2009 - A Year of Opportunities?

A little late, but here are my views on the travel landscape this year as it pertains to frequent flyers in particular.

The financial turmoil means flight and hotel bookings are way down overall, and particularly on some routes. As some bloggers have, correctly in my view, noted we can expect some good sales, and there are a range of other impacts.

First, the downturn in travel is uneven. Business travel will be much less than in recent years. This affects some aspects of travel more than others. Secondly, leisure travel is impacted through reduced discretionary spending.

What does this mean for savvy travellers?

Discounted fares and sales

Airlines that rely heavily on business travellers and premium leisure travellers will in general find 2009 hard. Expect sales and inducements to buy up to first or business class, particularly on certain routes most impacted. Normal wisdom is to book well ahead to get the best deals but this year year the reverse may be true. Not only are advance sales lower thus discounted fares will be available closer to departure than normal, but airlines will try to encourage demand through sales. Already some airlines have been offering last minute sales at very low fares.

Conversely low cost airlines may have less need for sales as people switch from perceived high fare full service airlines to perceived low fare reduced service airlines.

A similar logic applies comparing longhaul/expensive routes with shorthaul/cheap routes – demand drops on the former and may increase on the latter.

For some airlines or routes the impacts may be more subtle. People switching from business to economy travel may result in sales in premium cabins rather than the usual economy class sales.

Capacity reductions

Another airline response is to reduce capacity, through less flights and/or using smaller aircraft. This means schedules may change more than normal this year. For 2009 I’m being less aggressive on connection times and the long sequences of flights in a row that I sometimes do.

Frequent flyer status

Business travel is the bread and butter of many airlines. With business travel slashed, the airlines will be looking to retain as many customers as they can. So qualifying thresholds will not be increasing. It should be easier to get a status match, and frequent flyer programs may more readily requalify those who just fail to meet the requirements and/or fail to requalify but have a long elite history. Some FFPs may also offer inducements to their best customers to maintain the amount of flying – eg Air New Zealand has introduced a gift for a small proportion of top tier gold elite members based on a higher level of status earning.

Awards

As with discounted and sale fares it should generally be easier to nab awards in 2009, especially in first and business class. However, on heavy leisure routes it may be more difficult with people economising by using miles instead of cash to pay for their holiday travels. I also expect more awards to be available at short notice.

Will 2009 see Singapore Airlines finally making available their new/best first and business class on awards? Currently A380, 77W and A345 awards are not available in first at all, and only available in business class using expensive Kris Flyer awards.

Operational upgrades

Airlines should have less need to op-up passengers. However some exceptions come to mind. For example British Airways longhaul aircraft have a relatively high proportion of premium seats and some passengers who would have booked in business class choose instead to book into economy. Under pressure to fill seats and with more empty seats in premium cabins, airlines may oversell economy by more than currently, and on the more popular routes there may still be a reasonable number of op-ups required.

Upgrades

Mileage, voucher or complimentary status upgrades should be easier to obtain. Some airlines, such as Lufthansa, are managing op-ups by encouraging people at check-in to use their miles to upgrade.

Fees

In 2007 a number of airlines added new fees and increased existing ones to generate revenue. I see this trend continuing in 2008, but with perhaps more fee waivers for FFP elite members.

Packages

To try to induce demand there may be more extras thrown in for little or no cost to the air fares. Eg ground transport, cheap accommodation, sightseeing tours.

Hotels

Higher end hotels and those that normally do a lot of convention business will also be impacted. Expect more deals in 2009, and some hotels that haven’t yet opened may delay their opening until the economy improves.

Summary

I expect there will be lots of opportunities in 2009 for savvy travellers. However these will be much more in some areas than others. Those that adapt to the changed circumstances, and are the most flexible, stand to benefit the most.