In the latest round of business travel surveys airlines have been sent mixed signals - some sobering, others encouraging - about the concerns, preferences and habits of their regular and most prized clients.
The International Air Transport Association (IATA) Corporate Air Travel Survey (CATS), published in October and OAG Worldwide Business Travel Lifestyle survey, published in November, indicate a continuing attachment to quality inflight service and on-board comforts as well as the perks of frequent flyer programmes. At the same time, cost-conscious corporations are tightening their travel policies, squeezing out individual choice. And even if demand for first class travel has risen, price sensitivity appears to be greater than ever with the slide towards the back of the aircraft continuing unabated.
"For the first time, more of the business passenger sample usually travel long haul in economy class rather than in business class," says Andrew Hayward, author of IATA's survey, which comprised a sample of 1,000 business travellers from 10 countries taking on average 13 trips annually. "European [business] travellers displayed the largest switch from the premium cabins to economy when travelling long haul in the past year and Asia-Pacific residents are still more likely to travel in economy class over long distances."
This he confirms, is part of a gathering trend. "The search for cheaper air fares for long-haul trips has become more important over the last three years. The number of travellers purchasing full fare long haul tickets has reduced significantly since 1997."
IATA's findings give some comfort, however, to airlines seeking to lure more premium passengers. The percentage of travellers flying on full fare tickets in first class has grown considerably since 1997, which in Hayward's view justifies the moves by airlines to enhance their first-class long-haul products. In addition, as might be expected, the most frequent travellers are still concentrated in the premium cabins for both long and short-hauls trips.
Part of the explanation for the downward pressure on travel expenses can be found in the OAG Worldwide Business Travel Lifestyle survey. Representing the views of nearly 3,000 business travellers in 13 countries, it highlights the threats and opportunities of increasingly stringent corporate travel policies. Around 80% of the world's business travellers are now restricted on class of air travel - up from 67% in the previous survey. Around 40% are also bound by choice of airline - up from 28% the previous year, according to OAG.
The NOP Business Travel report Makers Survey 2000, published by business travel management company Carlson Wagonlit Travel in February, reinforces these findings. Over 90% of the travellers canvassed from the 100 UK-based operations mainly of global companies claim to stick to the letter of their corporate travel policy. Less than 5% said they only deviate in emergencies and a "bold" 3% said they often disregarded company policy to "increase the quality of travel".
"Cost consciousness" is alive and well in company boardrooms, says John Munslow, Carlson Wagonlit's director of account management in the UK. "Corporate choice is ruling over the travellers' preferences"
Corporate buying power has increased through worldwide company mergers, explains Munslow, and the large travel and entertainment expenditures are coming under increasing scrutiny by financial directors. Airlines which ignore this significant shift, says Munslow, are losing market share, while those which adapt their pricing strategy accordingly will gain.
| Passenger preferences | ||||
| Factors influencing choice of airline for long-haul | ||||
| Factor | All cabins | First | Business | Economy |
| Frequent flier programme | 40% | 48% | 39% | 40% |
| Low fares | 26% | 25% | 31% | 23% |
| Crew service | 21% | 10% | 26% | 17% |
| Seat comfort | 20% | 30% | 24% | 15% |
| Company travel policy | 17% | 10% | 17% | 17% |
| Factors influencing choice of airline for short-haul | ||||
| Factor | All cabins | First | Business | Economy |
| Schedules | 51% | 56% | 52% | 48% |
| Frequent flier programme | 26% | 26% | 28% | 23% |
| Low fares | 25% | 18% | 18% | 33% |
| Company travel policy | 16% | 15% | 15% | 18% |
| Punctuality | 15% | 12% | 17% | 13% |
The Internet
IATA and OAG identify a significant increase in online activity (see table on page 72). CATS found that access to on-line systems has crept up to 90%from 85% in 1997, no doubt boosted by the fact that three quarters of them now have access to the Internet at both home and work, compared with 55% in 1997.
According to IATA, now nearly two thirds of respondants use the Internet to obtain flight information, a 50% rise since 1997, while bookings have rising to 17% in one year. This relates to point-to-point ticket purchases only. A meagre 5% go online to make multiple destination flight reservations.
OAG shows that of those business travellers who have made more than one booking over the last 12 months, over a third of all reservations were made on-line. Notably, they also carried out a a third of all hotel reservations and over 40% of car rental reservations over the Internet. Over a fifth of all respondants logged on to the net regularly to plan flights and to book hotels, a three-fold increase over the previous year. And the trend is distinctly upward.
"All regions have shown a 100% growth rate since 1997 in our survey," says OAG's Hayward. Similarly, CATS shows a marked increased in the number of people who expect to be making travel arrangements via the Internet in five years' time. In 1997, this figures stood at 39% of the sample, compared to 51% this year.
Growth could be faster, however, and again this is partly due to corporate travel policies. According to CATS, over one in 10 business travellers do not have the opportunity to book over the Internet because bookings are carried out by their company. And Paul Rayson, senior vice-president, airline business, for OAG Worldwide says: "The growth of interest in the Internet is significant, but use of it by individuals will be ruled by travel policies". Carlson Wagonlit Travel also reports on this trend, highlighting that 51% of decision makers are against travellers making their own booking and 53% saying that travellers would be influenced by perks.
Along with on-line use, paperless travel also gets the thumbs up, even if there are still problems. Most business travellers in Carlson Wagonlit's survey believe that the introduction of e-ticketing has been beneficial to their travel arrangements - thanks to improved speed, cost reductions, the end to queuing at ticket desks and less paperwork. However, last minute changes to the itinerary proved complicated and there were complaints surrounding the refunding of unused e-tickets.
