2012: Business Fares Will Be Bad For Business
Looking through a few articles tonight on the topic of fares and their projection for 2012, it looks like we already know who will be the most affected. Based on a recent study conducted by American Express, business fares are projected to surge 3 to 7% during 2012. American Express categorizes business fares as tickets that are purchased within 2 weeks of the travel date. On a brighter note, the same survey expects the leisure traveler to face fare increases that will range from 0.5% to 5%. Typically the “leisure traveler” will book tickets well ahead of their travel dates, thereby benefiting from advanced purchase discounts normally given by airliners.
Another issue that will play a significant role with fares is the ever diminishing availability of seats. Airlines have been cutting capacity this year and the trend will continue into 2012. As airlines remove seats, two things are sure to happen. First, the price for existing seats will rise as I stated earlier due to lack of supply. The second issue will be that tickets will be purchased far more in advance since people will start to plan their trips earlier. For the typical business traveler, this becomes a double edged, lose-lose scenario. Not only will you have to pay more for your seat, you will now have to potentially plan business travel far more in advance and have stiffer competition from casual travelers.
Traditionally business travelers don’t know their schedules more than one or two weeks in advance so it has been customary to book tickets that are close to their travel dates. An option of course is to buy a refundable ticket, but there’s a substantial premium that needs to be paid to have the ability to get a refund. Of course, the option exists to cancel the refundable fare and buy a lower priced ticket if you find one closer to the travel date, but who will have time to manage that process? Those that live out of their suitcases won’t have the time or desire to stalk fares, and corporations (in my opinion) probably will not want to add staff to their travel departments to make sure fares are optimized for its traveling army.
As I read various pieces on the topic, the feeling that I am getting is that businesses will take a long hard look at how they handle corporate travel for the coming year. Many in the interviews I read are considering raising the bar for who is eligible for air travel, or requiring greater justification and approval to board a plane for a business trip. Many business leaders suggested that this will force an overhaul in travel policies for their employees. To me its just more work and distraction for a business who is already facing challenges in an anemic economy. I’m curious about what you think. I would love to hear from business travelers and what you see happening with your business travel policies for 2012.
