Airlines must rethink business travel: researcher

MONTREAL – The airline and aerospace industries have to come to grips with a demographic shift among passengers that will reduce the demand for business travel, says an airline researcher.

Henry Harteveldt of U.S.-based Forrester Research says the aging of western travelers and the growing use of global communication will dramatically alter the airline business. While business travel won’t entirely disappear, legacy carriers like Air Canada (TSX: AC.B) may have to rethink their heavy reliance on passengers willing to pay a premium for traveling business and first class, he said.

“The airlines really have to figure out who is their core customer and they haven’t been very good at this,” the airline veteran said in an interview from San Francisco.

Harteveldt will present his findings to an Ontario aviation conference that gets underway Friday in Windsor, Ont.

The On the Wings Innovation conference will gather about 120 aerospace experts from more than 40 organizations, including manufacturers such as Bombardier (TSX: BBD.B), Boeing and Airbus maker EADS, as well as Ontario aerospace and advanced technology companies.

Rod Jones, executive director of the Ontario Aerospace Council, said the inaugural three-day event is designed to showcase the province’s technological expertise.

“What we’re trying to do… is just to start the thinking juices going. We’re less about solutions than we are about prompting some and provoking some thinking that’s beyond the norm,” he said in an interview.

Harteveldt’s research is an example of that thinking, Jones added.

The researcher said he expects the aging population will force leisure travel to become a growing driver for the industry. The percentage of the population 60 years and older is expected to double to 22 per cent by 2050.

These passengers demand better lighting, improved onboard communications and signage, along with better positioning of washrooms. Growing obesity also means the need for wider seats and aircraft entries.

The increasing use of new technology, video conferencing and corporate restrictions on premium travel could alter the destinations serviced by airlines and the size of the premium cabins.

Already, several European carriers have eliminated first class on some routes. Others have to be realistic about the size of the premium cabin market, he added.

“Airlines tend not to read the tea leaves very clearly. They misjudge growth and cycles and they end up looking way too short term,” Harteveldt said.

But Air Canada, which has seen a slight resurgence in its premium-class revenues, says many global carriers are adding new premium products or are playing catch-up with its lie-flat seats.

“Our own experience is that people like and need to travel for business and, as the world economy continues to globalize, we expect this will not change,” said spokesman Peter Fitzpatrick.

Analyst Richard Aboulafia of Teal Group said focusing on premium traffic has always been the right strategy for airlines as they seek to grow profits in a competitive market.

“We’ve heard predictions about the end of business travel for decades now,” he said from New York. “If you really believed that then you wouldn’t have incredible growth numbers in the private aviation arena.”

Business aviation grew 17.2 per cent annually between 2003 and 2008 despite the technological revolution, he said.

Other factors are more important to the airline industry than changing demographics, Aboulafia said. They include competition from high-speed rail, increased regulation for carbon emissions, shareholder demand for profits and operating in mature economies.

But Harteveldt said as passengers move increasingly into retirement or semi-retirement, some popular routes may no longer remain profitable or need such frequent service.

And reduced business travel will undercut the demand for super jumbo aircraft and force airlines to favour single-aisle aircraft holding less than 200 or 250 people, he said.

“The airlines have allowed the planes to get too big and they end up chasing markets and they end up charging too little for their product.”

Harteveldt said larger airplanes primarily make sense to service destinations where airport slots are controlled by government, or for countries like China, whose domestic market is expected to grow by more than eight per cent annually for several years.


Travelling With A Computer

Anyone who’s had to go on a work trip knows the difficulty of trying to stay connected and productive can be challenging. Here are a few tips to help you protect a laptop or notebook while you’re going from coast to coast.

Most people who buy their own laptop or notebook computer will show some care when moving it about, and they should since their hard earned money is at risk. What about those who are luckier? Sure: most companies will purchase computer equipment on behalf of their employees, but when you’re 1,000 miles and three days from coming back into the office for a replacement, you may have to rethink your confidence.
Laptop cases come in three categories:

1- The lowest is given to a briefcase or backpack that is not made to carry a laptop, but happens to fit the laptop inside anyways. Needless to say, since the container wasn’t meant for that purpose, you may get lucky, but you may also open up your briefcase to see scratches or dings in the investment you were trying to protect. With a slim enough notebook, you can fit it inside virtually any briefcase – even the Italian slimline.

2- The middle grade is given to normal, generic laptop bags and cases. They typically are the most expensive option, give a fair amount of protection to the laptop, and usually offer enough pockets and storage areas to carry your paperwork, folders, and even a book and wireless mouse while your at it. For convenience, they are right at hand and ready to be used, but for protection, that same availability means they are more likely to get knocked about or even stolen. Any laptop vendor will have it’s own branded selection – you can often haggle with them at the time of purchase to bring the price from a hundred dollars or more down to $50 or less.

3- The highest grade for protection is given to laptop sleeves. These are highly protective, padded laptop cases meant to snuggle the laptop tightly and then get packed themselves inside your luggage. As a result, they hide the laptop away and keep it far safer on your trip, but by staying so far away when you may need it, can be inconvenient. Typically, it has to be mentioned that sleeves usually have few pockets, if any, and some don’t even have a handle for easy carrying – of course, this means that they pack away in far less space.

Overall, although there are a few laptop sleeves that do have pockets, handles and shoulder straps, you may want to stick with a standard laptop bag. They don’t have the same protection as a proper sleeve, but the wide range of selections means you can probably find a good compromise between protection and convenience. In case has some of the slimmest sleeves, and Brenthaven offers some of the best protection – both start right around $50, even with handles and pockets.