Economists Hold Out Hope At Vegas ACTE Conference
Las Vegas - Two economists gave attendees of the Association of Corporate Travel Executives conference here late last month glimmers of hope that positive economic news is just around the corner. "There will be a rebound in six to 12 months, assuming there is not a big piece of bad news," said Robert Reich, former U.S. Secretary of Labor during the Clinton Administration. "The new economic structure will be different than the old," Reich predicted. "We are moving away from economies of scale to a new focus on 'relational capital.' "
American Express vice president and chief economist Dan Laufenberg said: "The economy is feeling worse than it really is," and forecast the beginnings of a rebound will show in the third and fourth quarters.
Recovery in the airline industry likely will lag behind general economic recovery, according to industry executives. Delta senior vice president of sales and distribution Lee Macenczak said the carrier maintains a "bearish" outlook for the remainder of the year. "We are close to the bottom in the market, but we still have some overcapacity that needs to shake out," he said. "Demand won't ever be like it was a few years ago."
Frontier Airlines CEO Jeff Potter agreed that the industry is not yet at the bottom of the current cycle. "We still are a long way off from major carriers addressing all the problems they face," he said.
ACTE president Mark Williams said that "things have turned a corner, but it will be a slow uphill climb and maybe not until 2005 before we see recovery."
Former Federal Aviation administrator Jane Garvey told delegates that "the sky is not falling," although the reality of the situation is that, "including 2003 estimates, the airlines will have lost $24.4 billion in three years. The storm is not likely to go away anytime soon. Even an optimist has to concede there are no quick fixes."
"It is unclear as to whether any or all of us can withstand a third year of $8 billion in losses," said Doug Parker, chairman and CEO of America West Airlines. "The supply/demand imbalance still is in the range of 10 percent to 15 percent.
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ACTE officials said that about 1,200 people attended the conference. The association also claimed that buyers comprised about one-third of attendees, although several attendees described that buyer count as an exaggeration.
Many buyers at the conference told BTN that their priority at this time is to award new service contracts. Some are evaluating vendors in several categories and seeking new outsourcing arrangements for various operational functions.
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A straw poll BTN conducted among buyer attendees verified anecdotal evidence that transient travel buyers recently have been taking on more responsibility for managing meetings. More than half of the 65 buyers surveyed said their departments have taken on additional responsibility for meetings in the past year. Seven have had full responsibility for meetings for several years, one is about to take on additional meetings responsibility and 23 did not take on any more responsibility for meetings in the past year.
Of those who did not take on more responsibility, three said they expected to in the next year. All but one of the 41 buyers that already had full responsibility or who just took on more responsibility have leveraged meetings and transient spend in their airline negotiations, and 25 have leveraged meetings and transient spend in their hotel negotiations. Several of those leveraging group and individual business travel spending added that they still have work to do to completely account for their total meetings expenditures.
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ACTE presented the Advancing the Industry Award to both Kathy Pavelich, Telus director of travel and administrative services, and Eric Peter, Merck manager of travel services.
Pavelich was recognized for a "best-in-class booking solution" that generated an 80 percent adoption rate and benchmarking interest from fellow Canadian travel managers. Peter was honored for accomplishments as project manager for his company's e-solutions initiative, which encompassed profile management, online booking, a mid-office solution and supplier access to a secure Merck Travel Web site.
The ACTE President's Award, which recognizes the greatest contribution to the association during the past year, was presented to CIBC global travel manager Yvonne Kerns in Canada and International Monetary Fund senior transportation officer Caro Cook in the United States.