The air travel management landscape at the end of 2008 looks far different than it did at the beginning, after the merger of Delta Air Lines and Northwest Airlines, the decision of all legacy U.S. carriers to curtail domestic capacity and new fare-unbundling initiatives developed as carriers hunted for revenue. Those changes, though, could pale in comparison to the impact of the global financial crisis on air travel demand. Here are the stories
Business Travel News has identified as the top air stories of the year:
Carriers Slash U.S. Capacity2008 was the year of capacity cuts. Initiated by legacy carriers early this year, the trend accelerated as demand continually deteriorated and fuel costs put pressure on airlines. According to OAG data, 10 percent fewer domestic seats will fly in the first quarter of 2009 compared with the same period in 2008. Southwest CEO Gary Kelly this month said, "traffic is basically at 1998 levels domestically."
Financial Crisis Ices Corporate TravelFueled by a financial crisis that continued to broaden in the fall, many companies enacted further plans to cut trips and draw down travel budgets—putting further pressure on the airline demand outlook. All signs point to ongoing pressure on travel budgets in 2009 and continued weakness in the air travel demand.
Newly Unbundled Fares Complicating PoliciesFrom select coach seat assignments to a checked luggage, inflight meals and the introduction of onboard Wi-Fi, airlines spent much of the year devising new ancillary revenue initiatives. Such initiatives have given carriers new forms of income but continue to pose challenges to travel managers, who must construct policy around the determination of reimbursable charges and figure out ways to track usage.
Fare Surcharges ArbitraryCombating historically high fuel costs in the first half of the year, airlines, both domestic and international, levied fuel surcharges on tickets. Examinations of data and discussions with analysts showed airline fuel surcharge structures had no clear or consistent methodology, no direct correlation with the cost of fuel and little consistency in their application, while travel buyers bemoaned surcharges' placement in fare filings that left the fees out of the realm of corporate discounts. As the cost of jet fuel fell in the latter part of the year, many carriers scaled back their fuel surcharges to reflect the dwindling expense item.
Buyers See Downside Of Delta-NWA: Cite Less Competition, Service; Await More DealsThough Delta Air Lines' merger agreement with Northwest Airlines failed to inspire other airlines to move forward with similar arrangements, their bid to become the largest global airline succeeded in October when the U.S. Justice Department gave the final nod. The carriers continue to integrate operations, expecting a single operating certificate from the Federal Aviation Administration in late 2009 and a consolidated reservations platform in early 2010. Still, corporate travel buyers worry the deal could diminish competition, reduce declining U.S. capacity and further degrade customer service.
American Leads In Launch Of U.S. Inflight Wireless InternetAmerican Airlines in August became the first domestic carrier to launch full wireless inflight Internet access, rolling out the service across its 15-plane Boeing 767-200 fleet. Other carriers, including Alaska Airlines, Continental Airlines, Southwest Airlines and Virgin America, have advanced their own plans to bring Wi-Fi to the sky. Most recently, Delta this month rolled out the capability on some shuttle flights in the Northeast—its first step toward a fleetwide rollout next year.