Europe's corporations are cutting travel budgets hard in the wake of 11 September and could have further to go as the economic outlook remains bleak. The terrorist attacks provided "the icing on the cake" for corporations already seeking to cut travel spend, according to business travel agency Carlson Wagonlit Travel. Liliana Frigerio, executive vice-president sales and account management, says booking volumes in the second half of the year were already down in response to lower global growth.
"If companies had any intentions to reduced travel spending, now they had a second reason," she says. However, companies may be less keen to cut travel which involves sales meetings with their clients. "Business has to go on. Every company has a sales force. I've never heard of a sale closed over a conference call," Frigerio says.
Similar findings had already emerged from the other side of the Atlantic with an American Express survey of medium and large US companies, carried out in the last week of September, showing that 65% had not made changes to their travel policies. Of the remainder most had limited air travel to essential trips or to take care of a key customer concern.
Some in the travel industry, however, believe that European cuts may have further to run than those in the USA. While US corporations had already started to respond to economic slowdown earlier this year, Europe was far less advanced in trimming its corporate travel spend.
One sign of hope is that, for now, there is no consistent evidence of a fall in intra-European travel. Another is that the initial fear of flying has attenuated. Amadeus, Europe's largest global distribution system, took in 27% less airline bookings globally in the 20 days following 11 September, compared to a year earlier. But bookings fell a less steep 17% in the first five days of October.
Sabre, with a heavier exposure to the US, saw an immediate and "dramatic drop-off" in bookings of 65%, but by the end of September the fall was only 35%. Still, Sabre estimates that worldwide bookings could fall by 20-30% fall in the fourth quarter. Most worrying is fear that cuts could become permanent. Research from Travel Analytics, a US travel consultancy, shows that 15-20% of travel was considered of "little or no value" and up to another 30% was also negotiable.
Source: Airline Business
