Although US business travel is showing signs of improvement, most industry observers say strengthening will be gradual, and that a full recovery is at least one, if not two, years away.

Alex Wasilov, president and chief operating officer of Rosenbluth International, the world's third largest corporate travel agency, says the volume of air-travel sales was already down 25% before the 11 September attacks, and "significantly" worse than that for up to 10 weeks after the attacks. By the end of the year there had been some recovery but volume was still trailing by 25%, he adds.

For the first six weeks of this year, Wasilov says that sales were down only 18%. "We envision it will continue to get better, that growth will be slow but sustained," he says. Sam Buttrick, airline analyst for UBS Warburg, suggests that industry revenue has improved or rather "gotten less bad with each passing month" and that business travel has to be part of that recovery.

Meanwhile, Peter Yesawich, president of Yesawich, Pepperdine & Brown, a Florida-based marketing firm, says his research has found a steady improvement in the number of business travellers who say that their plans are being affected by the events of 11 September. On the day after the terrorist attacks a third said that they would. That fell to 19% over the following two months and stood at 18% by mid-January.

Yesawich believes that recovery in business air travel "will be driven more by the economy than safety and security". He does not expect a full recovery until 2003. Buttrick says that although business travel is recovering it is unlikely to approach the levels of the late 1990s "for several years". Wasilov, however, believes the downturn in business travel "bottomed out" last year, sometime in the third quarter. "We do not expect the upward curve will be steep, but it will be measurable and sustainable," he says.

One area where observers disagree is over the likelihood that carriers may revise their fare structures to relieve business travellers of some of the burden of propping up yields. Wasilov, whose firm has been vocal in urging carriers to revamp their corporate pricing, believes airlines will take some action in this area by mid-year. "What's taking them time is that airlines realise this is their opportunity to get it right," he says.

However, Buttrick, who has also been critical of business pricing, is less sanguine: "We don't see any broad-based initiative soon in that regard. When the industry recovers a bit more, some carriers might get more experimental."

Yesawich says that one significant change among the buying patterns of business travellers since 11 September is that far more are purchasing their airline tickets online. He also points to comparison-shopping among online travel agencies. The percentage of business travellers who use the Internet to book airline tickets jumped from 27% in November to 48% in January.

Source: Airline Business