Fall Business Travel Issues

Image: Mike Rinnan / PhotoShelter

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Business travelers come by paranoia legitimately. The airlines unabashedly rig their fare structures to guarantee we pay the most and often get stuck in the middle seat. Hotels deftly stack their rate cards to ensure we pay the highest rate and often end up with the room nearest the noisy ice machine.

I would never suggest that we business travelers abandon this well-earned paranoia, but I do think there are some things we need not worry about this fall. It simply won't be as bleak as the ill-informed talking heads have lead us to believe.

Don't Sweat the Prices All year the "experts" have warned about massive and imminent airfare increases. And at least on the surface, there was plenty to worry about. Airlines were unprepared when oil jumped from last summer's $75-a-barrel price to this spring's highs around $150 a barrel. And with fuel accounting for 40 percent of costs, Delta chief executive Richard Anderson's claim that fares would need to rise 20 percent seemed chilling but rational. And fares have risen—at least a dozen times since January.

But looking at the surface leads to superficial analysis. The experts forgot that airlines—and airfares—don't exist in a vacuum. As fares rose, Americans stopped booking vacations they couldn't afford. And business travelers cut flying to match the needs of their own businesses, which were negatively impacted by skyrocketing energy prices.

The result: As I predicted in a June column, airlines had to slash some fares at the last minute to fill seats. So the prices travelers paid actually rose much more slowly and much more modestly than the bloviators expected. In July, for example, Continental Airlines said its RASM (revenue per available seat mile flown) was just 4 percent higher than in July 2007. The Air Transport Association, the airline trade group, pegs the average year-over-year price increase at about 7 percent. Of course, the problem with averages is that no traveler pays the "average" price. I don't doubt that business fares have risen faster than leisure fares—paranoia strikes deep, you know—but year-over-year airline-revenue figures prove that prices aren't rising precipitously.

The slowdown in air travel has affected hotels and resorts too. And as we discussed in a recent column, the lodging gravy train has stalled. Hotels are discounting lustily to keep their existing rooms filled and put heads on beds on the new properties that continue to open.

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