Corporates not looking to cut down on travel to prune costs despite slowdown: Survey

MUMBAI: Even in the face of soaring airfares and an economic slowdown, business travel spends are managing to buck the trend with top management viewing travel as a potent tool to push growth, according to data for the second quarter from the American Express Travel Monitor.

A survey of 545 financial chiefs, including some Indian CFOs, by the US-headquartered global solutions company revealed that corporates are not looking to cut down on travel to prune costs. This is in stark contrast to what happened in 2009 when the economic slowdown brought business travel virtually to a halt.

"This is a really important change as the focus on business travel was purely from a cost reduction purpose side earlier but now it is seen as business development activity," said Sandeep Shastri, vice-president and general manager, Global Business Travel, American Express, India. Worldover, airfares have risen sharply, especially in India. But even then, there has been a 11% rise in domestic travel spends in India. "This is also kind of interesting that when we look from an industry perspective (aviation), there is network disruption and reduction in capacity by the Indian carriers that is making fares go up, but at the same time we are seeing growth on a client side and a third of the CFOs are willing to spend on travel," said Shastri.

American Express said airfares for international travel from India rose 9% quarter-on-quarter, but business-class airfares saw an even-greater rise of 13%. This has prompted large corporate houses to discourage its employees from traveling business class. "In this environment deals need to be negotiated better, companies need to put in place multi-year contracts," Shastri said. Other experts also agreed that business travel has been robust. "We have seen a growth of 40% for some of businesses. Sectors like pharma, healthcare and likes are not going to be impacted by the slowdown," said Malvinder Singh Rikhy, CEO, Kuoni Business Travel, India. "It is a strong market and we have seen a massive growth in our topline and client spends are up in big numbers."