City Cruises

Published on Friday, May 15, 2009

Business travellers downgrading flights to cut costs

Cost conscious business travellers are opting for cheaper alternatives to first and business class flights.

A study published today by the Civil Aviation Authority shows that this cost cutting trend has occurred during a rise in business travel between 1996 and 2007.

The recession has seen UK international scheduled business travel at major London airports fall by six per cent in 2008 compared with the previous year.

The way business passengers travel has changed with around 70% of long-haul and 90% of short-haul corporate travellers flying economy in 2007 compared with 66% for long-haul and 60% for short-haul in 1996.

However, due to the overall increase in business travel, absolute numbers in long-haul premium classes still increased from 1.8 million in 1996 to 3.5 million in 2007.

The proportion of passengers travelling first or business class declined by 11% to 23%, while those opting for premium economy increased to nine per cent.

For short-haul destinations, business passengers travelling in premium classes fell from five million in 1996 to 2.3 million in 2007. The number of business passengers travelling economy class increased from 7.6 million to 22.8 million, fuelled by no-frills carriers successfully capturing a share of the sector.

Short-haul international business passengers saw the biggest increase, rising from 19 million in 1996 to 29 million in 2007.

No-frills airlines have seen a 10 fold increase in their market share from three per cent in 1996 to 30% in 2007, the CAA study revealed.

Domestic business traffic at UK airports grew from 15 million passengers in 1996 to 19 million in 2007, with London remaining the main destination.

The number of domestic and short-haul business travellers has either fallen or remained largely static at Heathrow, because of the success of other London airports in gaining a share in the domestic and short-haul business markets.
Another factor has been lack of capacity at Heathrow causing these services to be displaced to make room for longer-haul flights.
But Heathrow has captured virtually all the growth in long-haul business passengers at London airports. This also reflects British Airways’ decision to move many of its long-haul flights from Gatwick to Heathrow.
Most business travellers fly to either Europe or North America. However, emerging markets such as China, India and the United Arab Emirates had the largest growth rates between 1996-2007.
The key destinations for business travellers align with the level of trade the UK has with each country.
Long-haul destinations are still dominated by travel to North America, accounting for 40% of long-haul passengers.
Half of all long-haul business travellers used either British Airways or Virgin Atlantic in 2007, a figure that has remained unchanged from 1996.
CAA’s group director of economic regulation Harry Bush said: “The growth of no-frills travel has had a major impact on the business travel market, with nearly a third of business travellers choosing to travel on these carriers from a greater variety of airports.
“At the same time, many more business passengers using full service carriers are choosing the lower frills options of economy or premium economy class.  The current recession is likely to see these longer term trends continue.”
by Phil Davies 

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