A fly in airlines` ointment: Less business travel

19th Mar 2001

General Electric Co. employees are working to spend more time on the Internet and less on airplanes. International Paper Co. workers are booking flights further ahead of time. Cisco Systems Inc. is trimming travel spending by 60 percent.
The slowing U.S. economy has prompted companies to scale back on business travel to reduce costs, and spurred others to come up with ways to avoid high fares as the economy slows.
General Electric started using a travel-reservation system last August that includes a questionnaire to ask employees if an online meeting is possible, spokeswoman Pamela Wickham said.
“All the productivity that`s wasted by travel - in the car or on the way to the airport - you can set up a quick online meeting and you`re sharing documents real time,” Wickham said.
The change is hurting airlines because corporate travelers tend to fly on short notice and pay more than leisure passengers. Northwest Airlines Corp. expects to lose as much as $150 million this quarter, as Delta Air Lines Inc., UAL Corp.`s United Airlines and US Airways Group Inc. say business is worse than expected.
Corporate travelers may be more willing to skip trips after a year of record delays at U.S. airports, said Kevin Mitchell, president of the Business Travel Coalition, which lobbies on behalf of company travel managers for increased airline competition and lower fares.
“I`m sure it comes to many travelers as a positive thing because travel has become such a nightmare out there,” Mitchell said. Workers are more comfortable with alternatives such as videoconferencing than in earlier slowdowns, he said.
About 620.7 million passengers will fly in the United States in the fiscal year ending Sept. 30, a 2.7 percent increase from 604.1 million in fiscal 2000, the Federal Aviation Administration said in a recent report. That`s about half the growth rate experienced in fiscal 2000.
According to a study by the National Business Travel Association conducted in January, 24 percent of 410 U.S. corporate travel managers surveyed said they cut their 2001 budgets, with 5 percent lopping spending plans by a fifth or more from last year.
The U.S. economy expanded in the fourth quarter at the slowest pace in 5 1/2 years as inventory investment slowed and consumer spending cooled. Stockpiles of unsold goods at U.S. auto dealers and furniture and building-supply stores rose more than expected in January, a sign that manufacturing may slow.
Minnesota Mining and Manufacturing Co., Polaroid Corp., Xerox Corp. and toolmaker Black & Decker Corp. are among the companies scrutinizing travel during the slowdown.
“We`re doing anything we can to reduce the escalating costs,” including traveling less often, said Peter Buchheit, director of travel and meeting services for Towson, Maryland-based Black & Decker.
Cisco Systems, the world`s biggest maker of computer-networking equipment, is limiting travel to the most important trips, such as dispatching employees to help customers solve network problems, spokeswoman Abby Smith said. Employees at International Paper, the biggest papermaker, are booking flights further in advance because business has slowed, spokesman Jack Cox said. Engineers and designers at No. 1 chip maker Intel Corp. are handling more projects by phone and videoconferencing, said spokesman Chuck Mulloy.
Passenger traffic for the 10 largest U.S. airlines fell 1.3 percent in February from the year-earlier month, according to reports filed by the carriers. The American Stock Exchange Airline Index has fallen 8 percent this month as analysts reduced airline earnings estimates because of the economy, fuel costs and flight schedules that were curtailed amid labor disputes. Delta, the third-largest U.S. airline, said this week it expects a loss of as much as $110 million this quarter, or 70 to 90 cents a share.
The carrier cut back its flight schedule in the quarter because some pilots declined to fly overtime. Coupled with effects from the economic slowdown, Delta said it expects to lose as much as $350 million in revenue this quarter and $250 million in the second quarter. Northwest avoided a mechanics strike this week after President Bush intervened, delaying a walkout for at least 60 days.
US Airways, the sixth-largest U.S. airline, said this month it will have a larger first-quarter loss than analysts expected because of fewer travelers on its flights.


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