Getting With the Program - Carlson Wagonlit Travel

38 Lower Costs, Higher Value: “New World” AirlinesBenefits for all playersEven companies that do not source low-cost carriers can benefit from the way in whichthese new players have shaken up the market. In reaction to aggressive low fares,traditional airlines have generally kept prices stable, avoiding the major price hikesobserved in other industries across the region. Many legacy airlines are also relaxingrestrictions on economy fares in order to maintain business. In addition, carriers likeQantas (owner of Jetstar) are upgrading their services by offering their own premiumeconomy class, with features such as dedicated check-in and flat beds.More competition in the market is clearly a cause for celebration among buyers, whocan use the possibility of reallocating market share as a major lever in negotiations. Inaddition, companies may benefit from the influence low-cost carriers are having ontraveler perceptions. By providing an acceptable alternative to travel with traditionalairlines, budget airlines might be making full-service economy seem a high-priced luxury,which becomes more attractive to travelers who are used to using business class. Thismay help travel managers who are trying to convert travelers from business class toeconomy with legacy preferred partners—often the single largest source of savings ina travel program.As the market continues to evolve, corporate-friendly budget carriers in Asia Pacific arepresenting growing opportunities for travel managers—indeed, a whole new world ofopportunities for companies willing to give them a try.