One year ago, rising oil prices were taking travel costs to new heights and business travelers were feeling the pinch. Now travel prices are falling again, fueled by the global recession, and airlines, hoteliers and car rental companies are taking evasive actions to survive. Here are ten trends caused by the global economic meltdown, and what they will mean for business travelers in 2009:
1. Air travel on sale. With fewer travelers in this sputtering economy, airlines are desperately trying to fill seats. From January 2007 through July 2008, U.S. airlines raised fares 32 times, according to FareCompare.com. Less than two months into the new year, U.S. airlines have initiated 25 fare sales and prices are back to pre-2007 levels in many markets. If you still have funds in your travel budget, this is a good time to fly.
2. Capacity cuts continue. To counteract declining travel demand, U.S. airlines continue to trim their schedules. Most have already eliminated 10% to 20% of domestic flights and the Air Transport Association projects the seven largest U.S. airlines will cut another 3% to 10% this year. This means fewer seats available for last-minute purchase and more involuntarily denied boardings on oversold flights.
3. Ancillary fees proliferate. Although base airfares are declining, airlines are unlikely to relinquish the added revenues from those annoying ancillary fees for checked luggage, meals and snacks, in-flight entertainment, seat selection and more. United Airlines expects to earn $1.2 billion in ancillary fees in 2009. It's difficult to avoid most fees unless you are an elite member of that airline's frequent-flier program. Continental is the only major U.S. airline not charging for meals in coach and Southwest has shunned a la carte pricing, at least for now.
Unfortunately, hotels are learning from airlines to replicate these most successful, but hugely unpopular, fees. Some hotels are quietly removing amenities like cookies or fruit from lobby areas, or newspapers or toiletries from guest rooms. In other cases some hotels have begun charging guests for formerly free services like Internet access.
4. Trimming and downgrading travel spending. A recent survey by the Association of Corporate Travel Executives found over 70% of corporations trimming their travel budgets by 10% to 20% this year. Many corporations are downgrading travelers from business to economy class on long-haul flights and lowering the hotel class used for business travel. If you're lucky enough to fly business class and rent at upscale hotels, you'll have an easier time finding flights and rooms.
5. Pursuing the business traveler. When times are tough, travel suppliers focus on their best customers, those who generate most of their revenue and profit. Even in this dismal economy many airlines are upgrading first- and business-class cabins and service, particularly on long-haul routes. But the pursuit of business travelers isn't limited to long-haul, global airlines. Southwest recently implemented priority boarding and free cocktails for full fare "Business Select" travelers, and pushed families with small children back in the boarding process. Southwest has also installed special seating with power outlets and USB hookups in their boarding areas, and is touting its no-change-fee policy to attract business travelers. Southwest and jetBlue are also among a growing number of airlines testing Wi-Fi in-flight.