Sara Turner reports from the Association of Corporate Travel Executives' (ACTE) London forum
GOVERNMENT WARNING
A SENIOR FIGURE AT BRITISH AIRWAYS has warned that the current government policy surrounding UK aviation could lead to fewer routes being served by the airline from London.
Richard Tams, BA's head of sales and marketing in the UK and Ireland, said the government under-estimated the value of the number of passengers that transfer through Heathrow.
Tams highlighted the airline's daily Heathrow-Denver route as a classic example.
He said the regular frequency of the route only existed because of demand from passengers transferring through the airport.
"With UK demand alone, there would only be enough passengers for two, or maybe three, flights a week," he said. The BA senior executive said the British economy benefited from having such a wide number of destinations served directly from the UK.
Tams also called on the industry to unite and "speak as one voice" against Air Passenger Duty (APD). He said the airline industry was seen by the government as "a bottomless pot for the treasury to draw on".
"We can not get the government to cancel it," he said, "but we can at least convince them it's not an easy option."
Tams' comments were echoed by Anya Newton, executive director at Goldman Sachs, who called for "more action" rather than "lots of talking".
"The total cost of the trip is absolutely critical to us," she said.
With the hikes in APD, this is inevitably on the rise. While corporate buyers may not lobby, Newton said there were other ways to participate, such as providing data as evidence of any downward trends.
CORPORATE DEALS
NEGOTIATED RATES will "matter more" in 2011, predicted an industry analyst.
Prashanth Kuchibhotla, director of global consulting advisory services at American Express Business Travel, said suppliers had brought capacity back in line with demand during the downturn, meaning cheap air tickets and hotel rooms would be scarce. He predicted air fares would increase between 5 and 8 per cent, and said negotiated hotel rates could be lower than best available rates. This year has seen a sustained growth in occupancy figures, which is likely to continue into next year and will be accompanied by an increase in daily rates.
Kuchibhotla said the price of a room is likely to be "all over the place", however, and recommended that travel buyers should look at room rates on a city-by-city basis.
In Asia the price of a hotel room is likely to increase more than in the US, for example.
Kuchibhotla also spoke about the effect of increased consolidation in the airline industry, about which he was largely positive.
While there may be some short-term pain for buyers, with the possibility of reduced supply in the market and, therefore, higher rates, the long-term picture will be better, with a healthier airline industry.
"Healthier companies can go into markets they haven't been in before," said Kuchibhotla, noting that they can take more risks, which means more destinations will be served.
GLOBAL DISTRIBUTION SYSTEMS risk alienating airlines and corporate buyers if they don't listen and engage with their needs, according to leading industry figures.
BA's Richard Tams said airline suppliers have felt for a while that they're not necessarily being treated as the customer.
The airline's head of sales and marketing in the UK and Ireland said: "If I were a GDS, I'd like to think I would remember the old saying: 'He who pays the piper calls the tune'."
He added that airlines did not often feel they were empowered customers, principally because GDSs operate as "quasi-monopolies".
"Airlines will do what they can to try and create competition where they perceive there is none," he said. "That means looking at all sorts of alternatives to GDSs, even if they may seem surprising to some people."
Tams said the GDS networks were still by far the most efficient way to distribute complex airline products, but suggested there was a point where cost must be scrutinised, such as the sale of cheap fares with wafer-thin margins.