NYTimes.com Article: The New Breed of Business Travel

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The New Breed of Business Travel

July 16, 2002
By JOE SHARKEY






SALT LAKE CITY -- THE Salt Lake Tribune had one of those
big bold front-page headlines you sometimes see in movies.

"Record Heat Sizzles State," it cried, and the crowd of
about 1,000 people gathered for a reception in a downtown
plaza that remained sunny and very hot even at 8 p.m. was
plenty thirsty.

This being a festive crowd of travel-industry executives
and corporate travel managers in town for the annual
convention and trade show of the National Business Travel
Association, lemonade was not the beverage of choice. In a
state where jokers say it's easier to buy a firearm than a
gin and tonic, the booze was flowing impressively behind
the guarded perimeter of the plaza.

"This sure is one very happy crowd," said a frazzled young
woman tending bar at a drink tent where the lines were 12
deep.

It seemed to be a far merrier crowd, in fact, than the one
in attendance last summer during the same organization's
trade show in Atlanta. Then, even before the catastrophe of
Sept. 11, the business-travel industry was staggered,
demoralized and bewildered after a souring economy slammed
the brakes on freewheeling spending for business travel.

"I think the industry had its hard landing last year," said
Allison Marble, a spokeswoman for the business travel
group. Now, she and others said, as the industry regains
its footing, business travelers and corporate travel
managers appear to be emerging from the gloom, blinking at
the light and contemplating an entirely new environment.
Virtually everything about business travel, from the buying
behavior of the consumers to the fundamental business
models of the airlines, hotels and other suppliers, has
changed, probably permanently.

The major airlines, losing billions with no realistic
turnaround in sight, are facing the most difficult choices.
No one I spoke to among the 4,200 people attending the
trade show here expressed any faith that the airline
industry's fare structures - which depend on business
travelers' paying fares that can be five times as much as
those for the leisure-travel market - can even survive the
year.

"Even as people who run those airlines cut out restrictions
on business fares and do everything they can to get that
market back, I think they finally realize that business
travelers' behavior has changed, and it just won't change
back," said Krista M. Pappas, the senior vice president for
strategic development at FareChase Inc.

It is no longer a debatable point that large numbers of
business travelers are now flying on fares the airlines
intended for leisure travelers. Now, with the financial
collapse of one or more major airlines no longer an
unlikely possibility, those airlines still appear to be
dithering and fiddling with selected fare discounts and
selected easing of restrictions, while stubbornly clinging
to bedrock fare structures with the futile tenacity of the
defenders of the Maginot Line in 1940.

The major airlines have steadfastly insisted that the
business traveler has merely cut back on trips, and will
one day resume more frequent flying. However, industry
professionals say a large and sharply growing number of
business travelers have actually dropped from the radar
simply because they have slipped into the cheap-fare world
of the leisure-travel market.

American Express officials noted yesterday that more than
40 percent of corporate tickets the company books now are
so-called nonrefundables - the cheaper, advance-purchase
tickets that traditionally have been classified as leisure
fares. Business fares are generally classified as
full-price tickets that are fully refundable, with no
restrictions like requirements for a Saturday night stay.
Two years ago, only a quarter of corporate tickets were
nonrefundables, said Nancy Carlin, an American Express vice
president.

As major airlines scramble to fill seats at almost any
price, even restrictions like the Saturday-stay
requirement, intended to discourage business travelers from
buying leisure fares, are fading on many routes. Often, she
said, the only real restriction on a cheap advance-purchase
ticket is its nonrefundability. An unused nonrefundable
ticket may be reused on the same airline within one year,
with a penalty fee of $75 or $100.

Because so many business travelers now use electronic
ticketing, corporate travel managers worry about the
tendency of employees to forget about those tickets, and
let them expire, unused.

American Express said yesterday that it would soon
introduce a new service, Ticket TRAX NR, that automates for
company travel managers the cumbersome process of keeping
track of unused nonrefundable tickets, and applies their
value to future tickets.

American Express also announced a new centralized online
booking tool called TravelBahn Portal, to gather on a
single internal corporate site all air fares on the Web,
while at the same time enabling company travel managers to
compile the booking data they need to negotiate discounts
effectively with airlines, hotels and other suppliers.

Ms. Pappas, meanwhile, said that her company was releasing
today a new version of its Web Automation software that
gathers on one portal the hundreds of thousands of
ever-changing fares available on over 150 travel Web sites.
She said that the vastness of fare information available
online was having an impact on travel booking that was only
beginning to be understood, even by industry professionals.


"There is almost no loyalty left" among customers to
specific airlines, other than that bound by frequent-flier
upgrades and schedule conveniences, she said. "Once the
Internet took hold" the airlines' assumptions about the
viability of their existing fare structures and customer
bases "went to hell in a handbasket," she added.

"It's now sort of the Wild West" in the distribution of air
fares, said Pam Arway, the executive vice president of
American Express Corporate Travel in North America. As
business travelers find their way in the new environment,
it should not be hopelessly complicated to make the
arrangements.

"You want to get from Point A to Point B," she said. "That
should be easy."


http://www.nytimes.com/2002/07/16/business/16ROAD.html?ex=1027828742&ei=1&en=d864905a5ac6b7af



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