Business travel in a volatile market

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Long-time business travelers may look back nostalgically on a time when air travel was an adventure; something you dressed up for and looked forward to. The concept seems foreign in a time where costs, stress-inducing security measures and a decline in service have made business travel involve more headaches than thrills.

Some say the recent spike in baggage fees, some as high as $450 per bag on international flights, is making businesses more conscious — and more irritated — when it comes to planning air travel for their employees.

Michael Malaney, president of Grand Rapids Travel Leaders, has been providing travel services to West Michigan businesses for 31 years. With airlines projected to collected $3.5 billion in luggage fees alone by the end of 2011, Malaney noted that businesses have had no choice but to eat the extra cost. The mergers between Northwest and Delta, AirTran and Southwest and the proposed merger between United and Continental leave travelers with fewer options.

“The industry is consolidating into a smaller and smaller group of airlines who will then really be able to dictate price, costs and expenses to the general public,” said Malaney. “There is no question that airfare will go up.”

Malaney noted that despite air travel being more expensive, business travel through his agency has gone up 20 to 25 percent in terms of airline tickets sold in the past year, which he considers a good sign for West Michigan’s economy. What has changed, however, is the travel policies of corporate clients. Many businesses are making sure their employees do not fly first class and are more flexible with dates and airports in the interest of cutting costs.

For frequent flyer Michael Hayes of Ashburn, Va., travel is an inherent part of his work. Hayes said that his company has felt the burden of cost-cutting measures due to the amount of time wasted trying to navigate the least expensive way to maintain the same amount of travel.

Despite the irritation, some travelers take a less critical view of airlines. Frequent flyer Dr. Scott Stehouwer of Grand Rapids said that in regard to commerce in general, knowing the final cost of a service helps customers feel less cheated and that some of the added fees may be justifiable.

“We’re in an era of expensive fuel, expensive labor and deregulated airlines,” said Stehouwer. The deregulation has had the unintended consequence of higher costs to travelers. “There’s no such thing as a free lunch,” he said.

After deregulation of the airlines, airfares dropped dramatically while at the same time, the cost of providing air travel has gone up due to fuel and energy prices. Delta spokesperson Trebor Banstetter said that Delta expects to pay an additional $4 billion in jet fuel prices compared to a year ago.

The unbundling model is an alternative to seeing huge increases in lump airfare prices. “From the customer perspective, it gives them more control of what they want to pay for, and from our perspective, it helps cover the cost of actually providing the service,” said Banstetter.

In the past decade, the industry has suffered greatly with almost every airline being in and out of bankruptcy, some multiple times. The repercussions of 9/11, volatility in fuel prices, the SARS epidemic in Asia and the costs of heightened homeland security has sent a series of financial shocks through the system, Banstetter said.

Recent Articles by Alissa Lane - Special to the Business Journal

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