Airlines Expect a Slow Recovery
The major network carriers are heavily dependent on business travelers, who pay more for seats, both because they historically book closer to their departures and because they are more likely to fly in a premium class. In general, these carriers tend to have a 50-50 mix between business and leisure fliers. By contrast, Southwest said that in its fourth quarter, about 18% of its passengers bought full fare tickets, down from 24% a year ago.
American (AMR) CEO Gerard Arpey said Wednesday business travel is on the way back, but not necessarily quickly. "Historically in recessions, particularly in deep recessions, one of the quick things companies can do to cut costs is to cut business travel," Arpey said during American's earnings conference call. "It takes a while for corporations to realize there is a negative ultimate consequence to taking people off the road, that they were traveling as an integral part of doing business."
Still, CFO Tom Horton said American is "seeing signs that business travelers are getting back on the road." Corporate travel revenue was flat year over year, compared with a decline of 35% in May, he said.
As Kelly joked during the Southwest call: "Flat's the new up."-- Written by Ted Reed in Charlotte, N.C. .
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