Markets Focus: Friendly Sky Frequenters
Business class takes flight in airlines' futures
Frequent and business flyers feel like they don't count as much as they once did. With fewer rollover opportunities for points and more blackout dates, the devaluing of the customer is one obvious effect of the budgetary crunch in the travel sector. But airlines may be giving them an upgrade.
For business travelers, comfort continues to be key, along with crossover deals with luxury airlines, four-star hotels and other high-level products. A March 2008 Orbitz study found 65 percent of business travelers would shell out more for benefits like refundable fares and priority seating. In an October 2007 survey, 62 percent of respondents said they choose a hotel without considering price.
Despite all the seemingly carefree spending on extras, according to the 2007 "Loves and Hates" survey conducted by American Express, reliability continues to be No. 1 on business travelers' wish lists: 99 percent of respondents chose it. Reliability has never been more at issue than in the post-9/11 world, in which airports make travelers show up much earlier than before. And more time at the airport means a greater chance for advertisers to reach this audience through services offered while they wait, such as Wi-Fi connections, which are sprouting up in airports all across the country.
Fran Gallagher, CEO and publisher of Pennsylvania-based Global Traveler magazine, says the loyalty advertisers depend on is not as important as they think. "I'm talking about the segments that are entrepreneurial," he says. "Everyone likes to gain frequent flyer points, hold them and get their status, but they can be swayed to another airline based on price or service they can't get somewhere else. The frequent flyer is defined as someone who travels three times or more a year; 2.5 million fall into that category, but only 7 percent use a passport annually. You pull these numbers apart and find out it's the small percentage that does the high-end traveling because they're the ones on the uncomfortable flights of more than six hours."
Regardless, loyalty still is something to consider. For example, a 2007 TripAdvisor survey showed that 59 percent often stay at the same hotel chain. Gallagher says that there are usually two types of frequent travelers: "You get someone price-sensitive who is booking economy-class seats, and they'll take as many connections as possible," he says. "Then there are those who will pay the extra $400 so they don't have to switch in Atlanta to get to Philadelphia."
Eva Leonard, editor in chief of New York-based Business Traveler, says one word best sums up the frequent flyer: savvy. "These people are into accruing the miles, and they know all the ways to take advantage of frequent-flyer programs," she says. "We have 150,000 readers, so you know the opportunities are out there. The in-flight magazine is one way to get to them, and so is the Internet." In fact, 36 percent of the respondents to the 2008 Orbitz survey said they look for Wi-Fi offerings on flights. In-flight access will grow, but Leonard points out, "People use flight time as downtime, and they sometimes don't want to use the Internet other than to check their personal e-mail. Advertising in that environment may sometimes be seen as intrusive." One Orbitz study found that 12 percent of business travelers use flights to relax rather than talk on the phone, which would likely extend to Internet use.
Adam Rodriguez, director, North America, for Business Traveler, says advertisers need to pay more attention to the younger traveler. "It used to be these business travelers were ages 48 to 55," he says, "but now we see late 20s and a bunch of 30-year-olds. They're staying away 60 to 70 nights a year and taking 30 flights. Jets are now offering private shells where you can be in your own cubicle. This next generation of travelers (is) obviously dying for some alone time."
With rising fuel costs and the bankruptcy of major airlines such as Aloha and ATA, the future of the business traveler is uncertain to some extent. "Flights are packed full like never before," Gallagher says. "I almost got stuck in St. Maarten. If I missed the flight, there wasn't another available for three days. For the first-class traveler, this may mean shifting to economy class or missing a major meeting. The solution to this may be airlines such as Lufthansa and Qantas, (which) are making more classes seem like business class. Those may be the airlines where advertisers will see good success through partnering."
Leonard is watching out for the future of frequent travel programs - if there even is one. "It will be interesting to see how the mileage programs evolve or devolve," she says. "When they first started out in the '80s, people took advantage of it, and it worked until airlines tightened up on the requirements. It's inevitable that some customers are going to feel let down by the lack of deals."
Even as flying becomes more hectic, travel is still seen as more of a positive in business than a negative. According to an Orbitz study, 62 percent of business travelers mentioned exploring other parts of the United States and the world as the most compelling reason to fly. A 2007 TripAdvisor survey revealed 49 percent of business travelers "often tie leisure time to business trips to take advantage of the company-expensed travel." And business is certainly not stopping company
workers from splurging. According to the October 2007 Orbitz survey, only 12 percent "take saving company dollars into their own hands, choosing a less-expensive hotel than what their company would allow."
Regardless of what the future holds, Business Traveler's Rodriguez says one thing that will never change is a need for pampering.
"Eighty-six percent of our readers fly first and business class," he says. "Flight prices may be going up, but I think they'll hold on to those preferred seats as long as they can."