Ever since the credit crunch, businesses have been coming up with new ways of cutting operating costs and the new frugal trend quickly became evident in all industries, including the business travel sector.
As companies slashed their budgets, business travel expenses were often among the first ones to take a hit. As a result, bookings plunged between 2006 and 2010. However, since business travel trips are not a luxury, but a necessity, organizations operating on a tight budget tried to improve their bottom line by tapping budget airlines.
Originally, budget carriers had practically no interest in attracting the average business traveler, as they catered to families and average consumers. However, as corporations tightened their belts, budget airlines saw an influx of well dressed business travelers. It didn’t end there. Businesses also went after cheaper accommodation.
The internet is one of them, as teleconferences can sometimes complement, or entirely replace business trips. Another interesting alternative in some parts of the world is high-speed rail. Europe already has an extensive high-speed rail network, with relatively affordable prices. The network is being expanded, and in many cities the end of the high-speed line is very close to the center, which is not the case with most airports. This saves time and money. High-speed rail is also big in parts of Asia. The US, however, does not have a high-speed rail network.
The mobile revolution has also resulted in plenty of travel oriented online services that help business travelers and their organizations compare prices and find the cheapest deals in a few easy steps. Such services usually feature reviews of hotels, airlines, and restaurants. This, in turn, is driving prices down even further, due to increased competitiveness.
Budget airlines don’t offer nearly as many amenities as the average business class. They don’t care about seating or luxury, it’s all about keeping prices down. This means business travelers on a tight budget don’t get much in the way of free food and drink. They also can’t use comfy reclining seats to catch a nap, but such seats would be pointless in the budget setting anyway, as there are simply too many people and kids around. The crowded, noisier environment of budget carriers also means that there’s less room for laptops and fewer opportunities to concentrate on the work during travel.
The list of shortcomings is extensive, but it is also irrelevant for many businesses and travelers. With all the hidden costs included, low-cost carriers are winning over regular travelers from regular operators, and the trend is probably here to stay. Even as the economy recovers, many businesses will find it hard to justify the cost of ditching low-cost carriers just for the sake of convenience. It is always a lot easier to transition to the cheaper service then come back to a more expensive one.
However, these rules don’t apply to all organizations and destinations. Executives will still enjoy their big business class seats and, depending on the pay grade, going budget simply isn’t an option for some. As for destinations, short-haul budget flights seem to make a lot more sense, as they offer significant savings for only a couple of hours of hassle. The long-haul segment is another story, of course.
Now that the economy is finally showing new signs of life, it’s up to budget carriers to work out new ways of attracting more business travelers and keeping them on board. and this could potentially pave the way to more business friendly low-cost carriers in the future.
Sources: EIBTM 2012 Trends Watch Report
Image credit: www.forbes.com
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