Firms keeping frugal with travel

By Melissa Allison
Chicago Tribune

Chris Peterson attends to business on his cell phone after checking in for a United Airlines flight at San Francisco International Airport. A new survey found that most businesses plan to spend the same or less money on air travel in 2004. Advertiser library photo

They'll have to wait a lot longer, a new survey shows.

Nearly three-quarters of businesses surveyed said they will spend the same or less money on air travel in 2004, and almost two-thirds plan to up their use of discount airlines such as Southwest Airlines and JetBlue Airways, according to a new survey of 110 companies by the Business Travel Coalition.

Big airlines have lost passengers to low-fare competitors since 2001, when the economy stumbled and terrorists attacked the United States. Air travel has rebounded slowly, giving low-fare airlines a chance to build loyalty among business travelers.

New business has allowed discount airlines to increase the number of routes they fly and boost their amenities — some serve snacks and offer business-class seating. That helps make them a viable alternative for corporate fliers who used to pay full fare for business and first-class seats on major carriers such as now-bankrupt United Airlines.

"The major airlines were counting on business travelers to come back in great force and be willing to pay the high prices they paid in the late 1990s," said Kevin Mitchell, chairman of the Business Travel Coalition, which represents corporate travel purchasers. "That's not in the cards."

He and others say discount carriers and electronic communication pose strong and lasting threats to traditional airlines.

Kristen Andersen, an account manager in Chicago for Sun Microsystems, said it has become unnecessary and too expensive to hold meetings in person. Conference calls and computer network presentations have become more efficient when it comes to saving money and time, she said.

"I'm probably on the phone eight hours a day," Andersen said. "Before I was on airplanes."

Her company also scrutinizes the price of plane tickets more than it used to, requiring managers to approve flights that cost more than the preset limits for certain routes.

Bill Tulin, a partner at Ernst & Young in San Francisco, said the consulting firm's clients balk at paying for air travel more than they used to.

"In 1999, people were flying first class all over the globe. Now it's a different world," said Tulin, who wrote the book "Travel Fitness: Feel Better, Perform Better on the Road" in 1995, when business travel was an unquestioned way of life at many companies.

Mitchell, from the Business Travel Coalition, said major airlines need to realize that there has been a fundamental shift in the way businesses think when it comes to travel.

"It was an immutable law that business travelers were not sensitive to price," he said. That was when the economy was roaring and there were few alternatives to major carriers.

Now Mitchell, who is 6 feet 3 inches tall, can fly in coach class on a discount carrier and be comfortable in his seat and with the $200 he paid.

Even when the economy bounces back, he and others will stay on carriers that charge less. "We're happy with what we've got," he said.

The Air Transport Association of American, an industry trade group, did not return calls for comment.