Quick Hits: Fewer Businesses, Fewer Business Travelers?
Brief scrutiny of today's headlines.
Wall Street's troubles may mean the airline industry has to survive for years without tens of thousands of its most profitable customers.
Low-fare coach passengers are sometimes called "ballast" by the airlines, filling up the back of the plane and allowing a carrier to fly 5 or 6 times a day between major cities to assure the frequency needed to attract high-profit business travelers. With luck, the airlines break even on low-fare coach passengers, Portfolio.com reports.
On the New York to London route, corporate travelers typically pay about $5,000 for a business-class round-trip ticket, or about 10 times the lowest advance purchase fare available to vacation travelers.
That means that, for every Lehman or Merrill Lynch (MER) traveler that no longer makes the trip, airlines will have to find 10 vacationers to make up for lost revenue.
Typically, airlines spend more to attract discretionary travelers and, unlike many business travelers, such price-conscious customers must be sold on the airline each time they fly.
American (AMR), Delta (DAL), Continental (CAL), British Airways and Virgin Atlantic fly the New York-London route each day. Price competition is good news for vacationers, but most business travelers are more concerned about scheduling than price.
Business travelers also make numerous trips between New York and Los Angeles and New York and San Francisco as the entertainment and high-tech industries seek financing. There's also significant business travel between the West Coast and the Pacific Rim.
Airlines may also take a hit on business travel between New York and Washington. The average one-way walk-up fare to fly the 214 miles between New York's LaGuardia Airport and Washington's Reagan National is $340, or $1.59 a mile - about 13 times more per mile than the average fare airlines charge nationwide.
Chew on that price the next time you fly cattle class with your knees tucked under your chin -it's sure to beat the stale peanuts.
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