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Travel Management

 January 08, 2008
2008 - A Year of Change For The Corporate Travel Industry

 "The fall out of the global credit crunch, heightened security concerns, Open Skies and a continued spotlight on climate change, are set to make 2008 another dynamic year for the corporate travel industry," says David Radcliffe, Chief Executive of international corporate services company Hogg Robinson Group (HRG).

Whilst the immediate effects of the turmoil in the global financial markets have been widely publicised, Radcliffe warns that concerns surrounding the slowdown could continue to be felt well into 2008, with the result that companies will need to maximise return on expenditure to an even greater degree. With business travel a barometer of the global economic climate, and corporate travel often a company's second largest controllable cost, corporate travel budgets will be under increased scrutiny with corporate services companies playing an important role in helping organisations to manage such costs.

Security Remains A Key Concern

Unprecedented security levels in the face of continued terror threats not only resulted in record queues at major international airports in 2007, but have also prompted major corporations to take stock of their data and reporting requirements. As such, the ability of corporate travel management companies to track and provide real time information on employee movements will continue to be a business necessity in 2008.

Continued Challenges Faced By Air Passengers

Radcliffe points to March as a pivotal point in the calendar, with the introduction of the transatlantic Open Skies agreement and the much anticipated opening of Heathrow's Terminal 5 in the UK. "Open Skies is good news for most airlines and travellers. Paving the way for airline expansion on both sides of the Atlantic, it should increase travel options for our corporate travel customers and greater competition is likely to generate lower fares -- particularly welcome in the current price sensitive climate. However, there are likely to be some knock on effects; some larger airlines may be forced to give up their monopoly over flight slots, which could restrict their future growth. In addition, Open Skies may spur a wave of consolidation as airlines scramble to secure prime slots.

"Already hosting significantly more transatlantic flights than any other European airport, it is likely that the implementation of the treaty will lead to greater increases in passenger traffic at London Heathrow -- an airport that is already overcrowded. Whilst, it is well timed to coincide with the opening of Heathrow's Terminal 5, it is vital that we consider the bigger picture of air travel management. New airport terminals provide the opportunity for an enhanced travel experience in the long-term, however, corporate travellers continue to face ongoing disruptions as airlines continue to operate at, or near, capacity on many routes and at many airport hubs.

"Congestion at international airports, such as Heathrow, is generating significant waste, both in terms of lost time and unnecessary CO2 emissions from planes circling as they wait for a landing slot," says Radcliffe.

"Such problems have already prompted a doubling of international scheduled flights from regional airports, now reported to handle 42% of international travel. What's more, following the launch of Open Skies, many US airlines are expected to expand services to key European hubs, such as Paris and Amsterdam. With Open Skies expected to generate 26 million more airline passengers over the next five years, pressure to build an additional runway at Heathrow and other international hubs can only intensify. However, such plans must balance the impact on business and the economy with the best way to control CO2 emissions, and concerns of local residents."

Environmental Concerns Gain Momentum

Additionally, with more companies addressing their corporate social responsibility (CSR) activities and as the recent United Nations Conference in Bali, resulting in the historic climate change commitment of world leaders, catapults environmental concerns to the top of every business leader's agenda, HRG is highly experienced in recommending corporate travel solutions for the increasing number of carbon conscious business travellers. Corporate travel is increasingly included in CSR programmes and HRG is proactively advising corporate customers on travel programmes to minimise their carbon footprint.

"Environmental concerns are not going to go away." confirms Radcliffe. "It's our job to ensure we can support our clients in the best possible way to meet their own objectives."

Future 'Hotspots'

Considering key markets to watch in 2008, Radcliffe predicts that the continued strong economic growth in emerging markets such as Brazil, Russia, India and China (BRIC economies) will continue to attract corporate travellers, through a combination of the expansion of multinationals looking to capitalise on market opportunities and the growing importance of indigenous organisations on the world stage, with Russia one of the markets expected to demonstrate significant growth. However, he advises that infrastructures may struggle to accommodate the burgeoning demand from corporate travellers.

As such, the corporate travellers will do well to seek out organisations such as HRG, whose focus on relationship building with local suppliers in these markets will be key to meeting their demands and service expectations. China will continue to the one to watch: the transatlantic Open Skies treaty has paved the way for a similar agreement between the US and China, increasing accessibility to the market. In addition, the Beijing Olympics will provide a catalyst for infrastructure development and the world's media spotlight on the Chinese capital is expected to drive an upsurge in corporate travel to this country.

"It is another challenging year for the corporate travel industry but it is also one which continues to provide opportunity," confirms Radcliffe. "It is our job to ensure that we can cut through the complexity on behalf of our clients and ensure that we continue to provide a comprehensive range of services, all of which are designed to offer added value right when and where they are needed."