Read us | Listen to us | Watch us | Join Live Events | Turn Off Ads | Live |

Click on your language to translate this article:

Afrikaans Afrikaans Albanian Albanian Amharic Amharic Arabic Arabic Armenian Armenian Azerbaijani Azerbaijani Basque Basque Belarusian Belarusian Bengali Bengali Bosnian Bosnian Bulgarian Bulgarian Catalan Catalan Cebuano Cebuano Chichewa Chichewa Chinese (Simplified) Chinese (Simplified) Chinese (Traditional) Chinese (Traditional) Corsican Corsican Croatian Croatian Czech Czech Danish Danish Dutch Dutch English English Esperanto Esperanto Estonian Estonian Filipino Filipino Finnish Finnish French French Frisian Frisian Galician Galician Georgian Georgian German German Greek Greek Gujarati Gujarati Haitian Creole Haitian Creole Hausa Hausa Hawaiian Hawaiian Hebrew Hebrew Hindi Hindi Hmong Hmong Hungarian Hungarian Icelandic Icelandic Igbo Igbo Indonesian Indonesian Irish Irish Italian Italian Japanese Japanese Javanese Javanese Kannada Kannada Kazakh Kazakh Khmer Khmer Korean Korean Kurdish (Kurmanji) Kurdish (Kurmanji) Kyrgyz Kyrgyz Lao Lao Latin Latin Latvian Latvian Lithuanian Lithuanian Luxembourgish Luxembourgish Macedonian Macedonian Malagasy Malagasy Malay Malay Malayalam Malayalam Maltese Maltese Maori Maori Marathi Marathi Mongolian Mongolian Myanmar (Burmese) Myanmar (Burmese) Nepali Nepali Norwegian Norwegian Pashto Pashto Persian Persian Polish Polish Portuguese Portuguese Punjabi Punjabi Romanian Romanian Russian Russian Samoan Samoan Scottish Gaelic Scottish Gaelic Serbian Serbian Sesotho Sesotho Shona Shona Sindhi Sindhi Sinhala Sinhala Slovak Slovak Slovenian Slovenian Somali Somali Spanish Spanish Sudanese Sudanese Swahili Swahili Swedish Swedish Tajik Tajik Tamil Tamil Telugu Telugu Thai Thai Turkish Turkish Ukrainian Ukrainian Urdu Urdu Uzbek Uzbek Vietnamese Vietnamese Welsh Welsh Xhosa Xhosa Yiddish Yiddish Yoruba Yoruba Zulu Zulu

Outlook for US airline business travel remains grim

Written by editor

CHICAGO – A sharp slowdown in business travel, the best moneymaker for major airlines, will cut into U.S. carriers’ profits this year, and the picture doesn’t look much better for 2010.

CHICAGO – A sharp slowdown in business travel, the best moneymaker for major airlines, will cut into U.S. carriers’ profits this year, and the picture doesn’t look much better for 2010.

According to the Federal Aviation Administration, overall domestic air passenger traffic will fall nearly 9% this year, while international bookings are expected to decline by 2.4%. The FAA expects to see travel growth return in 2010. But business travel may take longer to recover.

Business travel, which accounts for most first-class and business-class ticket sales, has suffered from deeper cutbacks than leisure travel, as companies face a global recession. Even when trips aren’t canceled, employees increasingly are moving to economy class seats.

Airline consultant Michael Boyd estimates that trans-Atlantic passenger revenue, mainly driven by business travel, is down 15 already this year compared with 2008. He said he thinks airlines will need to keep shrinking capacity this year and into 2010, as passenger demand remains weak and costs, especially for fuel, keep rising. “Growth is not in the picture,” he said.

Ken McGill, travel analyst at Global Insight, said in a presentation this week that he believes the U.S. economy will start growing early in 2010, spurring more interest in leisure travel. But business travel, hard hit by falling corporate profits amid dried-up credit markets, will take longer to turn around. There’s also what he calls the “AIG effect,” including public scrutiny of corporate spending, and the potential “vilification of business travel spending.”

The U.S. government’s fiscal stimulus plan should increase some business spending for travel, McGill said, but he predicted that the number of business trips for the next four years will be sharply lower than the peak year, in 2008. Overall travel prices are expected to bottom out in mid-2010, he said. During 2008, he said, “falling prices will more likely result in a shift in spending rather than additional spending or trips.”

Boyd, who heads The Boyd Group in Evergreen, Colo., said the first sign of a travel turnaround will emerge when consumers start booking more trips to Las Vegas. He said he doesn’t expect that market to pick up until 2011, with an upswing in business travel to come even later.

If travel demand were to pick up next year, U.S. airlines, which have substantially downsized in the past year, would be unable to fill the demand, Boyd said. “That would be great for the airlines, but tough for passengers,” and would limit business travel growth.

Meanwhile, Boyd said, carriers like Delta Air Lines Inc., American Airlines, a unit of AMR Corp., and Continental Airlines Inc., have adequate liquidity to weather turbulence this year, and the flexibility to ground more aircraft if fewer passengers are flying.