Say farewell to those business-class airfare bargains

Companies feeling flush enough to send their employees on business trips have been doing so on the cheap in 2009. Fares in premium classes have tumbled in tandem with passenger traffic, giving corporate travel departments great deals on the best seats at the front of the plane. A British Airways sale this summer let business-class travelers fly round-trip from San Francisco to London on the serene upper deck of a 747 for just over $3,000, more than half off the usual premium fare.

But the cheap corporate travel bonanza is coming to an end, says a report Wednesday from American Express, which operates one of the world's biggest travel agency networks. Amex (AXP) sees prices on long-haul domestic and international business-class flights originating from the U.S. rising anywhere from 3 percent to 8 percent in 2010, "as the world begins to show signs of emerging from the recession."
Counterbalancing the trend are hotel rates, which will fall another 3 percent to 6 percent for upper-range properties because hotels can't cut capacity as easily as airlines can, Amex says. The price of the average domestic business trip will rise 1.2 percent, or $13, to about $1,080 when airfare, hotel and ground transportation are included, Amex says. The cost of an average international business trip will increase 2.4 percent, or $67, to $2,818, the company says.

And the corporate bean counters could be in for more sticker shock: Amex expects "unbundled and ancillary" fees -- things like surcharges for extra luggage and seat reservations -- to push up the overall tab by 15 percent. Among some of the recent fast ones pulled by airlines, British Airways announced it would charge customers for pre-assigned seating -- up to 50 British pounds for one in a emergency-exit row. No-frills Southwest Airlines has added a $25 fee for unaccompanied minors and more recently, a $10 priority-boarding fee.

As the recessionary hangover keeps the pressure on businesses, corporations will be forced to make a case for why an employee should travel, says Hervé Sedky, vice president and general manager of American Express Business Travel, which prepared the report. "Heading into 2010, companies will need to consider the impact of these changes in mindset, particularly as projected rate increases in key travel categories gain momentum."

Amex sees "pent-up" demand for travel and meetings being be "unleashed" in 2010. Also contributing to a rise in travel prices could be increasing fuel prices and stronger economies in some regions. Overall, Amex expects business-travel growth to be up 1 percent in the U.S. (and 15 percent in Canada). That's a big change from 2009, when the recession led to a 15 percent decline in the U.S. corporate travel market to $85 billion, according to travel industry research group PhoCusWright.

For leisure travelers used to flying in cattle class, Amex projects the airfare increases to be slightly more moderate than in business -- from 2 percent to 7 percent for domestic and short-haul international flights. But it says midrange hotel rates could see smaller declines -- from 1 percent to 4 percent -- than fancier properties. No doubt, staycations may continue to be the rage into 2010.
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