Nowadays, any economical instability in the market of investments may threaten the financial lives of millions of employees, businessmen and tax payers. The current global financial crisis, the whole world in enduring, has caused numerous financial setbacks to many businesses that were forced to start economizing and cutting back on expenses.
Thus, many luxurious services have been cut back to overcome the crisis and the losses that resulted. As a result, the travel industry has suffered from travel cuts induced by the global financial crisis itself and caused by the decrease in travel demands especially by businessman and regular travelers.
Current statistics show that the third of companies have actually halted all their business trips as they seek to cut their travel spending which is considered a high business expense. According to a new survey made by Business Travel Coalition (BTC) that polled over 200 companies, one in four firms have established emergency cuts to their overall travel spending in response to the current global financial downturn.
The survey was initially commissioned by the BTC in response to members’ concerns about the prospect of a new recession. About 40% of the companies surveyed from 14 different countries said they have established a complete and total travel freeze, while about 25% said they have cut air travel only. Almost 75% of the firms that established the cuts have admitted that the measures about cutbacks will stay in place until further notice or even until a certain change in the current situation.
The researches completed also found that the cuts in travel budgets have been fine news for most of the low-cost carriers present in the USA. BTC spokesman stated that we have entered an eerie similar to the cyclical downturn that happened in Autumn 2000. However, there is an increase in the order-of-magnitude in the significance of the present condition and in corporate reactions concerning travel expenses.
Many firms began cutting back on air travel expenses at the beginning of the year due to the worsening of financial data points. Surveys made in the first quarter of the financial year did not recognize a pullback trend. However, by middle of the year, it was broad based. BTC wanted to unequivocally capture the firms’ reaction to the economical crisis in order to be prepared for next year.
As the need of travel increased with the grow of businesses, the travel cuts have surely brought bad news to big firms. As a result, alternatives were admitted to replace this essential need. Half of the firms that were surveyed stated that they are seeking alternatives such as video conferences, cancelling overnight trips and even train travels.
Whereas other firms have established new policies that limit the staff’s traveling needs and force them to use some no-frills airlines like Easyjet or even Ryanair.
Another survey that supported the BTC one has also suggested that about half of the corporations polled have the goal of reducing their travel budgets before the ending of the economical year that is in March 2009.
A poll also made by KDS, travel management company, stated that almost 40% of corporations have been actually obligated to call off previously-reserved business trips while the other third had to call off many international meetings and replace them with alternatives like video conference calls.
These travel cuts that the current financial crisis have deteriorated the travel industries and led to many losses to numerous international airlines. Some airlines were actually forced to decrease their number of annual flights especially from places that have encountered a decrease in travel expenses. The new policies are to stay in place until further studies are made about the upcoming financial crisis.
The current economical crisis has surely been of bad news to thousands of industries and corporations. Though the travel cuts might have helped some low-budget businesses decrease expenses, but it surely have disrupted the high-income businesses that depend mainly on traveling.
The next financial year will surely state the precision of any further responses and policies that the corporations will follow. The current policies will surely remain running for quite some time until the financial crisis starts to vanquish.