Business travellers have never had it so bad. If they haven’t been grounded completely, they’re enduring long-haul misery at the back of the plane, fighting for seats on low-cost airlines, and even sharing hotel rooms with colleagues as companies put the squeeze on travel budgets. Some commentators have gone as far as to predict the death of business travel as we’ve known it, dispatched by a combination of recession, technology and environmental concerns.

It’s an appealingly apocalyptic vision and plays well to a media audience hungry for tales of corporate woe, but it’s far from the whole picture. 


In the first place, most business travellers are still getting out on the road, one way or another. The collapse of the financial and manufacturing sectors has prompted a wave of well-reported travel bans, which have impacted on major routes to Asia-Pacific and within Europe, but for many companies not travelling is simply not an option. Indeed, some are finding the need to get face-to-face with clients and customers even more pressing in a tougher economic climate.


“If you look at routes which are common to particular sectors, you can see one company that’s got a clamp-down on travel, and you can see the other company increase its travel, doubtless as it’s sending its sales and marketing folk out to grab the business,” says David Radcliffe, chief executive of leading corporate travel agents Hogg Robinson Group. 


What is common to all sectors is the need to drive down travel costs, to placate both finance departments and shareholders. Many firms are ensuring that travel is kept to a necessary minimum by insisting on high-level sign-off, while others are pushing travellers to downgrade their requirements, particularly on short-haul routes.


“We are seeing a shift from the front to the middle or the back of the aircraft, and we’re also seeing far more use of trains in Europe,” confirms Radcliffe. “We’re also seeing a move from the luxury end to the budget end in the hotel choices, and there’s a distinct move toward day trips.”


So far, so predictable. Fortunately for business travellers, however, cutting costs doesn’t have to mean giving up on premium travel. Recent International Air Transport Association (IATA) figures showing that passenger numbers in premium cabins are down more than 16% are clearly bad news for airlines, but suggest that the majority of business travellers are managing to maintain standards within reduced budgets. Indeed, the airlines’ pain is the travellers’ gain, as premium ticket prices are slashed to keep customers flying. 


Companies are also becoming more creative with their travel spend. Shopping around can bring substantial savings on premium fares, and paying top dollar for fully flexible tickets is going out of fashion. “Some firms are encouraging or forcing their staff to book travel further in advance, as a way of reducing usage or costs,” says Douglas McNeill, aviation analyst at Blue Oar Securities.


Other travellers are being asked to downgrade selectively, keeping business-class beds for overnight flights but moving further back in the plane during the day. This favours those airlines with premium economy cabins, such as BA, Virgin and Air New Zealand — soon to be joined by Air France — and has prompted Lufthansa to look at installing economy seats on its all-business-class services to the Middle East. 


This type of mix-and-match travel is also starting to emerge in the hotel sector, according to Paul Tilstone of the Institute of Travel & Meetings. “The traveller that normally books four-star every time might book budget if it’s just a place to put their heads and five-star if they’re staying a few nights and want to impress clients.”


Indeed, the luxury hotel sector has been hit so hard that travellers may be able to stay in luxury for little more than the price of a budget bed, particularly if they’re prepared to sign up to longer-term deals. “The hotels are suffering, especially the premium hotel market, but what they’re doing is reducing their rates to attract people who would normally stay in a three-star property,” says Nigel Turner of Carlson Wagonlit Travel.


But plummeting prices aren’t the only things sustaining premium travel, particularly in aviation. Even in the current climate, firms want their employees to arrive fit for business and are also increasingly mindful of their corporate social responsibility. 


“The health and safety departments of very large clients have a very firm view on how frequently a traveller travels, and whether they should travel with their legs out or their legs bent,” says Radcliffe. 


Certainly the airlines see a bright future for premium travel, if continuing high levels of investment are anything to go by. Even the cash-strapped US airlines are rolling out horizontal business-class beds across their fleets, with Continental Airlines due to join United and Delta in the flat-bed brigade this autumn, while Swiss, a subsidiary of Lufthansa, became the latest European carrier to go fully flat in March. 


Lufthansa itself has been a big player in the premium market in recent years, spending lavishly on lounges and onboard products, and is due to relaunch its first-class cabin next year with the arrival of its first A380s. “We decided a couple of years ago to follow a premium strategy approach,” says Dr Karsten Benz, vice-president for sales and services in Europe. “This has been successful and we can’t see any reason to change it.” 


Other airlines agree. “Our premium products are an integral part of our passenger experience and continued investment is essential,” says Emirates’ head of corporate communications Boutros Boutros; and despite being hit on the vital transatlantic routes, BA is also investing at the top end, with a new first-class product due out this summer.


“We’re still operating a very successful premium business,” says Richard Tams, head of UK and Ireland sales at BA. “Obviously we’re under pressure of price, but there’s a value piece here, there’s a network piece around our schedule, and those are going to give us enough value to present to corporate clients.”


New life has also been breathed into the all-business-class model, which seemed to have died a natural death last year with the demise of early players Eos, Maxjet and Silverjet. Lufthansa Business Jets are now plying routes to the US, India and the UAE, while BA is pressing ahead with plans to launch a new all-business subsidiary from London City Airport to New York in October.


“The pioneers of the concept were on the right lines,” says Blue Oar’s McNeill. “They were undone by the oil price spike last year, but they’ve blazed a trail and it will be exploited by the large established players.”


