As the year enters its final month, Westchester County”™s business-related travel industry likely experienced minimal gains in 2011 as the economy has continued to struggle and oil prices have remained high.
Businesses have sought greater efficiency in the absence of higher profits, said AAA New York”™s Jill Rosenberg, a trend she said has trickled down to business travel as well.
“As businesses are trying to economize, part of that process is to look at their travel budgets,” said Rosenberg, manager of group and executive travel services for AAA”™s New York branch. “The days of six people doing a job (are over) ”“ now two people are doing that same job. I think that travel is reflecting the same situation on the business side.”
Rosenberg said businesses are increasingly resorting to teleconferences and webinars in lieu of sending representatives to face-to-face meetings.
Flight volume up, but fewer flyers
The volume of flights departing from and arriving at Westchester County Airport through the first eight months of 2011 was slightly higher compared to the same period in 2010, but the volumes of incoming and outgoing passengers are noticeably lower.
At Panorama Flight Service, a fixed-base operator based at Westchester County Airport that provides storage, maintenance and refueling services for private aircraft, President Gene Condreras said the company”™s returns from the current year have been largely unchanged.
“I”™d say it”™s flat at best and that 2012 is going to depend upon what the economy does,” Condreras said. “You can follow the Dow Jones (Industrial Average) and you can basically track the upticks and the downticks with corporate travel. That goes for all flight operations, business and private.”
Condreras said that contrary to other industries, the price of fuel has little effect on the private air travel industry when compared to the fluctuations of the overall economy and the stock market. He attributed this to the fact that many private aircraft are owned by corporations and that in that respect, they are a luxury.
“We”™re a private air terminal and we service corporate aviation here. We”™re not only looking at our own flights that we conduct for aircraft charters ”¦ we”™re looking at the many different corporations and aircraft owners that utilize our private terminal.”
”˜Conservative approach to transportation”™
At Red Oak Transportation in White Plains, profits will likely be a bit higher this year than in 2010, said CEO Andy Stoppleman, calling that a positive achievement.
“Overall in 2011 we will be ahead by a couple of percentage points ”¦ which is actually pretty good in this market and certainly is pretty good for our company specifically,” he said.
The limousine service”™s business has been impacted by a number of clients moving out of the Westchester region, Stoppleman said, which only added to the financial difficulties.
“As the economy goes up and down I think people are taking a much more conservative approach to corporate transportation,” he said. “We are usually the first line of cuts that big corporations and small corporations make because we”™re more a luxury item than a necessity for corporations to function.”
Additionally, the high fuel prices that have persisted throughout the past year have had a negative effect on Red Oak”™s profits, Stoppleman said.
“Like everybody else in the industry we do have a fuel surcharge, which really offsets just a small portion of the increase. As an industry standard we pass along a percentage ”¦ but it certainly has affected the bottom line in a negative way.”
Oil prices on the rise
Last week, the benchmark crude oil price topped $100 a barrel following announcements Nov. 30 by the Federal Reserve and five other central banks that they would initiate monetary easing measures designed to lessen the mounting debt pressure in Europe.
Oil prices rose 7.7 percent during November and are up nearly 10 percent since the start of 2011.
In New York state, gas prices were at $3.586 last week according to the U.S. Energy Information Administration ”“ well above the national average of $3.295 per gallon and 44 cents above where prices were one year ago.
American files for bankruptcy protection
On Nov. 30, a day after American Airlines Inc. parent company AMR Corp. filed for Chapter 11 bankruptcy protection, a federal judge ruled that the company could continue normal business operations throughout the reorganization process.
American Airlines, which has posted more than $11 billion in losses since 2001, is the third-largest airline by volume in the country. It follows in the footsteps of Delta Air Lines and United Airlines, which both used bankruptcy proceedings to reorganize their respective companies and which have since both emerged more profitable.
The company reported last week that American and American Eagle both continued normal operations. The Nov. 30 U.S. Bankruptcy Court ruling also allows American to continue to provide employee wages, health care coverage, vacation and other benefits throughout the duration of the reorganization process.
OUTLOOK FOR 2012
- Transportation industry executives expect business travel to remain flat into 2012.
- Any increases in business will be largely dependent upon the improvement of the overall economy.
- Uncertainty in the global marketplace will continue to negatively impact the business travel industry.
- Fuel prices are expected to remain above last year”™s averages going into 2012.
