Airlines in promo frenzy

By Abigail L. Ho
Philippine Daily Inquirer
First Posted 20:23:00 08/23/2009

MANILA, Philippines - Fly to local destinations for just one peso! Travel to the United States for less than $500!

As the global recession rages on, both the local and Asian travel industries are relying on attractive promotions and discounts by airlines to stay afloat.

According to the Abacus Travel Sentiment survey, released recently by travel solutions provider Abacus International, there were some “green shoots” in a number of markets, including the Philippines.

The study revealed that bookings in the Philippines, Vietnam, Thailand, Myanmar, Sri Lanka, China, Pakistan, Nepal and Kazakhstan increased in the first half, vis-à-vis the same period last year.

“This is a positive indication that people are still traveling and that there are opportunities out there for businesses,” Abacus International president and chief executive Robert Bailey said in a statement posted on the company’s official website.

“Businesses must water the ground and tend these green shoots carefully by making the effort to understand local conditions so they can effectively influence consumers’ decision-making process,” he added.

Here in the Philippines, what mainly kept the travel industry afloat were the “attractive promotions and discounts” offered by airlines to stimulate travel, the survey revealed.

“Philippine Airlines’ appealing promotional fares to selected cities on its international network could have motivated Filipinos to take to the skies earlier this year,” it said.

Recession casualty

These promos included the offer of round-trip airfares to long-haul destinations such as San Francisco and Los Angeles for as low as $450.

But travel had been confined mostly to individuals in the first half, the study showed, as the corporate travel segment remained sluggish.

In China, for example, a third of the travel agents polled named the corporate travel segment as the biggest casualty of the economic downturn, with the negative impact estimated to range from 15-20 percent.

Only 16.7 percent of those surveyed said they still expected some growth from the sector, while a mere 6.7 percent believed the recession had little or no impact at all on the segment.

Travel agents in China were particularly affected by this drop in corporate travel, the Abacus study revealed, as most of them had a higher percentage of the corporate segment in their businesses.
“The financial pressures faced by companies have forced them to be more stringent about granting permission for staff travel. This has forced the corporate travel booking process to evolve and greater attention is now being placed on the pre-trip portion of the travel booking process,” Bailey said.

Airlines had also started to feel the pinch of the decline in corporate travel, he said, as this segment usually had the high-yield passengers.

Creative marketing would have to be employed to attract the fewer business travelers that were still taking to the skies, he said.

Still bullish

Despite this dampener, he remained fairly optimistic that the Asian travel industry would be able to weather the trials dealt by the global recession and the spread of the Influenza A(H1N1) virus.

He said industry players in Asia had actually done a pretty good job of staying afloat.

“Without their efforts and determination, green shoots that have started to break through the parched ground would not have appeared. What it takes now is for industry members to unite, collaborate and together innovate to address the challenges the industry is facing so that they can be turned into future opportunities. By doing so, the industry will create conditions conducive for more shoots to spring up and thrive,” he said.

These opportunities for growth could be found in the intra-Asia and domestic travel segments, he said, as long-haul international travel continued to be on the downtrend.

“The complex economic, health and safety issues facing consumers have resulted in a shift in travel patterns. Travel agents responding to the Abacus Asia Travel Sentiment survey indicated intra-Asian travel will grow in popularity in the short term,” he said.

The Abacus study revealed that as many as 40 percent of travel agents in South Asia and 51.7 percent in China believed that short getaways within the region would be the most preferred travel category among travelers over the next three months.

Domestic travel, on the other hand, would be the main preference of travelers, according to 31.7 percent of agents in South Asia and 34.5 percent of those in China.

“Faced with decreased discretionary budgets for travel as well as concerns over health and safety issues, leisure travelers are cutting back on visits to international destinations. Travel preference has shifted toward domestic holidays as these trips cost less,” Bailey said.

“They also offer peace of mind as travelers may feel safer and more confident when they stay within the familiar environment of their own countries. These domestic tourists are now the lifeline of tourism businesses and their expenditures come as much needed revenue to airlines, hotels and others in the industry,” he added.

Only 25 percent of respondents in South Asia and 10.3 percent of those polled in China said long-haul travel to the US, Europe and the Middle East would be the strongest performing segment over the next three months.