TSA to impede travel market recovery? Not buyin’ it

TSA airport security

When I finally crawled out of bed and caffeinated Saturday morning, I made the rounds on Twitter and found a bold statement by travel journalist Christopher Elliott: “Thanks to TSA, 2011 could be a flat year for travel”. Despite the digging he did, I’m just not buying it. Passenger inconvenience, especially when it comes to leisure trips, isn’t likely to have a major effect on the travel industry in 2011.

You’ve read it from me on Gadling before: it isn’t the leisure traveler that defines the travel market; it’s the business traveler. These are people who have no choice but to hit the road, whether because they are instructed by their bosses or because they recognize business opportunities that they need for growth or simply to keep their companies alive. As business conditions continue to improve in the broader economy, demand for flights is likely to increase, and those buying tickets will have relatively little choice in the matter.

We’re looking back on what’s shaping up to be a positive year for the travel industry, particularly the airlines. And, according to Elliott, on his blog, “2011 was shaping up to be the best year for travel since the recession began.” He cites expectations of higher prices, even if only slightly, but pent up demand by travelers for “long-postponed vacation[s].”

Thanks to TSA, 2011 could be a flat year for travel http://bit.ly/gsbOfTless than a minute ago via web

The next year of the recovery could be imperiled, however, by new measures implemented by the Transportation Security Administration, specifically body scanners. In fact, Elliott writes:

But now that the Transportation Security Administration has introduced full-body scanners at many American airports, and subjected those who opt out of the machines to an “enhanced” pat-down, the 2011 outlook has changed, say travelers.

To support this claim, he talks to Jeff Cohen, an Austin, Texas-based securities trader, who claims to be “torn about whether I’ll travel more next year or not.” Cohen tells Elliott he goes on “a couple of large trips a year” and had a big one in mind for the first half of next year, “to somewhere exotic.” Now, Cohen tells Elliott, “[T] he recent TSA crackdown has me rethinking that.”

Further, the Consumer Travel Alliance sees the traveling public as generally unlikely to increase its travel activity. Elliott continues:

A majority (46 percent) say they will travel “about the same” as they did this year. Slightly less than a third (30 percent) will travel more, while just less than a quarter (23 percent) will travel less. This contradicts several earlier surveys, which had predicted a significant upswing in travel next year.

The key word here is consumer. The focus, here, is on leisure travel. The needs of business travelers are again overlooked.

Let’s consider Cohen’s case for example. So, he’s rethinking his leisure travel plans for next year. If he has to hop on a plane to close a deal or bring in a new client, is he going to do that? Would he sacrifice a two-hour flight for a 10-hour drive do so? I don’t know the guy, but drawing on my white-collar experiences, I think I know how he’d react to a major business opportunity a few states away … and it wouldn’t involve turning the key to the ignition.

The business traveler really has little choice in whether to hit the road. Could he skip a business opportunity or pass on a project in favor of something local – or to wait for a gig nearby to arise? Of course. But, that would mean turning down the very fees that put food on the table. Sales professionals need to travel to bring in business, fulfillment teams (e.g., the folks who provide the good or service sold) may have to take to the friendly skies and support sometimes needs to be provided on site. This is just how the nature of commerce has evolved. If conditions continue to improve, more of these people will be buying plane tickets.

And, they’ll pay more for them.

The nature of business travel, given that it occurs in order to support subsistence or the accumulation of wealth (both important), is that it is inelastic, at least relative to leisure travel. There is effectively no choice but to get on a plane, unless extreme measures are brought into the equation. Since business travel relatively inelastic, these travelers will pay more, which supports a continued travel industry recovery.

The fact that business travelers tend to be willing to pay more for their tickets also means that they have less choice in whether to fly. Sure, there are tools out there such as videoconferencing and online collaboration software that can provide a substitute, but a recovering market means that there’s more capital available, which facilitates investment in face-to-face meetings. When your boss tells you to travel, you travel.

As a result, the decision to travel is itself relatively inelastic for the business traveler.

So, if the business traveler is the backbone of the travel industry recovery, the TSA is unlikely to get in the way in 2011, even if every passenger listens to the snap of a rubber glove before an invasive pat-down begins.

Now, let’s take a closer look at the leisure traveler. The impact of the TSA security measures may involve a bit of hype there, too.

Even before Thanksgiving, the close to two thirds of consumers thought the body scans weren’t a big deal, with 70 percent stating they didn’t expect the enhanced security measures to slow travel down during the busiest travel season of the year.

Further, economic growth, if it occurs, will provide consumers with more disposable income. Those who have an interest in travel are likely to become more ambitious, taking the trips they’ve always wanted to. Elliott finds many who disagree with this assessment, but there’s nothing like having a freshly filled checking account to alter your perspective.

We all love to hate the TSA, and I’ll admit that I’m among the many in that camp. There’s nothing worse than waiting in a long security line at a crowded airport. The notion of having to devise and carry out strategies for getting through the checkpoints faster indicates the absurdity of what goes on in airports today. Efficiency is as low as customer service, and there’s little we can do about it.

That said, will body scans and pat-downs impede a travel market recovery next year? It doesn’t seem likely. General global economic trends will determine how many people get on planes next year, not the policies crafted and implemented by government employees.

[photo by oddharmonic via Flickr]

Business travel to U.S. from overseas spikes

Suits and ties are no longer in short supply on visits to the United States from overseas. The latest data from the U.S. Department of Commerce shows 11 percent growth year over year for the first six months of 2010 … for total travel. Business travel led the way, with a 19 percent year-over-year gain for the same period. Leisure travel was up 9 percent.

