As corporations increase their focus on international business and buyers tighten their budgets, domestic air transactions are down 4.5 percent from this time last year and international air transactions are on a moderate upswing at 3.3 percent, according to the Airlines Reporting Corp.'s September processing data statistics released late yesterday.
While ARC attributed the trends to airlines shifting capacity to international flights, others in the industry said domestic travel has slowed because of corporate consolidation, a boost in international business and repercussions from recent economic concerns.
The reduction in ARC-processed domestic travel transactions has been a trend for some time, according to Mike Premo, ARC vice president of marketing, sales and customer care, as carriers continue to tighten domestic capacity while increasing international capacity
(BTN Sept. 24). "When you look at the carriers that participate in ARC, they are either reducing capacity in general or they are redeploying their existing capacity," Premo said. Carriers that have indicated plans to increase internat6ional flights "tend to be ARC ticketing carriers," he said.
Although year-to-date domestic transactions have only decreased 1 percent for A & I Travel Service, president Rebecca Martin said she recognized the downturn in domestic travel with most of the Memphis-based travel management company's corporate clients and expects more of the same for the rest of 2007, as has been the norm in fourth quarters of past years. This is year is different, however, with the added woes of summer of air travel and uncertainties for the overall economy.
"Right now, it's a sense of the unknown. People are starting to question and pull back their travel budgets," said Martin. "We've had a couple of companies that have said they are going to limit everything that is nonessential travel for the fourth quarter. I don't have any doubt that it will rebound in the first quarter of '08, as the numbers and the economy continue to look strong."
Meanwhile, ARC's data indicate an increase in international transactions. New York-based Ovation Travel Group chairman and CEO Paul Metselaar said the company's international air transactions now make up 50 percent of total air transactions, significantly more than 18 months ago.
"More corporations are focusing their attention overseas," said Carol Ann Salcito, president of Norwalk, Conn.-based consultancy Management Alternatives. "There is so much consolidation in the United States amongst corporations that naturally there is less domestic business travel and more overseas travel. It's a natural pattern and we are seeing it with all of our clients."
Typically, Salcito said domestic travel increases during merger and acquisition activity, which now is lagging compared to the first half of the year. "Acquisitions were announced and the due diligence was occurring in the first and second quarters," she said. "Their heaviest travel occurred domestically in the fourth quarter of '06 and the first quarter of '07, but they didn't close until June or July, so now there isn't much going back and forth."