More than one-third of those responding to
Business Travel News' large market benchmarking survey this year have made business class policies more restrictive, helping to fuel dramatic declines in premium cabin usage. As those deep cuts continue to ravage airline balance sheets and remain down year over year, the bleeding in business class utilization has stopped and some even are seeing nascent signs of a premium recovery.
Download a PDF of the full 2009 Large Market Benchmarking Report here, including all data, charts, stories and large market buyer profiles.American Express Business Travel Monitor data released this month for the third quarter, which ended on Sept. 30, shows 37 percent of tickets purchased by clients were for business class travel, while 58 percent of tickets were in the economy cabin.
American Express Business Travel Global Advisory Services research director Christa Manning said, "We're definitely seeing some people move back to the front of the cabin," but the numbers are further evidence of the degree that corporations have cut business class usage since the third quarter of 2008, when 49 percent of tickets purchased by American Express clients were for travel in the front of the plane-a difference of 12 percentage points from the most recent quarter.
American Express said business class utilization began to build as the quarter wore on, moving the dial a modest 1 percentage point from 36 percent usage in the second quarter, down from the first quarter's 39 percent. According to Manning, business class use "toward the latter part of the quarter was pulling that number up."
United Airlines CEO Glenn Tilton, during the carrier's third-quarter earnings call, claimed the carrier was beginning to see "signs of optimism in the revenue environment," including "early signs of recovery in business and premium demand."
Still, not all indicators point to steady recovery. Data released this month by the International Air Transport Association show worldwide premium traffic down year over year nearly 14 percent in September. That shows improvement from the 19 percent average decline recorded in the first nine months of the year, but premium traffic fell further from August's 12 percent year-over-year decline.
IATA in the report said, "September marked an interruption to the improvement in air travel numbers that began in the second quarter. The question is whether this setback is just the usual volatility-upturns are never smooth-or a change in the previously improving trend."
Several travel managers at a buyers-only large market benchmarking session during the Association of Corporate Travel Executives conference in Washington, D.C., earlier this year discussed a wide array of actions their companies had taken to limit business class usage. Among those, some companies this year lengthened the amount of flying time required before allowing an employee to travel business class, restricted access to premium cabins only to certain executives or dropped it completely from domestic programs.
Still, according to results of the large market survey, not a single company has outright barred business class usage companywide, and 2 percent of the respondents even said they removed restrictions for employees to book business class.
Carlson Wagonlit Travel chief operating officer of North America Mike Koetting, a speaker during the May ACTE conference, said that while many companies have taken the "meat clever approach" to reducing travel, many other companies have tried to stretch their travel dollars through business class policy adjustments, in many cases "reducing business class from a trip that used to be six hours in duration to eight hours in duration or 10 hours in duration. Those are pretty simple things to implement and communicate."
Shifting business class policy has become one of many levers buyers pulled this year to drive more savings through policy, as opposed to airline negotiations.
The most common business class policy is to base eligibility on the number of hours of a trip. The 54 percent of respondents who have such a policy on average allow business class use for trips of at least eight hours. About 44 percent of respondents allow business class for all international trips, while 34 percent have a policy that makes business class exceptions for high-level executives.
"In challenging economic times, a company can allow for business class travel," American Express' Manning said this month, "but if an employee has a business objective, and they don't know if they'll be able to achieve it in one trip or two trips, and they know they have a limited overall travel budget, they'll probably self select into the more cost-effective categories."