid=ancillary-fee-ancillary-fees.Mar-10.25

Aiming For A Budget: Continuous Cutbacks, Fees, Transformations Test 2010 Forecasting
http://www.procurement.travel/news.php?cid=budgeting.Sep-09.01