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Business class or budget?
By STEVE HUETTEL, Times Staff Writer
"I'm a picky traveler," said Hajaistron, a sales executive for Achieveglobal, a business training company in Tampa. "A plane ride is productive time. I need solitude. If I'm in a coach seat, I don't even get my laptop out." He almost always gets an upgrade to the front cabin on his regular carrier, Continental Airlines. But with a little persuasion, Hajaistron went outside his comfort zone for a trip last week. His company's in-house travel agent told him about low-fare, all-coach JetBlue Airways. Leather seats. All new Airbus planes. And best of all in these tight times, a round trip fare of $336.50, about $160 cheaper than Continental. Hajaistron's change of airlines was one more sign that it's a new world for corporate travel. As recently as the go-go 1990s, many companies kept a loose rein on business travelers. Supervisors shrugged it off when employees passed up the lowest airfare to run up frequent flier miles on another carrier or chose a hotel where the company didn't get a discount. But last year's recession and fallout from the Sept. 11 terrorist attacks have put business travel -- and the people who oversee it -- under the microscope in corporate America. Most companies slashed travel budgets in spring 2001 as the economy started heading south. Many tightened travel policies or forced bosses to do a better job policing violators, who are known to travel managers as mavericks or renegades. Travelers are under increasing pressure to plan ahead and fly on cheaper, nonrefundable airline tickets that require a fee to change. Corporate travel agents also are buying more from no-frills carriers such as JetBlue, Southwest Airlines and AirTran Airways. They're searching the Web for bargain airfares and hotel rates that don't show up on their regular computer reservation systems. And companies are asking more often: Is this trip really necessary? In many cases they're encouraging employees to use teleconferences or Webcasts instead.
American Express says the average one-way fare paid by its business customers fell from $319 in March 2001 to $289 last March, a 9 percent decrease. More than 40 percent of those tickets are nonrefundable, up from 25 percent just two years ago, the company says. While cutting discount ticket prices, most airlines until recently refused to budge on full-fare seats, creating a wider gap between traditional business and leisure fares. "Consequently, business travelers are going under, around and over the fence," wrote Pam Arway, executive vice president of American Express Corporate Travel, in the industry newsletter Business Travel News. That trend was established before Sept. 11. The terrorist attacks influenced corporate travel in different ways. Some fretful business travelers asked for smaller planes or connecting flights, figuring such trips were less likely terrorist targets, said Lois Raffel, travel services manager for Achieveglobal. A few wanted to go at night because they thought hijackers out to seize the controls couldn't fly in the dark. Such fears are largely gone, Raffel said. But flight reductions and heightened airport security after Sept. 11 are causing other changes. Many of the flights that airlines eliminated were the last departures of the night, so business travelers whose meetings run late sometimes are stranded, she said. To handle tougher bag and passenger screening requirements, airlines cracked down on people who show up at the last minute to fly standby. Also, travelers are tending to leave later on business trips and get home earlier to spend more time with their families, said Joanne Land, a travel agent for Achieveglobal. "They want to get back to make the school play," she said. "They're making conscious efforts to keep their lives in perspective." * * * Holding the line on business travel costs always has been a balancing act. Getting to a sales presentation or client appointment on short notice and on time is always more important than saving a few bucks. And business travelers want the flexibility to switch flights so they can fit in another visit to a customer or get home early if their schedules change. But companies increasingly chafe at the high cost of refundable tickets that, in effect, subsidize cheap leisure fares. A last-minute "walkup" coach fare from Tampa to New York City and back, for example, cost as much as $2,118 last week. Airline tickets make up 48 percent of the cost of a business trip, by far the largest single expense, according to a Runzheimer survey. Corporate travel managers negotiate discounts with airlines by agreeing to buy a certain number of tickets between specific cities. The discounts vary widely but typically range from 20 to 40 percent, said Melissa Abernathy, an American Express spokeswoman. Huge companies such as PricewaterhouseCoopers have tremendous leverage. The accounting and consulting giant spends $800-million a year on travel for some 38,000 U.S. employees, said Mark Williams, who oversees all of that travel from his Tampa office. The company has preferred carrier deals with American Airlines, United Airlines and Delta Air Lines and buys about 70 percent of its air travel from them, he said. Its air travel costs dropped 17 percent for the year ending