Business travel faring well amid downturn in global trade

SINGAPORE – Business travel is holding up well, even amid the downturn in global trade.

That is the view expressed by airline CEOs at the Aviation Leadership Summit.

The aviation industry continues to be fraught with challenges – escalating fuel costs, a slower rate of growth in air passenger traffic and a shrinking cargo business.

Andrew Herdman, director-general of the Association of Asia Pacific Airlines, said: “Cargo falling back from records set in 2010 is an indication that economies are slowing down, it is usually a negative indication. On the other hand, passenger numbers are still up and it reflects the fact that consumer confidence in Asia is still quite robust. ”

Indeed, the lucrative business travel market seems relatively unaffected.

Leithen Francis, Asia editor of Aviation Weekly, said: “So far this year, business travel still seems to be reasonably strong. One of the advantages we have got here in Asia is that there is so much intra-Asia trade going on so we are quite immune to what is going on in North America and Europe in terms of business travel.”

Goh Choon Phong, CEO of Singapore Airlines, said: “So far, we have seen that business demand has been quite robust. So it will continue to be that way for now, the outlook that is. Whether or not there will be further shocks, for example, if there is a disorderly default by Greece and whether or not that will create a big shock to the business environment and to business travel, we will see.”

Business travel is often used as a proxy for how the global economy is performing. But despite the uncertain economic outlook going forward, industry watchers said business travel is expected to be pretty robust this year, with stronger demand coming from Asia Pacific.

Emirsyah Sata, president & CEO of Garuda Airlines, said: “Business travel has been going up, especially to and from Indonesia. Indonesia is now an investment grade country and we see all investments coming in and the trade between Indonesia and various countries…we have got this trade agreement and then the economic partnership agreement, so we see these activities in the business community and we are benefiting from it.”

Making up roughly 10 per cent of the total passenger traffic, business travels accounts for 30 per cent of revenues, an equation that looks set to continue in 2012, if the global economy steers a course clear of economic headwinds.