Even the private jet market is showing surprising vitality, considering the outrage generated by the tactless behaviour of US car industry chiefs in turning up to demand bailout money in luxury jets. “People are wary but I don’t think it’s going to stop them flying,” says George Galanopoulos of London Executive Aviation. “People can see through bad publicity. Is the boss of a major plc with two of his main people going to start flying Ryanair or wait hours in airports? It doesn’t make sense.”


Lufthansa offers discretion by issuing private-jet customers with first-class tickets instead of charter agreements, and reports strong demand for the service. “Companies can’t afford to keep their executive jet fleet so they deinvest, but they continue to use these planes because they create the flexibility they need to do business,” says Benz.


But can airlines really maintain this pace of premium investment in an extended downturn? They don’t have much choice, says McNeill. “While there’s an obvious concern about minimising cash outlay, airlines know they have to keep investing in these products throughout the cycle, because the cycle will eventually turn and at that point they need to be in a position to take market share.”


Fortunately, the major European players at least have taken the lessons of the Gulf War, 9/11 & SARS crises to heart & have made the most of the recent boom years, giving them the necessary leeway to ride out the present downturn. “The big three networks — Lufthansa, BA and Air France-KLM — have strong balance sheets and manageable capital expenditure commitments, so they’ll emerge bloodied but unbought at the other end of the recession,” adds McNeill. “The secret at the moment is to be as big as possible and to have as much cash as possible.”


And for those that have the cash, the downturn is providing opportunities as well as challenges. Lufthansa has taken advantage of Alitalia’s implosion to launch an Italian short-haul carrier out of Milan and at the time of press was waiting on regulatory approval of its takeovers of Brussels Airlines and Austrian Airlines, while BA was still negotiating on its merger with Iberia. Capacity is being slashed but carriers are fighting to keep routes to key emerging markets open, and a slow but steady stream of new routes are coming on line. 


“There will be recovery, there will be lots of travel needs to be fulfilled,” says Benz. “We see this crisis as an opportunity to integrate our partners and be ready for upswing.”


So will companies retain their appetite for travel, and particularly premium travel, through into that upswing? If they don’t, they’ll lose their customers and their staff, says Radcliffe: “Most businesses rely on human contact and, more importantly, most businesses face competition. When companies tightened travel in the second Gulf War, we actually saw people changing companies within their sector, and one reason was because the company they went to understood the need to travel decently. At the moment that’s way down the agenda, but that will come up again.” 


And those who can travel at the front of the plane can look forward to being wooed withever-more luxurious products by hungry airlines. “Premium traffic is what makes the money for the industry,” says Anthony Concil of IATA. “You’ll see airlines being very aggressive in trying to ensure their premium products are enticing enough and provide value-add services to the business traveller, to entice them back into that cabin as the economy recovers.”

The Next Stop

Dream time 
The 787 is finally due to see service next year, and while the order book is giving Boeing a headache, passengers on the new Dreamliners should feel a lot better. The aircrafts are made of carbon-fibre composites, which means cabin altitude will be 6,000ft instead of 8,000ft, cabin air will 
be more humid, and windows larger. The cabin will also feel lighter and more relaxing, thanks to LED lighting.


Light fantastic 
A new generation of Very Light Jets (VLJs) is making business aviation more affordable. The Cessna Citation Mustang and Embraer Phenom 100 are already flying, and Honda’s HA-420 is due out next year. Several companies have ordered VLJs in the hope of establishing air taxi services around Europe; this model looks even weaker after the collapse of DayJet in the US, but the planes are a boon for charter operators at a time when everyone is downsizing.


Supersize me 
The A380 has led to new concepts, from Emirates’ onboard showers and Singapore Airlines’ double beds to Air France’s new Thales in-flight entertainment system and Qantas’ self-service galleys. Layouts for BA, Virgin and Korean Air et al are eagerly awaited, and rumours abound that Lufthansa is looking at putting bunk-beds in economy. 


Plane talking 
Reaction to in-flight mobile phone usage has been mixed. Despite the fact that services can be restricted to texts or emails, or switched off on night flights, the negative publicity has meant only three European airlines have committed to onboard calls: Bmi, Ryanair and TAP Portugal. Air France-KLM trialled picocell technology last year but postponed a decision on its uptake, while Lufthansa has ruled out mobile phones in favour of Wi-Fi. This is also a popular option in the US, where regulators have yet to give the go-ahead for in-flight phone usage; American Airlines plans to have Wi-Fi on more than 300 planes by the end of 2010. Elsewhere, the technology is being greeted withenthusiasm: Emirates says more than 160,000 passengers have switched on their phones onboard since it rolled out the service in March 2008.


Work and play 
Networking is the name of the game: hotels are turning their lobbies into “social spaces”, websites can find you a dinner partner in Ulan Bator, and soon you’ll be able to decide whether you want a plane seat next to a talker, a reader or a hopeless romantic. Then there is Spotme; designed for use at conferences, it can slice and dice the delegate list to see who you should be talking to and beeps you when they’re within 100m. Enthusiasts say it could be expanded to let you see if colleagues or old school friends are in the same city — which may appeal to some more than others.


Seeing is believing 
Video-conferencing has come a long way: Cisco’s TelePresence system is winning fans worldwide; WebEx and Skype are connecting people at low cost. It may be a complement to business travel rather than an alternative, but virtual conferencing is on the rise, with pay-as-you-go systems now being installed in hotels, business centres and airports.


Life choices 
Or how about meeting in another world — the internet’s Second Life to be precise. Starwood trialled its Aloft brand there, Intercontinental launched a virtual meeting space, and the Institute of Travel & Meetings is planning simultaneous conferences there and in real life this autumn.