in June, thanks in part to bargain fares the airlines offered after Sept. 11, Williams said. Those fares dried up in the past two months as carriers eliminated discounts on their lowest fare categories. PricewaterhouseCoopers also saved money by encouraging employees to use a Web site called GetThere.com, which highlights discounted fares from preferred carriers for participating companies. Travelers are more likely to pick a cheaper flight when they see the alternatives themselves instead of talking to a travel agent over the phone, Williams said. The fee for booking online also is half the cost of going through the company's contracted American Express agents. About 65 percent of travelers book their own trips through the site, he said, and the company wants to push that to 80 percent. "People like it," Williams said. "They see it as a game." * * * Another tool to hold down costs is tougher enforcement of employee travel rules. Many companies, for example, are cracking down on travelers who don't take the cheapest flight that fits their schedules. But airlines still provide powerful temptations for business travelers to stay loyal even if they don't offer the lowest fare or best connections on a certain trip. The biggest lure is elite flier status that can mean upgrades out of coach, extra frequent flier miles and airport club memberships. Travel managers insist they're not the company's expense account cops. But you could certainly call them the neighborhood watch. If employees don't choose the lowest fare, companies often require travel agents to report it to their bosses. "We're nailing down people who could use (cheaper flights to) alternative airports or other connections," said Sheila Kittle, vice president of corporate travel for Raymond James & Associates. "Department heads are going after people who ignore the bottom line." Rule No. 1 at most companies: Thou shalt book trips only through the travel office or designated travel agent. That guarantees employees get negotiated airline and hotel discounts -- and that the company holds up its end by meeting agreed-upon levels of purchasing under the discount contracts. But special Web-only travel deals have thrown a wrench into that, said Abernathy, the American Express spokeswoman. "It used to be that no matter what, the traveler couldn't do better on their own than the company plan," she said. "Now, they look at a fare that's five times what they paid on their last vacation, and they think the company's nuts." Corporate agents are checking out sites such as Orbitz.com and Travelocity.com for better deals. They're also using new software that searches the Web and displays those fares along with the ones on airline reservation systems. Airlines have refused to put special Web fares on the computer reservation systems agents use. But a number of carriers, including American, Northwest and Delta, began discounting their most expensive refundable fares and offered cheaper fees to upgrade into business and first class seats. * * * On a recent morning, travel agents at Achieveglobal fielded all kinds of questions from employees on the road or gearing up for business trips. Steve Feith, an executive consultant, dropped by the office to book a trip to Appleton, Wis., then check out available flights to Montreal and Warsaw. "I need to know what to tell my family," he said. "Am I going to church or not? What do I tell them about whether I'll be here for my daughter's birthday on the 17th?" An employee of an affiliated company, which uses Achieveglobal's travel office, called to ask if it would cost her money to extend a business trip to Bermuda by one day to meet a friend. The airfare didn't change, so she'd only need to pay for any extra hotel charges and meals, agent Joanne Land said. An employee in Indianapolis asked if she could return home to Phoenix a day early. Sure, agent Laura Curtis said. It was pretty much a wash -- a $46 higher airfare and $100 change fee were offset by saving $112 on the hotel room and another day's car rental. The favorite story around the office -- one that shows the value of a sharp travel office -- involves the company's sales executives calling from the Marriott hotel near the World Trade Center in New York on Sept. 11. After hearing the second plane hit and seeing the carnage, their message was simple: Get us out of here. Guessing correctly that they couldn't get a flight out of the city, Hajaistron, one of the executives, asked the agents to rent three cars. Figuring there wouldn't be rentals available close to the city, he told them to check in Somerset, N.J., 30 miles away. The agents reserved the cars and, through the executives' family members, passed on the confirmation number via cell phone. The executives made their way to the Hudson River as the second tower collapsed, caught a boat to New Jersey and paid a van driver to take them to Somerset. When the Avis agent there told them all the vehicles were taken, they produced the confirmation number, took two of the cars and drove home. Hajaistron still sings the agents' praises. "They're awesome," he said "I trust them implicitly." -- Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.
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From the Times Business report
From the AP
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