Discussions focus on economic uncertainty

Impact:last month’s terrorist attacks in the US combined with an economic slowdown are expected to hit business travel

Business downturn by Beverley Fearis

Discussions focus on economic uncertainty

USattacks accelerates corporate cutbacks

THE impact of economic recession will be at the forefront of discussions at the Business TravelManchester 2001 trade show this week.

The terrorist attacks in the US, which came as the world economy was already slowing, are expected to hit business travel severely until at least the end of the year.

Before the tragic events in New York, Washington and Pennsylvania, companies were already cutting back on travel to the US and Europe.

American Express director of consulting services Matthew Davis said: “Companies are downgrading and cutting back on their internal meetings.”

But he said the situation was not likely to be as bad as during the Gulf War.

“Companies are more wise to the effects of a recession this time,” he added. “They are realising they can afford to postpone their internal meetings for six months, or do them over the telephone, but they know their life blood is the external meeting and that will still go ahead.”

Amex’s latest Air Fare Index showed there was a 6% drop in transatlantic business-class fares in the second quarter of the year compared with the first quarter.

Davis said:”This is the first time we have seen these fares fall since we started doing the survey six years ago. We would normally have expected them to increase or stay static.”

KPMG industry manager travel, tourism and leisure, Alessandra Alonso, said the uncertain economic climate meant corporations were more likely to look to change travel suppliers or perhaps renegotiate deals.

“These are challenging times, but there could be opportunities for travel suppliers to come out of the crisis better than before,” she said.

Even before the attacks,airlines in the US had cut capacity and entered into a fierce price war, slashing fares by up to 50%.

In addition, European airlines, including KLM and Lufthansa, had reduced trans-atlantic services before last month’s events led to moresavage cuts, including a 10% capacity reduction by British Airways.

Virgin Atlantic is scrapping its newly launched Gatwick to Toronto service on October 10 and its Heathrow to Chicago route on October 14.

It is also reducing its London to New York services from five to four a day.

United Airlines has abandoned its plans for a new Chicago to New Delhi service and has cut schedules, along with other UScarriers Delta and Continental.

Centaur group event director Paul Robin, which organised Business Travel Manchester 2001, said the show was well timed for corporate travel buyers to talk directly to airlines about their plans.

He said sessions had been specifically geared towards helping travel buyers identify ways to keep costs down.