The corporate deals travel buyers strike with airlines can significantly impact their organization’s annual bottom line. This makes strong negotiation of these programs an absolute imperative.
Three key factors will affect corporate travel programs in 2011, notes Joel Wartgow, the director of air consulting with CWT Solutions Group-Americas in Business Travel News: airline consolidation, rebounding demand, and increasing fares.
Wartgow believes that airline mergers present challenges and opportunities for travel buyers—challenges in the sense that past preferred partners might no longer be good fits, but opportunities in that newly merged airlines may be more aggressive in courting new corporate clients and holding onto existing ones.
If you thought the past few years of mega airline mergers like Delta-Northwest, United-Continental, and AirTran-Southwest were hectic, buckle up your seatbelt. British Airways chief executive Willie Walsh recently noted that rising oil prices could trigger more airline merger activity this year than last.
As for demand, the Wall Street Journal reported that airline-passenger traffic rose 8.2 percent in 2010 “after the biggest demand decline in the history of aviation in 2009,” noted International Air Travel Association Director General Giovanni Bisignani. However, airline profits are still anemic at a mere 2.7 percent on average, which Bisignani called pathetically.
Given this and the likely continued rise in the price of oil, many experts are forecasting rising airfares throughout the year. In January, domestic airfares were hiked for the third time in a month—between $4 and $10 per round trip.
It’s the fastest pace of domestic airfare hikes since 2007, reports FareCompre.com, when fuel prices jumped dramatically, and airlines started assessing fuel surcharges. Domestic peak travel surcharges of between $10 and $30 per roundtrip for 2011 travel also are becoming more common.