Businesses Are Conserving on Travel Dollars

U.S. businesses are spending air-travel dollars more effectively, paying just 2% more for flights in the third quarter than a year earlier even though business fares rose an average 6%, according to an American Express Co. survey.

The gap between the lowest unrestricted business fares bought at the last minute and those booked earlier using available discounts grew to its widest in three years during the quarter, the American Express Business Airfare Index also showed.

The widening gap shows large businesses are negotiating with airlines for greater discounts and that individuals are finding lower fares when booking their own flights, said Melissa Abernathy, spokeswoman for American Express Travel Related Services Co.

“Business travelers are behaving more like leisure travelers,” Abernathy said. “They are more resistant to higher fares and are willing to put up with some inconveniences.”

Travelers who had avoided cost-saving connecting flights or early departures are more willing to accept them now that the average round-trip business fare has grown to $976, rising 6% from September 1998, she said.

“There is greater opportunity to find much lower fares now than three or four years ago,” Abernathy said. “Companies negotiate [discounts] better and employees are behaving differently. With more options presented, they tend to choose the lower-price options.”

American Express defines a typical business fare as the lowest fully refundable, economy class fare available with no more than a three-day advance purchase. The index monitors flights from 40 major U.S. cities to a total of 215 destinations.

During the third quarter, the average fare paid by business travelers was 41% lower than the typical business fare, the largest quarterly gap since the index began tracking the number in 1996. In September, typical business fares were 49% higher than in January 1996, while the average fare paid was up 23%.

The lowest discount fares available in the quarter fell 3% from a year ago. Such fares seldom are used by businesses because they require as much as a 21-day advance purchase, a minimum stay, refund limits and round-trip travel.