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9/11 Saved Business Travel
Opinion · August 30, 2002

Did the terrorist attacks of Sept. 11 kill business travel?

Conventional wisdom suggests that the attacks inflicted massive damage on corporate travel, grounding frequent fliers such as Brooks Hurd.

"If you fly on short business trips, your travel time is sometimes doubled by security checks," says Hurd, a consultant for the San Luis Obispo, Calif., semiconductor industry. "Why bother?"

The numbers appear to support that assertion. The Travel Industry Association of America predicts business travel will remain flat this year and rebound only to 2000 levels by next year.

The nine major air carriers lost $3.8 billion alone in the first half of 2002, mostly from the absence of travelers willing to pay for expensive unrestricted tickets — the kind normally preferred by business travelers.

But as the anniversary of the hijackings approaches, it's becoming increasingly clear that the conventional wisdom is wrong. Last September's events may have changed business travel for the better, and probably saved it.

Before Sept. 11, travel represented the second-largest controllable expense behind payroll for companies. Businesses struggled to contain costs — airfares, lodging and meals — as the economy receded, even when employees complained that the overall travel experience was becoming intolerable.

Today, businesses have successfully cut costs while the travel industry is reducing prices and improving service. A recent survey by the National Business Travel Association (NBTA) found that 65% of companies had reduced expenses from 2000 levels. One-third said they spent 10% less than they did two years ago.

In other words, the disasters of Sept. 11 forced a series of important concessions from a travel industry that had previously proved unwilling to budge.

Michael Hirschfeld, who is the president of a retail business in Westport, Conn., says the post-Sept. 11 travel experience has been "great in many ways." Indeed, hotels are trying harder to make their guests happy, as evidenced by the bump in customer-satisfaction ratings given to several major chains by the American Customer Satisfaction Index. Hilton's numbers are up about 3% to levels not seen in two years; Hyatt's are up by the same amount to levels it hasn't registered since 1998.

Even the numbers of complaints filed against U.S. airlines are only about half what they were a year ago — down from 9,773 in the first half of 2001 to 5,626 for the first half of this year, according to the latest Department of Transportation figures. This suggests that carriers are offering travelers better service. After you account for the 11.8% drop in domestic-passenger traffic for the first half of the year, that's still a significant decline.

The change in complaints stands in sharp contrast with the late 1990s, when many business travelers told me they felt that they were being taken for granted. Business travelers changed, too.

How so? They stopped behaving like business travelers. The trend started before the terrorist attacks, but 9/11 was a breaking point. Before the tragedy, corporate travel managers had been aggressively trying to cut travel costs; afterward, they just cut travel. More than half of all travel managers surveyed after Sept. 11 said they would reduce the number of trips taken by employees, according to the NBTA.

A few months later, the same travel managers said that to save money, they were authorizing their employees to book trips on discount airlines or buy advance-purchase fares. Those are buying patterns typically associated with leisure travelers.

What has that done?

Look no further than the airline industry for the answer. A year ago, the major airlines still clung to a model of pricing airline tickets that charged business travelers about four times more than leisure travelers. But now companies such as American Airlines are calling for a meaningful change that narrows the wide chasm between business and leisure fares.

"We must face up to the need for some fundamental changes in the way we do business," American's CEO, Don Carty, said in a speech at the National Press Club in Washington in July.

Last March, for the first time in almost a decade, the price of an average unrestricted coach-class ticket dropped, according to American Express, edging down by 2%. American this month reduced its business fares by an additional 10%, a decision that was matched by many of its competitors.

While some of the economic hardships that were exacerbated by Sept. 11 have forced a few U.S. airlines to restructure their operations, positive changes for travelers are coming out of it.

For example, Delta Air Lines joined forces with rivals Northwest and Continental last week in a code-sharing agreement in which the three airlines would sell seats on each other's flights. Travelers also would receive frequent-flier miles on any of the airlines.

And American has announced that it is streamlining its operations to give travelers better flight options by spreading out the number of its flights more evenly during the day.

Would the airlines have even entertained the idea of changing the way they did business if not for Sept. 11?

I'm certain that had the attacks not occurred, the current pricing system that exploits business travelers would have remained in effect indefinitely. It's a matter of speculation as to how much longer that might have continued before business travel became so unfairly priced and unaffordable that it would have collapsed under its own weight.

Hurd, who often travels to Israel on business, admits that even with all of the hardships involved in travel, he still goes. Yes, the hassles add time to his trips — particularly domestic-airline flights — but he puts up with them. "I can live with the delays," he says.

The devastation of Sept. 11 transformed business travel into something more efficient and, ultimately, sustainable than it has ever been. But the real tragedy is that it took a tragedy to make these much-needed changes happen.

Christopher Elliott is a travel commentator based in Key Largo, Fla. All e-mailed questions may be edited, condensed or republished at the site's discretion.