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After a yearlong slump, corporate travel appears to be in recovery mode. According to the latest statistics from ARC, global distribution system providers, airlines and travel management companies, corporate demand in late 2009 finally turned positive versus depressed 2008 levels.
Encompassing industry giants American Express, BCD Travel, Carlson Wagonlit Travel and HRG, the "mega" travel management companies in November on aggregate achieved positive, year-over-year air transaction growth, according to ARC. With an increase of almost 6 percent, it marked the first time in more than a year that ARC reported any growth for that group of agencies. The megas had seen their aggregate transactions drop by about a quarter in early 2009.
Excluding the megas and "online" travel agencies, ARC's "other" travel agency segment experienced about flat transaction volumes in November, following several months of gradual improvement.
"Anecdotally, we are hearing fourth-quarter year-over-year increases from some of the largest multinationals at the 5 to 10 percent range," according to a statement provided by Sabre Holdings. "On the TMC front, we are seeing monthly year-over-year increases ranging from 2 to 10 percent so far in the fourth quarter, with a small group registering increases beyond 10 percent. We are encouraged by these numbers, and it should bode well for 2010 volumes.
"We see our own data mirroring industry trends," according to a Travelport spokeswoman, referring to statistics from U.S. and Canadian points of sale. "In November, we've seen an increase in corporate travel bookings, year over year."
The latest raw airline traffic numbers similarly showed improving trends. Seven of the nine largest U.S. carriers reported overall, year-over-year growth for systemwide traffic in November (with Delta Air Lines and US Airways as the exceptions). At AirTran (+10.5 percent), Alaska Airlines (+5.5 percent), Continental Airlines (+2.9 percent), JetBlue Airways (+7.7 percent), Southwest Airlines (+11.7 percent) and United Airlines (+1.8 percent), November traffic gains either reversed losses reported for October or represented larger improvements.
The improvement has been more pronounced specifically for some of the airlines' corporate account traffic and revenue. According to Delta Air Lines CFO Hank Halter's presentation at a Next Generation Equity Research conference last week, the carrier's corporate volume in November grew roughly 5 percent year over year, the first such increase in 2009. Corporate revenue declined about 10 percent, the smallest monthly drop this year.
After losses in each month of 2009, US Airways in November enjoyed a roughly 5 percent increase in corporate contracted revenue, according to president Scott Kirby, also speaking last week at the conference. "This is very indicative of the business demand recovery," he said, noting that the largest year-over-year increases in passenger unit revenue are occurring in business-oriented markets, including the Northeast shuttle and other routes from New York LaGuardia, Washington and Charlotte, N.C.
According to United Airlines CFO Kathy Mikells, year-over-year corporate client revenue in September declined about 25 percent, a less severe drop than in any month of 2009. Mikells said the improving trend had continued during the fourth quarter.
Tower Travel's Smith anticipates further recovery into next year. "2010 looks like it will come out of the gates strong," he told Management.travel. "[We] don't know if it will maintain, but early bookings suggest January will be busy."
Though such optimism is becoming more pervasive around the business travel industry, it is not universally shared. Compared to his counterparts at other airlines, Southwest Airlines CEO Gary Kelly sounded pessimistic. "Business travel still lags," he said last week. "I am not expecting a rebound in business travel in 2010."
"Nothing in the many conversations we have had with customers since October leads us to believe existing clients' business will increase in 2010," according to Robert Polk, CEO of Polk Majestic Travel Group in Denver.
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