Companies Change Airlines, Schedules : Business Fliers Adjust to Snafus

Cancellations bedeviling air travelers today are changing the travel habits of some of the airlines’ most valued customers--business fliers.

Poor service is driving business travelers away from certain airlines and airports, and in some cases it is driving them off of commercial carriers altogether. It is leading them to book flights at off-peak hours and to schedule trips so they arrive the night before a morning meeting. Those strategies are adding significantly to corporate travel budgets, but most business travelers believe they have no choice.

It may mean spending a little more to ensure a business executive’s timely arrival for a key meeting, but “it depends on what you define as costly. Missing a business meeting is very costly,” said Mitchell York, editor of Business Travel News, a weekly publication for business travel planners. “If you have an 11 a.m. meeting and you leave at 8 a.m. and miss the meeting because you don’t arrive until early afternoon, it might cost $1 million, compared with $125 for a (hotel) room. It’s opportunity costs, not just costs” that are critical, he said.

Some companies are using corporate aircraft more. “From a pure dollar standpoint, there’s no way you can justify a corporate airplane. You can fly people first class forever on the interest you pay on a corporate aircraft,” said David Curtiss, manager of corporate travel for Upjohn Co. But “if that multimillion investment in that airplane means you can be someplace to make a decision that wouldn’t have been made, or couldn’t have been made properly before, you can recoup that money in increased business opportunities and profits.”

Edward T. Chu, director of aviation and travel for Warner-Lambert Co., said his corporation’s helicopter and two jets “are being scheduled now pretty close to optimum usage.” The costs are sometimes justified on overseas or transcontinental flights, particularly if the company’s airplanes are full, he said. “On short hauls, it’s not the most economical way to travel, but the speed and convenience does offset the economics there,” he said.

There are no comprehensive figures on the added costs that businesses are incurring, but even a small percentage increase can add up to tens of thousands of dollars for an individual company and millions to business as a whole.

Upjohn, for example, spent more than $7 million last year in corporate travel from its headquarters in Kalamazoo, Mich., an expenditure that Curtiss said puts it in the middle range for large corporations. The critical nature of most business trips and the large sums spent on travel make corporations understandably touchy when they don’t believe they are getting their money’s worth.

When business travelers book flights on commercial air carriers, “they’re buying a schedule,” said Travis Tanner, president of retail travel for Carlson Travel Group, which owns Ask Mr. Foster, one of the largest travel agencies in the United States. “If they buy a schedule, and it never flies on time, is that really worth the price?”

Despite what a traveler may think after sitting on a runway for two hours, airlines are conscious of the problems, and they understand how much they have to lose if business travelers desert them.

Represent Big Profits

Business customers are a large and profitable part of the market for airline services. Last year, 46% of all travel on airlines was for business purposes, according to Airline Economics Inc., a research and consulting company.

But even that percentage understates the importance of business travel to the airlines. Because business travelers are more likely to pay full fare rather than travel on discount tickets, they represent big profits for airlines.

Business travelers account for 49% of United Airlines’ passengers, but the airline wants to increase that percentage, said Matt Gonring, a spokesman for United. “One percent of our passengers contribute 11% of our revenue,” he said. Put still another way, 11% of the airline’s travelers--the frequent fliers who shuttle back and forth for business--generate almost 50% of the trips on the airline, said Gonring.

As a result, United is designing a program to “discriminate in favor of business travelers,” Gonring said. United is designing a computer profile of its most frequent fliers, those who fly a minimum of 25,000 miles a year. In 1986, United had about 150,000 of those passengers. The profile will list each of these passengers’ seating and meal preferences and allow United personnel to address them by name. The passengers will get first chance at standby seating and first-class upgrades and will be able to board along with first-class passengers, said Gonring.

At the top of the list of airlines provoking consumer complaints to the Department of Transportation have been Continental Airlines and Eastern Air Lines, both subsidiaries of Texas Air Corp. Several corporate travel planners said that they often get requests to avoid booking flights on those airlines.

Much of the difficulty that travelers encounter arises from airlines’ use of the hub-and-spoke system of routing. In this system, carriers arrange their routes so that many flights converge at “hub” airports. The idea is to maximize traffic. An airline might not be able to justify more than one flight a day from city A to city B. It might, however, be able to justify eight flights a day from City A to its hub, where passengers could connect with flights to 30 different cities, including City B.

But hub-and-spoke routes have proven prone to disruption. The hubs are often congested, and airports at the tips of the “spokes” are short on backup equipment and repair capabilities.

Some corporate travelers suggest that there is a market out there waiting for the airline that offers point-to-point service, eliminating the stopovers in hubs. “The carrier who does step ahead and who does a good analysis of the market and puts in nonstop travel at a convenient hour can get the bulk of travel for city pairs (direct flights from one city to another),” said Chu.