Airlines, hotels struggle as business travel plummets

August 10, 2009

Despite signs that the country’s economic free fall may be bottoming out, demand for business travel continues to plummet, putting airlines and hotels in financial straits.

As businesses continue to tighten spending practices, corporate travel is projected to drop by 15% this year compared with 2008, while overall travel demand could decline by 11%, according to a study by PhoCusWright, a Sherman, Conn., market research firm.

Corporate travel — defined as business travel managed under strict corporate policies — has historically represented about 40% of the total travel market, but PhoCusWright predicts that share will drop to 35% next year.

As a result of such declines, airlines are struggling to fill lucrative, premium-class seats, typically reserved for business travellers with hefty expense accounts.

Some airlines are considering replacing premium-class seats with economy or coach seats. And many airlines are simply cutting capacity by taking airplanes out of service.

Tony Tyler, chief executive of Cathay Pacific Airways, Hong Kong’s biggest carrier, told a television news show that his airline may resort to pulling out premium-class seats. “We’re going to have to make fundamental changes to our business,” he said.

British Airways, which experienced a 12% drop in revenue in the first quarter of 2009, announced plans to cut capacity later this year by parking 22 aircraft, primarily older Boeing 747s and 757s.

Thanks for the quotes to http://www.latimes.com/ where you can find more details.

Random Posts

Written by Alf Merrywaters · Filed Under Business, Travel 

Comments

Comments are closed.