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Business travel to recover more slowly than leisure

April 08, 2009 |

According to the Federal Aviation Administration, overall domestic air passenger traffic will fall nearly 9% this year, while international bookings are expected to decline by 2.4%. The FAA expects to see travel growth return in 2010. But business travel may take longer to recover.

Business travel, which accounts for most first-class and business-class ticket sales, has suffered from deeper cutbacks than leisure travel, as companies face a global recession. Even when trips aren't canceled, employees increasingly are moving to economy class seats.

Airline consultant Michael Boyd estimates that trans-Atlantic passenger revenue, mainly driven by business travel, is down 15 already this year compared with 2008. He said he thinks airlines will need to keep shrinking capacity this year and into 2010, as passenger demand remains weak and costs, especially for fuel, keep rising. "Growth is not in the picture," he said.

Ken McGill, travel analyst at Global Insight, said in a presentation this week that he believes the U.S. economy will start growing early in 2010, spurring more interest in leisure travel. But business travel, hard hit by falling corporate profits amid dried-up credit markets, will take longer to turn around. There's also what he calls the "AIG effect," including public scrutiny of corporate spending, and the potential "vilification of business travel spending."

Get the full story at CNNMoney.com

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