As the effects of the economic downturn continues to send shock waves through the business world; big spenders (Spend Matters take a swipe at Google and other rising market giants here) are all starting to take a look at where their money is flowing.
Both ABC and NBC have recently had internal memos released to the public with cost cutting on the agenda. In an e-mail to the staff; NBC Universal’s chief executive Jeff Zucker is reported to have said that cost focus will be on cutting promotional expenses and discretionary spending such as travel. In a similar move, David Westin, president of ABC News, sent out an e-mail to inform his staff that ABC News (along with the rest of Disney’s Media Networks Group) will be implementing new guidelines aimed at reducing administrative costs; notably by scaling back on travel accommodations for executives as well as cancelling magazine and newspaper subscriptions and planned holiday parties.
Now this might seem like desperate moves; more like a show of action than any thing else; but one has to wonder how actions like these affect travel patterns and the airline industry. The airline industry is experiencing a crush of it’s own; over thirty airlines have collapsed so far this year (including the UK’s third-largest travel operator XL – who left 90 000 holidaymakers stranded abroad) and recently Willie Walsh, chief executive of British Airways, forecasted that another thirty will be gone before years end.
So far many of the collapsed airlines are low cost carriers whose margins were based on high volume and chances are high that this pattern will continue so the question one has to ask is:
If business travels are asked to choose cheaper alternatives; will the new travel patterns come into effect soon enough or will the cheaper alternatives go out of business before this new wave of potential travellers even hit the market?
Recently I had a conversation with a colleague of mine (who is acting as travel manager at a mid size European manufacturer) regarding travel policies and the use of low cost carriers and from his daily perspective, low cost carriers was a non-issue for many companies – travel policies may state that lowest price is a priority, but this only seems to apply to the traditional airlines, low cost carriers are still seen as unworthy of business travel.
It remains to be seen if this is still the case as the screws are turned on both travel management and the airline industry. In any case; risk management needs to be prominently on the agenda when addressing the issue.
