Why the global financial crisis is forcing us to cut back on travel
Today, any economic instability in the investment market can threaten the financial life of millions of employees, business owners and taxpayers. The current global financial crisis, which the whole world is enduring, has caused numerous financial setbacks for many companies that were forced to start economizing and cutting costs.
Thus, many luxury services have been cut to overcome the crisis and the losses it has caused. As a result, the travel industry has suffered travel cutbacks induced by the global financial crisis itself and caused by declining demand for travel, especially from regular and business travellers.
Current statistics show that a third of companies have stopped all business travel in an attempt to reduce their travel expenses, which is considered a high business expense. According to a new survey by the Business Travel Coalition (BTC) that surveyed more than 200 companies, one in four companies have instituted emergency cuts to their overall travel expenses in response to the current global financial downturn.
The survey was initially commissioned by BTC in response to members’ concerns about the prospect of a new recession. Around 40% of companies surveyed from 14 different countries said they have put in place a full and complete freeze on travel, while around 25% said they have only reduced air travel. Almost 75% of the firms that established the cuts have admitted that the measures on cuts will remain until further notice or even until some change in the current situation.
The completed investigations also found that cutbacks in travel budgets have been good news for most of the low-cost airlines present in the US. The BTC spokesperson stated that we have entered a disturbing cyclical downturn similar to the one that it happened in the fall of 2000. However, there is an order of magnitude increase in the importance of the current condition and in corporate reactions to travel expenses.
Many companies began cutting air travel expenses earlier in the year due to worsening financial data. Surveys conducted in the first quarter of the fiscal year did not recognize a downward trend. However, by the middle of the year, he was broad based. BTC wanted to unequivocally capture the reaction of companies to the economic crisis in order to be prepared for the coming year.
As the need to travel increased with business growth, travel cutbacks surely brought bad news to big businesses. Consequently, alternatives were admitted to meet this essential need. Half of the firms surveyed said they are looking at alternatives such as video conferencing, canceling overnight trips and even train travel.
While other firms have put in place new policies that limit staff travel needs and force them to use some low-cost airlines like Easyjet or even Ryanair.
Another survey that supported the BTC survey also suggested that about half of the corporations surveyed have a goal of reducing their travel budgets before the end of the fiscal year in March 2009.
A survey also conducted by KDS, a travel management company, indicated that almost 40% of corporations have been forced to cancel previously booked business trips, while the other third had to cancel many international meetings and replace them with alternatives such as videoconferences. .
These travel cuts that the current financial crisis has deteriorated the travel industries and caused many international airlines to lose a lot of money. In fact, some airlines have been forced to cut back on their annual number of flights, especially from places that have seen declining travel costs. The new policies will remain in place until more studies are done on the next financial crisis.
The current economic crisis has surely been bad news for thousands of industries and corporations. While the travel cuts might have helped some low-budget businesses cut costs, they have surely hurt high-revenue businesses that rely heavily on travel.
The coming financial year will surely indicate the accuracy of any additional responses and policies that corporations will follow. Current policies are likely to remain in place for quite some time until the financial crisis begins to wear off.