European fiscal crisis drags down business travel

AP News
Posted: Jul 10, 2012 2:59 PM

NEW YORK (AP) — U.S. companies are scaling back their travel plans in response to Europe's financial crisis and uncertainty about the economy at home.

American business travelers are expected to take 437.9 million trips this year, the Global Business Travel Association said Tuesday. That's down 1.2 percent from an estimate made in April by the travel and meetings trade group.

The outlook for next year is even worse, with the trade group lowering its forecast to 435 million trips, down 1.9 percent from April's estimate.

While fewer people will travel, they should spend slightly more thanks to increased airfare, hotel rooms and other travel costs. The trade group expects overall travel spending to rise 2.2 percent this year to $256.5 billion, and then increase another 4.7 percent next year to $268.5 billion.

The European crisis is having a direct impact on U.S. airlines. The three largest carriers serving Europe are seeing fewer passengers flying across the Atlantic. But demand for trips to Latin America and Asia is on the rise.

At United Airlines, part of United Continental Holdings. Inc., traffic across the Atlantic fell 1.6 percent for the first five months of this year. At the same time, Latin America and the Pacific had 4.3 and 4.5 percent increases, respectively.

Delta Air Lines saw a drop of 3.5 percent in traffic to Europe while posting increases of 2.5 percent to Latin America and 7.6 percent across the Pacific.

American Airlines, part of AMR Corp., saw its Atlantic traffic fall 2.2 percent while Latin America traffic was up 3.1 percent and the Pacific up 14.3 percent.

Airlines rely on business travelers who often buy more-expensive, last-minute tickets. They also purchase pricy business class and first class seats, which can cost as much as ten times the price of a coach seat. However, sales of those seats also appear to be slowing, according to the latest report from The International Air Transport Association, a trade group for the airline industry.

Scott Mayerowitz can be reached at