Companies are flying more – but not in business class

Air travel is showing signs of recovery but fewer companies are splashing out for their employees to fly business class, according to the latest data released by business travel agency Hogg Robinson Group.

It claimed air travel bookings were up 3.2% in the first quarter of the year compared to the same period of 2012 and the number of UK domestic bookings rose 4.3%.

However, business class transactions dropped 14.8%, with the decline particularly acute in Europe, it said.

At the same time, economy and low-cost carrier transactions on short-haul destinations rose by 1% and 4% respectively, suggesting a widespread shift in travel policy on these routes, said HRG.

On domestic routes, economy and low-cost fares were down 1% and 9% respectively, indicating business travellers may be swapping air travel for rail, and holding more meetings remotely, it said.

Belt-tightening is also extending to cabin classes on some long-haul destinations. HRG said business class transactions remained flat with the majority of the year on year rise in air travel accounted for by economy and premium economy fares.

Stewart Harvey, HRG group commercial director, said: "The general picture is of an industry in slow but steady recovery.  However, despite the improved view there is still a focus on cost by our clients and an increase in the use of economy fares, particularly on short-haul destinations. 

"We’re also seeing rail re-emerge as a genuine alternative to air travel."

India was among the destinations where HRG saw the strongest growth in corporate air travel, with transactions up 11% year on year.

Corporate air travel to the Rest of the World region, encompassing the emerging markets of South East Asia, Latin America, and Africa grew by 3.3%.

"The BRIC countries (Brazil, Russia, India and China) are now well established business travel destinations and, with the exception of India, the huge growth in air travel to these destinations is slowing," added Harvey.

"What we’re seeing now is significant growth coming from smaller, less established destinations, like Colombia in Latin America, and Ghana in Africa.  These countries are poised for massive growth over the next decade as more international routes open up."

HRG said its findings were supported by the latest data from IATA, which reported a 5.9% rise in the number of passenger kilometres travelled globally in March 2013.  However, it said the picture remained mixed, with a number of its clients still showing significant reductions in travel.

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