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A mere blip for business travel

August 17, 2006

By Kyle Peterson

CHICAGO (Reuters) – Tighter airport security in the wake of
a foiled bomb plot in Britain last week sent big-spending
business travelers rushing to private jets in hopes of avoiding
long delays and luggage restrictions.

But experts say the passenger migration from commercial
airlines to private services will be short-lived as long as new
government-imposed restrictions don’t permanently impede the
ability of travelers to work in airports and on planes.

Business travelers, who often pay more for last-minute
bookings and premium in-flight services, are a key revenue
source for major airlines like AMR Corp’s American Airlines and
UAL Corp’s United Airlines, which have invested heavily in
business cabin improvements.

“We have had some indications that right now there are some
shifts,” said Caleb Tiller, spokesman for the National Business
Travel Association. “But we expect those to be temporary.”

U.S. and British airports heightened security last Thursday
after British authorities said they foiled a plot to bomb
airplanes traveling to the United States.

The tighter security resulted in long security screening
lines and restrictions on carry-on luggage.

Luggage restrictions vary from country to country and have
changed several times in the last week. Security was tightest
in Britain, where the alleged plot was uncovered. All carry-on
baggage on flights from Britain to the United States was
initially banned.

Private jet services saw a surge in business from travelers
who could afford them. One expert said that if the
inconveniences become the norm, airlines catering to business
travelers could face persistent competition from private jet
services.

“If things really are going to settle out in terms of
limiting business traveler productivity, people are going to
start looking for alternatives,” said airline consultant Robert
Mann.

However, the top two U.S. airlines, American and United,
said there are no signs that their operations have been
permanently hobbled by new security measures and that bookings
remain stable.

“We’re still running very high load factors,” said AMR
spokesman Tim Wagner. “I think customers have taken this in
stride.”

One private jet service said the spike in its business
following the terror scare resembled the temporary spikes it
enjoys when natural disasters disrupt airline operations.

“We did get a handful of new customers out of the deal,”
said Greg Johnson, chief executive of OneSky Jet Network. He
said that in the first five days following news of the bomb
plot, OneSky flew about 30 charter flights, compared with 20 or
so which is more typical for that time frame.

NBTA’s Tiller said airport operations are already returning
to normal and that business travelers that avoided commercial
airlines are returning.

He noted, however, that travelers who used private jets to
circumvent airport security may develop a liking for the
convenience and make greater use of them in the future.

“In times when standard commercial aviation becomes more
challenging, corporations look to potential alternatives,”
Tiller said. “Those alternatives provide added value during the
challenging time, but they may provide added value even as
things return to normal.”

NBTA surveys show a growing use of private jets and
charters since the 2001 terror attacks on the United States. A
2002 survey of corporate travel managers showed that 26 percent
of U.S. companies used private jets. By 2004, 33 percent of the
companies said they used them. Informal research from the NBTA
show the trend continues.

Tiller added that business travel has increased across the
board and airlines have not seen a decline in business travel
customers.


Source: reuters



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