Travel Industry Sees Business Booking Slump Lasting
Airlines and travel companies say they do not expect the slump in bookings by business travellers to recover anytime soon as the global economic crisis keeps company travel budgets tight.
The volume of business travel bookings done through agencies dropped 20 percent in January and February compared with only a 12 percent drop in leisure travel bookings, the head of commercial operations at Amadeus, a booking system provider to travel agencies, said on Thursday.
"We have a feeling that leisure bookings reached the bottom in the last four to five weeks. Business travel is still getting worse," Philippe Chereque said at the ITB travel fair.
The yield on business travel has dropped around 20 percent to 25 percent, Chereque said.
Airlines and tour operators are struggling to remain profitable as businesses and individual consumers cut travel during the recession.
The world's airlines lost up to USD$8 billion in 2008, the International Air Transport Association said last week, and few are willing to guess when business travel will start to pick up again.
"If we're honest, we'd have to say we don't know," said Harry Hohmeister, Lufthansa unit Swiss's Chief Network and Distribution Officer told an audience at the ITB fair.
Hohmeister said that if one believed economists, business travel bookings could start recovering in the third or fourth quarter of the year.
British Airways sees business travel doing "very badly", said Gavin Halliday, head of BA's European business said.
The UK carrier warned last week that it expected an operating loss in its financial year ending April 2010 and hinted that job cuts may be on the cards.
Lufthansa, which vies with Air France-KLM to be Europe's biggest airline, said on Wednesday that it saw its 2009 operating profit falling from 2008. It said the end of the tunnel could come in 2010.
Companies that have not imposed travel bans on its employees are booking cheaper tickets, a trend that has helped low-cost carriers such as Ryanair and easyJet win market share in the crisis.
"You see more neckties in the tail of the plane now," Amadeus' Chereque said.
Lufthansa's low-cost Germanwings unit has also seen growth in its business travel segment, which accounts for about 40 percent of its revenue, unit head Thomas Winkelmann said.
Some airlines are still planning to add capacity in 2009 and aim to tap into markets where demand is still strong, such as in Africa and the Middle East.
Dubai-based Emirates will boost its capacity by around 20 percent in its financial year starting on April 1 as it adds new large planes, including seven A380 aircraft.
Emirates European manager Nabil Sultan said the company would deploy the new planes to destinations where demand was still high and would try to attract tourism customers.
"I still see opportunities amid the doom and gloom that you hear about," Sultan said.