Preferences and concerns
With the growing congestion in Europe and the USA, it comes as no surprise that delays are foremost in the minds of business travellers. According to IATA's CATS, concern over this issue is the greatest on short-haul trips and has increased to 52% - compared to last year's 36%. Of the long-haul travellers, 30% of respondents cite delays as a major concern when travelling long haul, also up from 21% in the previous year.
Apparently underlining the fact that few airlines have been able to avoid delays, punctuality is however, low down in the ranking in terms of priorities when choosing a carrier. On short-haul trips, IATA's survey ranks on-time performance fifth and on long-haul it ranks ninth.
It is convenient, frequent flight times and connections that business passengers are most obsessed with. For short haul trips, it is in the top three of key considerations for just over half of all respondents. For the long-haul, 40% of the sample ranks it as among the most important considerations.
IATA's finding are reflected by OAG. "Our survey once again shows that schedules rate clearly above anything else in people's minds," says OAG's Rayson. Schedules are the most important factor across all the regions - although they are the clearest frontrunner in North America.
Loyalty key
The continuing popularity of frequent flier programmes (FFPs) is also clear from the OAG and IATA surveys. CATS ranks FFPs second after schedules as a priority for short-haul and long-haul travellers. OAG reports that these loyalty programmes are growing - despite almost reaching saturation point. International travellers belong to 3.5 programmes on average, which means 98% of all executives are totting up air miles for free flights. Crew service, seat comfort, aircraft type, in-flight entertainment, direct flights and airline safety are seen as relatively more important for long-haul flights than for short-haul flights.
The respondants to Carlson Wagonlit Travel's survey complained heavily about insufficient leg-room, a finding which combined with the other findings, provides added credibility to the strategies of those airlines making more generous seat-pitch provisions for their premium cabin, or in economy, such as American Airlines.
Wagonlit also found that in-flight food provoked no complaints among one in four of UK-based business travellers, with the few who wanted change saying they would like to see healthier food and simpler snacks. Other irritations included drinks being served after the meal was finished.
Other findings
Luggage allowance: cabin baggage allowances, lack of consistency in allowance and poor hold baggage delivery secured universal complaints in Carlton Wagonlit Travel's survey. An inflexible attitude to carry-on baggage would persuade four in 10 business travellers to switch airlines, a preference clearly understood by British Airways when it recently boosted its Club Class allowance to that of first class. Video conferencing: IATA found that only 40% of travellers had used video conferencing. But corporate travel managers were in agreement with 75% claiming that this had no impact or increased the propensity to travel. On-board activities: business travellers spend half of all their in-flight time either reading for pleasure or sleeping, according to IATA. Regional preferences: the Europeans rate low fares and crew service most highly when choosing an airline, with Asia-Pacific residents voting for seat comfort, as well as company travel policy, according to OAG. North Americans give seat comfort a lower rating than do either their European or Asia-Pacific counterparts. Europeans are proving to be most wary of the Internet, led by the Germans, according to OAG.European fares1994-9
| Fare Type | Five-year change |
| Supersonic class | 61.9% |
| First class | 35.1% |
| Business class | 25.3% |
| Full economy | 12.9% |
| Discount economy | 13.2% |
| Peak-season excursion | -6.2% |
| Off-season excursion | -9.5% |
| Source: American Express -European Corporate Travel Index, 4th Quarter 1999 | |
Premium fares rise
Recent figures on European air fares amply illustrate why British Airways so jealously guards its take-off and landing slots at London Heathrow Airport.
UK business travellers pay 76% more than the European average for business class fares to New York, according to the American Express European Corporate Travel Index of the 4th Quarter 1999. This latest Airfare Index, which is based on ticket prices for 439 European city-pairs, calculates that the cost of a business class seat to New York has increased by 50% over the past five years. According to the survey, a UK-based company taking 200 flights to New York in business class will pay on average £275,000 ($424,000) more than a company based in Germany and £217,700 more than a French company.
The upward trend of premium class tickets is almost across the board in the region. While European leisure travellers have seen a real decrease in the cost of air travel, the premium fares paid by the business travellers have risen considerably, says Olivier Sauser, vice-president consulting services group, Europe, for American Express. The highest rises in premium fares have been between Europe and North America, with those from Europe to South-East Asia coming second and those to the Far East and Australasia third.
Sauser blames "historical restrictions" for preventing travel management companies from taking maximum advantage of the European single market and providing corporations with a "consistent service and reduced costs". Until IATA lifts its requirement that travel companies clear any transactions through the relevant clearing house of the country where the sale was made, corporations will not be able to take full advantage of potential operating efficiencies through consolidation of travel purchasing and servicing into regional travel centres."
Loyalty schemes
Frequent flier programmes per traveller
| Country | Number |
| USA | 4.5 |
| Italy | 4.3 |
| UK | 3.5 |
| France | 2.5 |
| Germany | 2.5 |
| Hong Kong | 4.1 |
| Japan | 4.0 |
| Average | 3.5 |
| OAG Worldwide Business Travel Lifestyle Survey 1999 | |
The Internet
| % of all respondants using the Internet for: | |
| Air travel information | 77% |
| Flight booking | 68% |
| % of all bookings made online in the past 12 months | ||
| Total | Internet bookers* | |
| Airlines | 15% | 35% |
| Hotels | 15% | 36% |
| Car rental | 10% | 43% |
| *Represents total among those travellers making at least one Internet booking in the past year Source: OAG Worldwide Business Travel Lifestyle Survey 1999 | ||
Source: Airline Business