Of course, this follows the staggering losses of 2009, in which business travel to the United States from overseas plunged 40 percent year over year, thanks in large part to the effects of the global financial crisis and the collapse of Lehman Brothers in September 2008. So, this year’s double-digit gains aren’t nearly enough to recover for the business activity that has been lost.

We’re headed in the right direction with business travel exports, but we still have a long way to go. The Department of Commerce notes in a statement, “[T]he double digit gains in business travel that most of the top overseas countries registered in the first half of 2010 are a welcome change.”

For the top 20 countries in travel to the United States, all posted gains for business-related travel, but only six showed leisure travel growth.

The suits are back, and they’re probably bringing some cash with them!

Five indicators of the airline industry’s future: start with first and business class

Airlines are getting a little lucky. The big bucks and wider margins that come from first- and business-class fares are coming in faster than the nickels and dimes from economy class. This will delight the various airline industry employees who think that passengers aren’t paying enough, and it’s also a growth indicator.

According to the International Air Transport Association, an industry trade group, year-over-year growth slowed down in August relative to previous months, though this is due in part to the fact that August 2009 was the first month of the industry’s recovery, setting a higher bar for year-over-year growth than in the few months prior.

Nonetheless, airline sector growth is slowing down a bit, and not just because of the higher base in August for relative measurement. The total number of passengers traveling fell a little over 1 percent from July to August this year.

In August, first- and business-class passenger traffic surged 9.1 percent, following a 13.8 percent jump in July. Behind the special curtain that separates the elite from the proletariat, passenger traffic climbed 6.2 percent in August, following 8.8 percent in July.

So, where is the airline industry going this year? Here are five indicators to watch:

1. According to IATA‘s 230 members, demand for premium travel is up 17 percent relative to 2009 … but 99 percent of that hit in the first quarter of 2010.

2. Premium-class travel has leveled off since the end of Q1, but it’s uncertain if this is only a temporary state.

3. Business confidence is still positive, but it is inching downward. Premium markets remain 11 percent below the early 2008 peak, MSNBC reports.

4. Leisure travelers are even trying to help, with total economy travel up 11 percent from the depths it hit in 2009.

5. Month-over-month stagnation now may not say much about the future, according to IATA. Leading indicators point to growth of 5 percent to 6 percent a year.

[photo by Let Ideas Compete via Flickr]

Australians can’t wait to leave: outbound travel up 3X over 20 years

It looks like the best place for vacation, if you’re Australian, is anywhere else. According to the Australian Bureau of Statistics, outbound travel surged from 2.1 million a year to 6.8 million a year over the past 20 years. For the 12 months ending last June, 6.8 million overseas trips originated in Australia. Two decades earlier, it was only 2.1 million. At today’s levels, there are 31 overseas trips made per 100 Australians.

The Sydney Morning Herald reports:

The ABS says the unprecedented increase is due to a combination of factors including more affordable travel and accommodation, partly due to the strength of the Australian dollar, and increasing competition between airlines.

What’s really interesting is that Australians are leaving the homeland for fun rather than profit: leisure travel was good for 82 percent of overseas trips.

So, if you’re Australian, where do you go? Well, New Zealand. The country’s neighbor attracted 1.1 million Australians.

[photo by Pascal Vuylsteker via Flickr]

The top factors that influence blended travel opportunities

Vacations are getting squeezed out, either because of personal financial pressures or a fear of looking like you aren’t crucial in your cubicle. We keep cutting out the time we need for ourselves and our families, which can make the strain of recession-era employment even worse. You don’t need any more pressure … so why are you creating it? You need to get out on the road, and not just for the company. Whether it’s with family, friends or your favorite mistress, you need some time to recharge. Play it right, and you can get your company to pick up at least a piece of it.

“Blended travel” – tacking personal trips on to business travel – is becoming increasingly common. I’ve done this for most of my professional career, turning road warrior time in Paris (among many other cities) into subsidized non-solo trips. I’ve popped third cities between business destinations, met friends and flown family out to hang with me. And if I could show that it saved the company a few bucks, it would wind up doing the same for me.

With your fun money being pinched, investing some time to research your options can help you turn business travel into a great vacation. Here are five factors to keep in mind:1. The nature of your travel: How you travel and what you’re doing on the road can have a profound effect on your blended travel experience. If you work late and get stuck in meetings all the time, bringing your family isn’t going to work (unless they want to enjoy the destination without you). If you go back to the same place every week, it could constrain how much time you have available (focus on the weekends, for example). Get a sense of the rhythm of your travel schedule, and use that to determine your blended travel options.

2. Company savings: By modifying your travel plans to accommodate your personal aims (including having your family join you), could you wind up saving the company a few dollars? This may not bring the cost of the personal side of your plan down to zero, but it could take the sting out a bit. Finding a way to save the company some money can work to your advantage. I used to look at the timing of flights relative to hotel rates to pull this off. Sometimes, all you need is a relatively tolerant boss.

3. Corporate discounts: Many larger companies have employee discount programs on everything from consumer electronics to mortgages … and travel. This could help you chip away at the cost of your (partial) family vacation. Also, see if there is a way you can use your company’s negotiated rates, too.

4. Where you are (and where you can go): Not every location is worth turning into our annual getaway. I can think of plenty of business trips that I’d never use for a blended travel experience. If your spot is particularly undesirable, think about what’s in striking distance. Maybe you could set something up to meet your family at a third location.

Hint: Again, it’s a cost game. If you can show that the cost of your jaunt is less expensive than a straight shot home, you can make the case for “subsidization.”