Checking in to a cheaper future

Business travel providers will soon be producing better deals, as stiff competition forces them to offer more perks for less. By Simon Calder

When the telephone was invented in the 19th Century, the railway companies were worried. Surely, ran the argument, if people can make instant contact with each other, they won't bother to take the train. Yet the converse happened: telecommunication actually spurred an increase in travel.

When the telephone was invented in the 19th Century, the railway companies were worried. Surely, ran the argument, if people can make instant contact with each other, they won't bother to take the train. Yet the converse happened: telecommunication actually spurred an increase in travel.

At the end of the 20th Century, no business traveller needs to be told that the Internet revolution offers countless opportunities to transact electronically. In the next millennium, the most valuable commodities are likely to be time and the power of the human brain. Businesses are bound to reassess how much of each their executives are losing while globetrotting - and travel providers are having to work harder than ever before to devise ways of reducing the costs in time and stress.

More pragmatically, companies are reassessing expenditure on transportation and accommodation, and questioning whether the premiums being charged for business are justified.

The most extreme example is the route between London Heathrow and Los Angeles. Eight wide-bodied aircraft cover the 5,500 miles each way, every day. So intense is the competition for economy passengers that fares for the back of the plane have fallen as low as £200. Yet the normal business-class fare is just two pounds short of £5,000. Is it really worth 25 times the economy fare to travel on the same plane?

The airlines are trying to make sure that it is, by offering an ever-wider range of frills. The twin focuses are on reducing those invisible costs: greater comfort - which means reducing the stress of long-haul travel - and improved communications facilities, thereby maximising available time. But increasingly, many companies are insisting that their travel agents earn their keep by finding them much lower fares than the airlines officially demand. And calls for aviation liberalisation across the Atlantic, which should lead to more realistic pricing, are rising.

At the other end of the spectrum, frills are disappearing rapidly. So furious has been the competition from Britain's low-cost airlines that KLM UK has decided that it has no choice but to join them. From January, regular flyers on five routes from Stansted will find that lounge access and breakfast are now optional extras aboard the rebranded no-frills airline, Buzz.

The cheap carriers are practically keeping an entire Boeing 737 production line in business with big orders for more planes. These have to be flown somewhere, and the established carriers are likely to be threatened by more low-cost links from Britain. Ironically, British Airways is likely to cut back routes in the face of competition from its own no-frills operation, Go.

BA, which reported dismal results yesterday, is in retreat, cutting capacity by 12 per cent over the next few years in a bid to boost yields. Meanwhile, aviation is expected to continue to expand at its present rate of five per cent annually. It is something of a miracle that, in less than a century, aviation has gone from its birth on a windy December morning at Kitty Hawk, North Carolina in 1903, to the point where the critical issues are legroom and the availability of laptop hook-ups.

Yet in the 21st Century, travellers will demand that the airlines reform themselves. According to the ticket I'm holding, in return for several hundred pounds, I receive a seat on an aircraft which may or may not depart on time, may not be operated by the airline stated on the ticket, may make unscheduled stops and, only if I am lucky, will arrive on roughly the right date in approximately the correct city. And I may not even be on board the plane if I've failed to reconfirm three days in advance. There is still no replacement in force for the 70-year-old Warsaw Convention.

The new wave of transport providers, notably the high-speed railways, are trying much harder to be customer-focused. Eurostar has no choice: the Channel Tunnel operator has no fewer than 10 million seats to fill this winter - plenty of them in the premium classes. No-one seriously disputes that a London to Paris journey is less stressful by rail than air, but Eurostar has yet to convince business travellers that it is a serious contender for feeding into the Continental high-speed network. And five years after they were promised, travellers from Scotland, the North of England and Midlands are still waiting for their Regional Eurostar trains to arrive.

On the hotel front, never mind the frills. The big question is something that is rapidly becoming a necessity: at what point does Internet access become a standard fitting in every business hotel room? Providing a modem point is no longer enough; surprisingly, many Internet cafés around the world are filled with people who find that the backpacker community is much better provided for than the business traveller.

While in India later this month, I may check out how bookings for easyJet or Go are doing. The Internet does something much more profound than simply allowing me to book a ticket by pressing a few keys; itempowers me as a traveller by revealing many of the secrets of yield management.

Anyone who browses through the no-frills airlines' websites (and I bet all easyJet's and Go's competitors do) can track booking patterns and yields throughout the year. Few small businesses will be able to resist shifting a meeting by a few hours to qualify for a £100 saving for each of the staff members involved. The sharing of information with the customer empowers them to exploit systems that were previously concealed. Every business travel provider - whether offering air, rail, car rental or accommodation - ignores that at their peril.

The business traveller in the new millennium will be more demanding than ever for quality in travel and accommodation, yet wants to pay less, in real terms, than ever before. And I think they will get away with it.