Fleet News

Changing times for airlines and rental firms

Two recent journeys set me thinking about the way that business travel appears to be changing after the September 11 terrorist attacks on the US and the possible implications for rental operators.

Trip number one entailed a Tuesday flight from the UK (Gatwick) to Lisbon, returning the following day. Despite trying various alternatives, the cheapest return flight cost more than £500 (€795) for a journey taking less than two and a half hours.

Gatwick was virtually deserted on both the Tuesday afternoon of my departure and the Wednesday evening of my return.

The duty free concessions were almost devoid of customers, and are probably losing money. As for the plane, it was no more than half full.

Contrast this to journey two, which involved another midweek trip, but this time from Stansted, in the UK, to Frankfurt. Booking through one of the low cost operators on the internet (at their standard fares), I paid £125 (n199) for a trip of about one and a half hours, the plane was virtually full, and Stansted was extremely busy.

Many of my fellow travellers were obviously also business people.

These experiences may not be typical, but I suspect they are a fair indication of a major change in business travel patterns.

Previously, the low-cost airlines focused their marketing efforts on leisure travellers and left the flagship carriers to serve the corporate sectors.

Now, however, as company travel budgets come under pressure and the low cost operators extend their networks, I believe that more and more companies will use their services, and the rental industry needs to consider whether they need to adjust to these changes in the trading environment.

Look at the parallels between rental and airlines. The major rental operators have always competed on spread of locations, quality of fleet and service, and various incentives to corporate accounts — just like the major airlines.

During the last few years, new international companies have appeared offering a 'no-frills' service at competitive rates. These new entrants have concentrated on leisure travellers, located their rental offices in unfashionable areas, and used the internet to restrict their overheads.

Here again, their strategy is similar to that of the cut-price airlines.

We've already seen Swissair and Sabena collapse, and many other major airlines are under huge financial pressure. Conversely, the low-cost flight operators seem to be going from strength to strength, and will surely extend their networks over the next few years.

Here again, there are obvious parallels with rental where the companies suffering most severely are those with the highest share of high-cost airport business, whereas the new entrants appear to be thriving and are actively extending their networks.

So is all of this a temporary blip or are we seeing a fundamental shift in both air travel and car rental? You can be sure that hard-pressed travel managers will be looking at ways of harnessing savings from switching some business to the low-cost operators.

The position is not so clear on rental because business travellers do not have enough time to collect a rental car from off-airport sites, but how long will it be before the new entrants find a way around this problem?

Answers on a postcard please.... (December 2001)

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