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Travel industry's tough times are beginning to improve.

DESPITE WHAT LOOKED LIKE THE end of the world after September 11, the travel business is still alive and recovery appears to be in sight, although it's still a ways off.

The terrorist attacks on New York and Washington, D.C., sent the travel industry reeling. Public confidence in the safety of flying was shaken, and everyone associated with travel and tourism was predicting catastrophe.

Now, six months later, Americans have decided to get on with their lives -- and that includes traveling. The number of travelers returning to the skies has increased every month since September.

"It was tough right through the holiday season," said Steve Davison, vice president of marketing and client services at World Wide Travel, Arkansas' largest travel agency and the 14th-largest agency in the country.

"But it's now back to pre-Sept. 11 levels," Davison said, adding that the industry already was hurting from cutbacks in corporate travel because of the recession.

Although the travel industry steadily has been regaining its balance after the economic one-two punch, industry observers don't think ifs out of the woods yet.

The U.S. airlines have made progress since Sept. 11 and now are beginning to bring the number of seats filled back to levels last seen a year ago. Of course, much of that can be attributed to the improving economy across the country.

"Poe Travel is really doing well," said Carolyn Cobb, manager of corporate sales for the Little Rock travel agency. "In January, our corporate side was almost like nothing ever happened."

"Business has been picking up steadily as the economy began improving," Cobb said. "People are resuming meetings and looking to agencies for help."

She said Poe Travel, with about $20 million in revenue in 2000, never laid anyone off during the long economic struggle and finished 2001 with about the same amount of sales.

At World Wide Travel, however, the work force of 300 was reduced by about 30 percent. Davison said the company has started to bring people back. World Wide Travel posted $220 million in revenue in 2000, but revenue was below $200 million in 2001, Davidson said.

About 70 percent of World Wide Travel's business comes from corporate travel.

"But we survived," Davison said.

Air Travel Promotion

Air travel has recovered slowly since October. Passenger volume for the big U.S. carriers was off 12.8 percent in January, the latest figures available, compared with last year.

A recent survey of business and leisure travelers found that 38 percent said the economy was the reason for cutting back on travel; 31 percent said security was the main issue. Airline passengers now are asked to show up between one and two hours before their flights to allow time for longer check-in and security procedures.

At last week's six-month anniversary of the attacks, airlines and travel agents temporarily set aside a noisy feud to announce a joint promotion to boost air travel.

The public relations campaign hopes to inform the public about aviation security changes, encourage travel and tourism, and promote travel agency services.

Travel agencies are under competitive pressure from Internet-based services that generate billions of dollars in sales, including sites run or supported by most of the biggest airlines. Most major carriers have cut the commissions they pay to travel agents.

In addition to having their commissions cut, travel agents lost at least $1.3 billion in sales and commissions as a direct result of September 11, according to the National Business Travel Association.

The Federal Aviation Administration last week forecast that the airline industry won't recover until next year.

The FAA said the number of passengers on U.S. airlines will remain below 2000 levels and won't begin to pick up until October -- if no further terrorist attacks occur.

The number of airline passengers, which hit 695.3 million in the 12 months through Sept. 30, 2000, will drop to 600.3 million in the fiscal year ending this September.

After that, however, the number of passengers is expected to grow by 14 percent to 684.3 million and then grow by an average of 4.2 percent a year, reaching 1 billion by 2013.

Another report issued last week by the Air Transport Association said the airline industry lost $7 billion in 2001, even with $5 billion in federal aid following the terrorist attacks. The association said the industry won't be profitable again until 2003.

Airlines cut their flights by a fifth after Sept. 11 to save money, but the FAA and airline officials say many of those flights gradually are being restored as more passengers return to the air.

Business Travel

The slower economy has caused businesses to take a closer look at how they spend their travel dollars.

Business travel is the meat-and-potatoes of the airline industry, making up about two-thirds of the airline industry's $300 billion annual revenue. Business travelers also pay higher-than-average ticket prices, a hotly debated issue.

Cobb, of Poe Travel, said the reason is simple: Business travel is not as flexible and cannot be planned far in advance.

"Businesses cannot take advantage of the discounts," she said.

Business fare is the lowest fully refundable, economy-class fare available with no more than a three-day advance purchase. Discount fares require as much as a 21-day advance purchase, a minimum stay, refund limits and roundtrip travel.

Still, businesses are learning to spend more efficiently. Some large businesses can negotiate with airlines for discounts.

And businesses are booking their employees on discount airlines, on flights with earlier departure times, from alternative airports or on flights that have connecting flights -- all moves that save money. Some are doing their best to book flights more than a week ahead to cut costs.

Business wants the airlines to make more discount airfares available, eliminate Saturday night stay rules and eliminate the 21-day advance purchase restrictions. Tighter restrictions on frequent flier programs have also irked business travelers.

The Association of Corporate Travel Executives is calling for an overhaul and simplification of the airfare structure.

Cobb, plugging the travel agencies, said that the agencies, through their online booking tools, can help companies track and manage their costs so businesses won't "get lost in cyberspace."

RELATED ARTICLE: Travel Cost Forecast

The National Business Travel Association's 2002, Business Travel Cost Forecast predicts that business travel costs will increase 3 percent this year.

* Business airfares ares will increase by 3 percent. The slowing economy and terrorist attacks caused businesses to trim, travel, spending last year. Business travelers are the airline's highest-paying customers, and the slowdown had a huge effect on the industry. Average business airfare is expected to be $1,102.

* Hotel rates will increase by 3 percent. Low occupancy rates probably will make hotel companies more flexible on rate negotiations during the first half of the year. The average corporate room rate will be $197.

* Corporate car rental rates will increase by 5 percent. The average corporate car rental rate will be $66.

* Business meal costs will increase by 3 percent. The average business dinner will cost $25 in 2002.
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Comment:Travel industry's tough times are beginning to improve.
Author:Henry, John
Publication:Arkansas Business
Article Type:Brief Article
Geographic Code:1USA
Date:Mar 18, 2002
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