The changing face of business travel
— Tim Russell is UK and Ireland Managing Director of Amadeus. The opinions expressed are his own. —
The recent recession saw businesses take a stringent view on travel costs, with the luxury of business class the first to go. In fact for many organisations, any form of travel was completely off the cards. The good news is that in the last six months we have seen the industry revive somewhat, though premium class yields are still 15 percent below pre-recession levels. Companies are still scrutinising their costs and gone are the days of sipping champagne whilst reclining in business class.
Low cost carriers are most certainly having their time in the limelight with consumers and businesses still heavily focused on saving costs. The major expansion in the budget travel market and the long term fall of economy class fares, puts a continued pressure on premium travel. Differences in business class and economy fares have become too glaring.
Will low cost business travel continue to be the norm? We are already seeing some low cost carriers adapting their offer to business travellers by offering, for example, flexible flight changes or priority check-in. Business travellers have very specific needs and many will be willing to pay for services that will help them maximise their time spent travelling but at a lower cost. How can full service carriers adapt to this new breed of business travellers?
Recent research from Amadeus showed that the future of the aircraft cabin is set to go through changes as airlines integrate custom technology into their planes and as customers are able to share and purchase their travel preferences with airlines prior to and at the point of departure.
The predictions point to the decline of traditional classes, and the arrival of new “virtual classes” as individual traveller preferences create a personalised experience. No longer will travellers have to squeeze into one-size-fits-all classes. For example, passengers could have access to a wide variety of (paid) electronic services such as Wi-Fi or in-flight video-conferencing services. Others might prefer quiet or distraction free zones and improved meal services. Starting from a lower base fee, airlines can provide customers with more choice and a more personalised journey than ever before. In those markets where business travel has been more impacted, it is most likely that airlines will secure revenues from a ‘premium economy’ type of sub-class.
Airlines will benefit from taking this broader approach to business, as the pendulum swings back to a focus on experience as well as cost. There are clearly areas where passengers are willing to pay for improved services and support, giving airlines also the opportunity to maximise total revenues per passenger and increasing brand loyalty. Business travel is most likely to survive and thrive but classes in general are likely to become increasingly fragmented.