Companies keep a lid on travel spending

Business travel

March 23, 1992|By Tom Belden | Tom Belden,Knight-Ridder News Service

With the economy recovering, more business travelers are returning to their on-the-road routine. But travel agencies and industry consultants say they are seeing clear trends, both in the way travelers are approaching their task and in how much companies and organizations are willing to pay, especially for airline tickets.

Travel policies are being more strictly enforced by many cash-strapped companies, the consultants say. More and more, for example, travelers are being required by their employers to fly on particular airlines with which the company has negotiated a special money-saving fare.

"Many companies are meeting the challenge of shrinking profit margins by implementing tougher travel policies and mandating traveler policy adherence," said Jeanie Thompson-Smith, president of Topaz Enterprises, a Portland, Ore., firm that audits air-travel costs for companies and travel agencies.

One telling sign that there is resistance to spending was what happened in late February when United Airlines tried to tack 2 percent onto the price of full-fare coach tickets, the type many business travelers have to buy.

After a week or so, with some airlines deciding to match the increase and others hesitating, United finally backed off. The airline said it would add the 2 percent only to deep-discount fares aimed at the leisure-travel market. The extra 2 percent is on top of higher fares that most airlines have been charging vacationers since about March 1.

At the same time, between mid-January and mid-February, airlines that fly between major East Coast cities and the Far West felt compelled to cut fares that the typical business traveler pays sharply. These tickets usually range from 10 percent to 50 percent off the full-coach fare.

During that period, American Express Co. says, the typical fare a business traveler paid for flying between New York and Los Angeles fell 53 percent, New York to Seattle dropped 47 percent, and New York-Phoenix went down 33 percent. Similar savings could be found between Philadelphia, Boston and Washington and the West Coast.

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Midway Airport, Chicago's closest airport to downtown, is coming back to life after the sudden demise of Midway Airlines in November left the facility under-used. For a while, the only way to get to Chicago from many major cities was to fly to O'Hare International Airport.

Southwest Airlines, which was the second-busiest at Midway Airport when Midway Airlines was operating, quickly took over the No. 1 spot after Midway's disappearance.

Southwest added flights to Indianapolis and Cleveland, and chairman Herbert Kelleher has said that over about three years, it plans to add service to many other cities. Mr. Kelleher says the no-frills, discount-fare carrier could include flights to the East Coast from Midway as part of the expansion, but he has not specified any particular cities.

USAir and United Airlines have launched new service from the East Coast to Midway. USAir has four daily nonstop flights from New York's La Guardia Airport, where it recently acquired new gates and landing slots from Continental Airlines. United has added flights to Midway from La Guardia, Orlando, Fla., and Washington National Airport, plus service to Denver, its main connecting hub in the West.

Finally, American Airlines is starting four round trips a day between Midway Airport and its major hub at Dallas/Fort Worth.

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Northwest Airlines is trying something very different -- humor -- to get your attention during the obligatory preflight safety demonstration. That's the stand-up act airlines are required to do by the Federal Aviation Administration, usually verbally by cabin attendants or, increasingly now, with a videotape.

Northwest's new four-minute videotape uses fast-talking actor John Moschita, known for his commercials for Federal Express and other companies, to introduce the safety pitch. The idea, Northwest says, is to answer the unspoken question many passengers, especially frequent fliers, ask when the pitch starts: "Can't they do this any faster?"

The humorous opening is followed by all of the required safety information, done in a more serious vein. The airline says it intends to change the introduction of the safety video on a regular basis, using other comedians, celebrities, musicians or Northwest employees.

All of this is FAA-approved.

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Budget Rent a Car has started a frequent-renter program that works like an airline's frequent-flier program. Budget officials say the AwardsPlus program is designed primarily to reward the loyalty of business travelers who are frequent car renters by giving an extra benefit they can use on vacation.

Here's how it works: Once you're enrolled in the program, every time you rent a car from Budget, you get your membership card validated. After your second rental, you're automatically given a free upgrade to a more expensive class of car. After four rentals, you get one free rental day the next time you rent.

Budget says it test-marketed the idea in Houston among regular customers and enrolled about 40,000 people in the program.

"The current economy is making people look closely at their spending . . . especially travel spending," said Budget marketing vice president Sandy Hughes. "We're always trying to come up with new ways to add value."

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