The outlook for business travel in the United States will hinge on the recovery of Eurozone countries, according to a second report released by GBTA in July. GBTA originally projected the U.S. business travel industry would grow 3.6 percent in 2012 but revised its presumption to 2.2 percent. The European economic environment is in flux, and many businesses are waiting until the situation is more certain before resuming a general rate of business travel.
“There’s two ways of looking at it,” Saxe says. “There are companies out there where business is down a little bit, maybe it’s time to travel and have those face-to-face meetings with people. But I also think with the economy being down, people are going to be a little bit more conscious as to what they spend.”
Cutting back on business travel, however, could further damage the economic environment businesses are trying to waiting out. “In a challenging economy, companies may look to cut their travel spending,” he says. “But GBTA research shows that that is the exact opposite of what they should be doing. In addition to the damage that slashing travel spending will do to a company’s bottom line, cuts to travel budgets could make a bad economic situation significantly worse due to business travel’s impact on the overall economy.”
The decline in business travel dealt a blow the transatlantic airline industry. Flights account for almost half of European business traveler’s expenses, according to a Business Travel News spending breakdown for March and April 2012, and many are deciding its not worth the cost.
United Airlines experienced a 1.6 percent decrease in people flying over the Atlantic during the first five months of 2012. Likewise, Delta was faced with a 3.5 percent decrease in people flying to Europe, and American Airlines saw a 2.2 percent drop in traffic over the Atlantic, according to CBS News.
This decline was not geographically across the board. All three airlines saw an increase in traffic to Latin America and Asia during the same stretch.
However, the airline industry, which will likely achieve a 3-year profit run this year, has come up with a clever solution to keep up demand for transatlantic flights: decreasing the number of available seats. This has allowed airlines to artificially control demand and raise prices from summer 2011. Flights from the United States to Western Europe are averaging $1,315 for May through September, according to the Airlines Reporting Corporation, up about 3 percent from the same stretch in 2011. Controlling demand as well as an 11 percent decrease in jet fuel costs from last summer, according to the International Air Transport Association, has allowed airlines to maintain a profit even as the number of businesspeople flying over the Atlantic wanes.
For more information on travel to Europe this summer, keep reading:
- Charles’ first report, Austerity in Europe: What to Expect for Summer Travel in the EU
- Charles’ report on Austerity in Europe: The Impact on Art & Culture in the EU
- The European and Italy and Greece Archives
- Recent Ask Peter advice on European Hubs
By Charles Edward Hicks for PeterGreenberg.com
