Business travel costs to soar – Amex forecast

 

European business travellers face air fares increasing by up to nine per cent next year.

UK companies may see rises of up to two per cent, according to the annual American Express Global Business Travel Forecast. 

But businesses can expect up to an additional 15% added to base fares as a result of airlines continuing to un-bundle services such as checked luggage and in-flight refreshments and fees for amenities such as aisle seating.  

Prices will be influenced by reduced capacity and competition, with a negative increase in air fares and hotel rates in some markets, according to the study.

Both suppliers and buyers of travel and related services are expected to face new “operating challenges” in the coming year.

It predicts that the average cost of domestic and international trips for UK businesses will increase again in 2009.

This will have a ripple effect in other areas of travel including hotel, car rental and corporate meetings and events. 

As suppliers adjust to rising operating costs, additional service fees will create new challenges for corporate travel program managers in 2009.

Amex Business Travel advisory services vice-president Joakim Johansson said: “Considering air fare, car rental and hotel stay, we expect the average domestic trip for European companies to increase two per cent, or €21, to a total of approximately €1,020. 

“An increase of 4.8 per cent, or approximately €140, is expected for international trips to bring the average cost to €3,082.”

The proliferation of baggage and other fees introduced by airlines and capacity reductions will dominate the airfare market in 2009 and create a significant need for companies to establish and clarify new policies for their business travellers, according to the report.

Johansson said: “In response to the record energy prices in 2008, many airlines began charging fees for different services such as checked luggage, in-flight refreshments and aisle seating. 

“To help mitigate the impact of these new charges already seen in the US, we advise companies to consider increasing their focus on demand management to ensure planned trips meet the guidelines designed to promote the most effective use of their business investment.”

He added: “With costs rising, business leaders are recognizing the need to balance travel and entertainment spending with the role travel plays as an essential revenue-generating function. 

“In a difficult economic environment, successful travel and entertainment management strategies will be based upon the total cost of a business trip, which takes into consideration costs such as parking fees, airline fees, meals and other related expenses.

“Travel budgets will also need to be viewed as an investment in business growth. 

“Effective measurement of the return on that investment will supplement the savings achieved by controlling travel expenses through comprehensive travel policies and increased policy compliance by business travellers.”

by Phil Davies