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European crisis will force BizAv travel to decline

July 11, 2012, New York, N.Y. - U.S. companies are scaling back their travel plans in response to Europe's financial crisis and uncertainty about the economy at home.


July 11, 2012
By Carey Fredericks

American business travellers are now expected to take 437.9 million trips this year, the Global Business Travel Association said Tuesday. That's down 1.2 per cent from an estimate made in April by the travel and meetings trade group.

The outlook for next year is even worse, with the trade group lowering its forecast to 435 million trips, down 1.9 per cent from April's estimate.

"We expect the growth in business travel will continue to be moderate to slow,'' the group said in a report.

While fewer people will travel, they should spend slightly more thanks to increased airfare, hotel rooms and other travel costs. The trade group expects overall travel spending to rise 2.2 per cent this year to $256.5 billion, and then increase another 4.7 per cent next year to $268.5 billion.

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The European crisis is having a direct impact on U.S. airlines. The three largest carriers serving Europe are seeing fewer passengers flying across the Atlantic. But demand for trips to Latin America and Asia is on the rise.

At United Airlines, part of United Continental Holdings. Inc., traffic across the Atlantic fell 1.6 per cent for the first five months of this year. At the same time, Latin America and the Pacific had 4.3 and 4.5 per cent increases, respectively.

Delta Air Lines saw a drop of 3.5 per cent in traffic to Europe while posting increases of 2.5 per cent to Latin America and 7.6 per cent across the Pacific.

American Airlines, part of AMR Corp., saw its Atlantic traffic fall 2.2 per cent while Latin America traffic was up 3.1 per cent and the Pacific up 14.3 per cent.

Airlines rely on business travellers who often buy more-expensive, last-minute tickets. They also purchase pricy business class and first class seats, which can cost as much as ten times the price of a coach seat. However, sales of those seats also appear to be slowing, according to the latest report from The International Air Transport Association, a trade group for the airline industry.