Answer the questions

Module 1 TRAVEL

Text 2

The most visible aspect of business travel is the airline industry. Everyone who travels, and these days that means almost everybody, has opinions about it. These opinions are often robust, perhaps because there is such a gap between the sophistication promised in air-line advertisements and the reality of crowded terminals, endless waiting, limited leg room and inedible food served at unlikely times of day (or night).

It’s obvious that governments use airlines as a status symbol. Every government wants one, and the national flag carrier is a visible sign of international status. But managing them is often in the hands of people who got their jobs through political patronage, they have no long-term business strategy, and many of them lose money.

Governments, negotiating with bilateral agreements, also have the power to decide who is allowed to fly where, when and how often, and can allocate take-off and landing slots at airports: the number and timing of these slots is a key factor in airline’s profitability.

Deregulation and liberalisation, driven by the competition laws of the European Union, mean that governments are no longer allowed to bail out their airlines. In Europe, deregulation also means that airlines have the right to cabotage, picking up passengers in a second country and flying them to another place in that country or to a third country. Another result of deregulation in Europe is no frillsorlow-cost airlines offering in-flight service and selling tickets direct by phone, avoiding travel agents and need to give them commission. Larger airlines are increasingly worried about these upstarts, as they are used not only by people who might have used low cost charter flights but also by cost conscious businesspeople who are fed up with paying full ‘economy’ fares on the usual scheduled airlines. Some of these airlines, such as BA, are trying to get in on the act by running no-frills operations themselves.

Airlines have very high fixed costs: with all the ground infrastructure required, it costs as much to fly a plane full as three-quarters empty, and the main aim is to get as many passengers on seats as possible, paying as much as possible to maximize revenues or yieldfrom each flight.

This has led to the growth of alliances, such as the one between BA and American Airlines, or looser forms of cooperation such as code sharing, where the same number is shown on your ticket from the second part of a two-flight journey, giving you the impression when you book that you will be on the same airline for the whole trip. Cooperation means that airlines can feed passengers into each other’s hubs for onward journeys and costs of marketing and logistics are not duplicated. The logic of this is that for intercontinental travel there may eventually be half a dozen global airlines, in the same way that there are half a dozen global computer companies, but while governments continue to bail their national airlines ‘one more time’, this process will be long drawn out.

Another aspect of travel is, of course, the hotel industry. Here there are similar issues of high fixed costs that have led to the development of hotel chains able to share them. Each chain is a brandand, wherever you go, you should know exactly what you are going to find when you get there.

However, business travelers are beginning to question the sense of travelling at all. Some argue that after the first face-to-face meeting between customer and supplier, further discussions can take place using purpose-built videoconferencing suites, webcams combined with PCs on the Internet and so on. Costs of videoconferencing are coming down, but it is probably more suitable for internal company communication, with colleagues who already know each other.

Answer the questions

1. What two aspects of business travel are mentioned in the text?

2. What problems can business travelers face?

3. List the results of deregulation.

4. Why business travelers are beginning to question the sense of travelling?

Date: 2015-12-11; view: 890