Guessing at the landscape of 2009 business travel is roughly akin to landing at San Francisco International Airport in a dense fog. You know there’s a runway down there somewhere, and you’re reasonably confident the sharp-eyed pilot upfront has tweaked the proper dials and logged in the correct coordinates to find it in all that pea soup. You’re counting on a safe landing, but gazing out of the cabin window, all you see is a blur of impenetrable gray fuzz.
Unfortunately for companies and travelers trying to get a handle on the true cost of a business trip, 2009 business travel is cloaked in its own dense gray fog. As the final battered months of 2008 drew to a close, I heard from travel industry associations, travel advocacy groups, even former airline executives who said to expect deep capacity cuts, modest to soaring cost increases, labor unrest as contracts expired, and fees, fees and more fees.
The National Business Travel Association (NBTA), Association of Corporate Travel Executives (ACTE), the Travel Industry Association (TIA) and other trade groups each spun similar versions of "The global economy is bad and getting worse, and business travelers will pay more in 2009 because of it."
The NBTA, for example, predicted cost increases of 5 percent to 8 percent this year, with the greatest increases surfacing in airfares (7 percent to 10 percent), along with hotel rate increases of a more modest 1 percent to 4 percent and nominal car rental rate increases of 1 percent to 3 percent.
American Express, on the other hand, predicted very modest increases of less than 3 percent on domestic trips, downgrading their earlier predictions of robust cost increases across the board.
PKF Hospitality Research expects domestic hotel occupancy to drop to a low 58 percent, and though hoteliers are saying publicly that they are not going to discount room rates, PKF predicts deals will be made, especially for meeting and incentive travel groups.
The creeping emergence of airline fees, the result of airlines unbundling various services and offering them at a la carte prices that can substantially increase the price of a ticket, is being met with loud traveler disapproval.
You want to check a bag? That will be $15 (on most carriers) for the first bag, the same or more for the second, and woe-unto-you if you travel with heavy equipment and need to check several pieces.
You say you prefer an aisle seat toward the front of the aircraft, or an exit row seat with more leg room? Hand over another $15 to $25, please (substantially more on some international flights). So far, elite members of airlines’ frequent flier program are exempt from many of these fees, but that could change.
And speaking of "change," the airline-imposed fee to change a booked reservation on most carriers has leaped to an average $150 per change for restricted domestic tickets — as high as $300 or more on international tickets. For the business traveler who routinely schedules and reschedules several times before departure, these fees alone can exceed the cost of the original ticket.
Who or what is to blame for these increases at a time when fuel costs — once blamed for escalating ticket prices — are dropping? The airlines claim they continue to suffer huge losses as ridership and market share diminish and they are forced to cut capacity. Besides, they point out, a la carte pricing puts the cost of the ticket within the control of the traveler — "pay only for what you want and will use."
Robert Crandall, the curmudgeonly former American Airlines chairman and president doesn’t necessarily agree, instead pointing a finger at a larger villain, the US government, for its failure to find a cure for the struggles of the airline industry.
"I don’t think there is a widespread understanding that 100 cities in the United States are going to lose commercial airline service," Crandall said.
"If the (proposed) schedules that are out there right now are actually implemented, there is going to be a lot of angst, and fares are going to go up pretty dramatically."
As we launch into the New Year, a clearer picture of airline cutbacks is taking shape.
While fuel costs are no longer the sole ogre (though some airlines that hedged fuel costs underestimated just how far the per-barrel price would fall), the slowdown of business travel in general is forcing carriers across the board to park more and more aircraft. (For an overview of cutbacks at 300 airports in the US, see www.usatoday/travel and look for the "State-by-State Cutbacks" chart in the interactive graphics section).
Crandall was no less vocal about the worrisome state of the U.S. air traffic control system and its effect on airline costs, an issue many hope President-elect Barack Obama will put on his "A" list.
"It’s time to stop the long conga lines of airplanes and (departure) delays by putting a limit on the number of airplanes that can go in and out of airports, and get cracking on a new air traffic control system," Crandall said.
There is no question that President-elect Obama faces harsh realities of an economy in crisis, including a crumbling air traffic system, major airlines teetering on the brink of extinction, and the bleak potential for protracted and bitter labor unrest among various airline factions. But a quick fix is unlikely, and companies and their travelers need answers now: What can you do to control travel costs in 2009?
I’ve said this before, but it bears repeating: If you don’t have a corporate travel policy in place, NOW is the time to develop and implement one.
If you have a policy that has not been reviewed or updated in some time, dust it off, renew and revise it, replacing every "should" with a "must" and spelling out expectations and your plans for enforcing compliance.
Reintroduce your new policy to all travelers AND their supervisors, and ensure travelers that the policy applies all the way to the top of the organization.
If possible, add your policy to your company intranet for maximum visibility and routinely remind travelers of new mandates or changes.
It’s a given that you cannot control what you do not measure, so take advantage of the comprehensive reporting programs offered by full-service travel management companies to track expenditures by traveler, department, client project or cost center.
If your travel agent offers an online booking program, make sure the key elements of your travel policy (trip authorization procedures, maximum allowable charges, preferred air, car and hotel suppliers, etc.) are an integral part of the online reservation process.
Make sure that you have a way to track and reapply unused airline tickets, and watch for no-show fees at hotels, imposed when travelers fail to cancel room reservations by the deadline.
Review rental car contracts for fees such as "topping off" charges applied even though a traveler has returned the car with a full tank of gas.
Crandall and other industry observers are probably right—-2009 likely will be a turbulent year for many business travelers.
Some say it will be 2010 before economic conditions significantly improve. But business travel, as it has in the past, will remain a vital and integral part of companies’ long-range plans.
