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ACTE survey

The impact of ongoing volcanic eruption on global business travel industry

Although some flights resumed across Europe there are still major restrictions in place as the volcanic activity in Iceland continues to effect air travel. The Association of Corporate Travel Executives (ACTE) surveyed its international membership to better understand the impact this incident is having on corporate travel programs. Thirty-one percent of the ACTE survey respondents claimed their greatest challenges resulted from stranded travelers and canceled meetings (as an equal priority). Nineteen percent cited stranded travelers as their primary concern, while canceled meetings were a major issue for 11 percent. Twenty-two percent checked “all of the above,” indicating that stranded travelers, cancelled meetings, reduced sales calls, and increased expenses were simultaneous priorities. A remaining 11 percent said they were not affected at all.

“The unanticipated loss of air service for hundreds of thousands of business travelers has played out in dramatic fashion,” said UK based ACTE President-Elect Chris Crowley (who is currently stranded in the United States). “Travel management resources are being stretched to the limit as every effort is being made to return travelers to their families. ACTE members – travel managers, travel agents, travel management companies and suppliers in 82 countries – have been working 24 hours a day, since the middle of last week to bring people home. This is their challenge, their commitment, and their promise.”

Seventy-one percent of global travel managers/buyers responding to survey indicated they have taken a “substantial” economic hit on their travel spend for 2010. Of this 71 percent, 36 percent described the unanticipated expenses as “severe,” while 35 percent cited it as “moderate.” An additional 21 percent indicated the hit was slight, while 8 percent reported being unaffected.

“It is important to note that the financial factors of this crisis have a special significance in the light of the fragile global economic recovery for business in general and business travel in particular,” said ACTE President Richard Crum. “If even just one percent of the industry’s financial contribution to the global economy were effected, that would equate to roughly 4 billion euros. However, with that said, our survey confirmed that our members agree that safety of all travelers should continue to be the primary focus.”

Crum added that travel managers have been preparing for contagion, pandemic, conflict, war, and earthquakes for years. For many travelers, that level of preparedness was reflected in their corporate response to the eruptions in Iceland. Forty-seven percent of companies responding to the ACTE survey had a plan in place to accommodate stranded travelers. Twenty-nine percent did not have a specific program for this crisis, but moved forward with implementing one cobbled from other crisis programs. Twenty-five percent believe this crisis is so extraordinary and rare, that no preparation could have dealt with these developments and have no immediate intentions to change their policies.

The question regarding the reimbursement of travelers who will be submitting extensive expense reports due to the lack of air transportation showed that forty -six percent of respondents would reimbursement. Of that group, 32 percent were an unequivocal “yes,” while 14 percent stated their travel policy covered cataclysmic events of this nature. Yet 44 percent responded that their companies would review submitted expenses on a case-by-case basis. This leaves the door open to deny expense reports from travelers who may have resorted to extraordinary and unauthorized means of trying to move on to the next leg of their trip. Ten percent of respondents to the ACTE survey said they would not reimburse travelers for additional expenses.

Moving quickly after many northern European airports were closed, alternative transportation was available to 56 percent of the survey’s respondents. Of this group, 16 percent reported they were able to move travelers via rail, ferries, motor coaches, and by chauffeured surface transportation, while 40 percent stated this was an option for a much smaller number of their travelers. Forty-four percent indicated there were no other alternatives for their travelers.

In the section on government response, 54 percent of respondents said “No” to the question, “Did government agencies react too quickly in closing airports?” Thirteen percent said “Yes” and 34 percent were “unsure.” Responding to, “Did government agencies respond too slowly to reopen airports,” the numbers shifted slightly, with 39 percent saying “No,” 25 percent saying “Yes,” and 35 percent claiming to be “unsure.”

The ongoing volcanic eruption raises several other questions that were asked by the ACTE survey. The first concerned initial (non-stranded) traveler reaction to flying through potential ash clouds. According to travel manager response, 72 percent claimed their travelers have not voiced concern about flying under current conditions. Twenty-one percent have received requests by not to fly into the affected areas, and 7 percent stated on a few travelers have voiced concern.

The unanticipated expense of this crisis has already taken a big bite out of existing travel budgets for 2010. In answer to the question, “Would the cost of this crisis force your company to travel less in 2010,” 76 percent responded “No.” Twenty-two percent were unsure, as the crisis is ongoing, while two percent said, “Yes.”

And finally, ACTE sought the answer to “what if this eruption were to continue for months or even a year,” resulting in travel patterns determined by ash clouds. How would companies respond to that? Twenty-nine percent of respondents said they would rely on a strategic response combining rail travel, ground transportation and electronic travel alternatives as an immediate travel hybrid plan. Thirteen percent reported they have a program for electronic travel and meeting alternatives in place now. Thirty-nine percent indicated they had both a strategic response and a plan in place now, while 19 percent felt confident they would need neither.