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What 2008 Taught Us

From hotels to airports to exchange rates to terminals, this was a year that defied business-travel expectations

Joe Brancatelli,  Dec 23, 2008

At the end of each of the thirtysomething years that I have survived a life on the road, I inevitably reach the same conclusion: It sure has been another bizarre 12 months for business travel.

Who'd have guessed that more than 80 airlines would fold in 2008, many of them destroyed by the price of oil this spring and summer? Who'd have imagined that the airlines could cut domestic seat capacity by double digits this fall and still see chairs go empty and fares drop? And who'd have thought hotels, expecting record increases in room rates in 2008, would end the year discounting lustily and mulling huge declines in 2009?

But all this chaos does have the proverbial silver lining: You learn stuff. Here are five things I've learned this year.

The Rich Aren't Different

The upper end of the travel industry has insisted that its increased emphasis on $20,000 first-class airline seats and $1,000-a-night hotel rooms was justified because the rich were different. The wealthy would always travel, claimed the developers of new luxury resorts and the executives of every airline that unveiled another pricey, front-cabin offering. But the rich aren't different -- except that they've curtailed travel faster than the rest of us. According to I.A.T.A., the worldwide airline trade group, premium-class travel dropped 8 percent in September, 6.9 percent in October, and "early indications for November point to further large declines." Occupancy rates at luxury hotels have plummeted faster than the lodging industry at large, and even fancy brands such as Ritz-Carlton and Four Seasons are suddenly discounting like crazy and throwing in extras like free nights and gratis breakfasts.

Better Airline Mousetraps Don't Guarantee Success

Last year at this time, there were four all-business-class airlines flying the North Atlantic skies and a fifth prepping for launch. They offered extraordinary in-flight comfort for a lot less than major carriers charged, and they expected business travelers to beat a path to their cabin doors. Turns out, building a better mousetrap doesn't guarantee survival in the dog-eat-dog airline world. Maxjet, EOS, and Silverjet all folded on the New York-London route and L'Avion, which flies between New York and Paris, sold itself to OpenSkies, B.A.'s boutique carrier that launched in June. But OpenSkies is struggling too. Its revolutionary prem+ cabin has confused passengers, who expect the back of the bus to be cramped and cheap, not spacious and fairly priced. And the lie-flat beds up front have yet to steal enough business from its larger competitors on the Paris and Amsterdam runs.

Slow and Steady Wins the Airport Race

This was going to be the year of the new airport terminal, with major facilities opening at London's Heathrow Airport; New York's John F. Kennedy International Airport; Raleigh/Durham; Indianapolis; and Detroit's Metro Airport. This year I learned that it really does pay to delay your opening if you need extra time to get everything right. You may take a publicity hit for a blown deadline or two, but you won't suffer the disaster than befell Terminal 5 at Heathrow. It opened bang on time in late March -- but was a nightmare of lost bags, missed connections, worldwide ridicule, and money-gushing make-goods for British Airways. Heathrow's owner, B.A.A., paid a bigger price: British regulators last week ordered the subsidiary of Spain's Ferrovial to sell its other London airports, Gatwick and Stansted. The four U.S. facilities shifted their launch dates by a few weeks and opened without notable incident or embarrassment.

Not All Fees Are Created Equal

The airlines turned 2008 into the year of Ă  la carte pricing, unbundling just about everything from the basic ticket price: checked luggage; advance seat selection; in-flight meals and beverages; fuel costs; and even blankets and pillows. The goal, of course, was to charge lower-fare customers for all the little niceties that once were free. Passengers pushed back hard against the fuel surcharges, even as oil prices soared to record highs. They reacted indifferently to the concept of paying for seat selection and largely ignored the airlines' buy-on-board meal programs and buy-a-blanket plans. And they seemed to accept without complaint the concept of paying for checked luggage. The free second checked bag disappeared from most domestic flights as early as February. By the summer, American Airlines was also charging for the first checked bag. Virtually all of American's major competitors have now fallen in line, reckoning that they were leaving money on the table by giving away something for which passengers would willingly fork over $15.

No Longer Almighty, the Dollar Is Resilient

When the U.S. dollar fell to record lows earlier this year and made international travel insanely expensive, there was no reason to believe the once-Almighty Dollar would ever regain its luster. But worldwide financial crises can be the dollar's best friend. The Australian, New Zealand, and Canadian dollars have given up years of gains against the U.S. dollar in just a few months. The British pound, trading above $2 for much of the year, has crashed. It closed last week below $1.50, which is about where it was trading before 9/11. And while the dollar has zigzagged crazily against the euro in the last week, it closed below $1.40, a far cry from the $1.60 level it had reached early in the year. The notable exception: the Japanese yen, which has gained about 15 percent against the dollar lately. In other words, don't plan any trips to Tokyo.

The Fine Print . . .

One thing I have long known that you should learn: Never believe what an airline says about its future route plans. Earlier this year, big carriers were crowing about their new flights to China. Virtually all of them were cancelled or delayed indefinitely. And United Airlines, which began a heavily publicized daily Washington-Beijing service last year, has slashed the route back to just a few flights a week. It has also switched to a smaller aircraft to further reduce the number of seats it flies between the two capitals.

From hotels to airports to exchange rates to terminals, this was a year that defied business-travel expectations
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