"New Environments For Travel Management" was the theme of an Executive Forum hosted by the Association of Corporate Travel Executives (ACTE) in Chicago on 19 June that drew 80 procurement specialists, travel managers, and suppliers – all seeking new strategies for the current U.S. economic crisis. The program offered hard answers for some tough questions, but also provided recommendations to minimize the impact of the recession.

"One of the hardest questions to answer is how long the current economic climate will prevail," said ACTE President Richard Crum. "And for those in our profession, the answer is about six months longer than it will last for other commercial sectors. So waiting it out is not a realistic option. This ACTE forum and others are designed to minimize the financial crisis and shorten its duration by offering greater options to our members."

No one can deny that the business travel management profession has a great deal riding on the economic health of the U.S. airline industry. In a session titled, "New Models in Airline Yield Management for A New Economic Environment," presenter Vaughn Cordle, AirlineForecasts LLC, stated that a one percent change up or down in U.S. consumer spending equals $1.75 billion in revenue to the U.S. airline industry. This means the slightest fluctuation in the wrong direction, like spending less, can eliminate any fragile gains.

Cordle explained the definition of "crack spread," the additional cost of fuel per barrel to refine it into jet fuel. In 2003, the crack spread was $5 (USD) per barrel. Today, it is $33.47, bringing the cost of fuel considerably higher than the same product that goes into U.S. automobiles.

What does this mean for the airline industry and the business travel management profession? That depends on whose forecast you listen to. The Department of Transportation's (DOT) energy section believes fuel prices will drop to $105-110 in 2009. Yet others predict fuel increases of an additional $60 (USD) per barrel. In the first case, it seems unlikely that carriers will drop fares or reinstate less profitable flights solely to make up for billions of dollars already lost. The second scenario would prompt further capacity cutbacks to 35-40 percent of domestic carrier capacity.

According to Cordle, U.S. airline capacity has never recovered its pre-9/11 revenue per mile statistics. This translates to a startling truth: to cover the current oil cost of $130-$140, the airlines must raise ticket prices $40-45, and lose 18-20 percent capacity. These actions will be accompanied by a loss of 75,000-85,000 jobs in the airline industry. The speaker predicted higher fares and less service throughout 2009.
"Washington cannot provide the answers," said Cordle. "When proposals are made, the concern for the legislative constituencies overrides any enactment that could benefit the entire industry."

Every ACTE Executive Forum features extensive presentations on advanced travel management techniques. In the session titled, "Contract Management," presenters Thomas E. Lacy, Executive Vice President, Global & Strategic Markets, HRG; and Cindy McCain, Travel Manager-North America, Weatherford International, examined contracts as the critical instrument in defining the relationship between buyers and suppliers.

According to McCain, if she had been told four years ago that she would be presenting on the topic of contract management at an ACTE Executive Forum, she never would have believed it. Through very rapid expansion, Weatherford International grew from a two-person company to a 40,000 employee company in 20 years. McSwain, whose previous procurement expertise was buying gas for her company, applied her energies and procurement know-how to bringing a managed travel program to Weatherford in the record breaking time of one year. Crucial to building this program was the contracts that were struck with key suppliers, especially the TMC.

The "Content Fragmentation" session, presented by industry veteran Harriet Washburn, Global Travel Services, IBM; and Pradeep Rao, Director of Marketing, Strategic Accounts, Sabre, focused on defining the problem of "fragmentation or "disaggregation" for the managed travel program and the role of technology as an enabler of solutions.