Global Economic Challenges Disrupt Expats & Business Travels

By Greg Hallberg, Waymark Shanghai & Minneapolis

Published March 22, 2010

For most of 2009, airlines around the world have witnessed increasingly empty planes in both economy and in particular business class bookings. I myself have seen far fewer passengers “up front” in either business or first class (almost empty) seats during trans-Pacific Ocean business trips – and at Waymark, as with many organizations I know – we are weathering the economic storm by making plane reservations in economy class seating. To be certain, the ability to hit the ground running, upon arrival at an Asian destination, after such a long flight, becomes more difficult with the lack of comfort in the rear half of the jumbo jet. However we all are doing what we can to contain costs, all-the-while taking proper care of our customers. My casual interview sessions with onboard flight crews seem to verify this trend, at least for the foreseeable future.

In past years during this go-go global economy, the corporate business traveler made up well over half of the customer base and as much as 75% of the revenue stream for airlines. Indeed, travel may be starting to gradually return to better load factors, but overall it will be a long time to fully bounce back to what might have been deemed normal – perhaps as many as 4-5 years down the road, according to most industry advisors. Company travel budgets have been scaled back within a range of roughly 25-45%, and executives more accustomed to business class flying most of the time, are also residing in coach class, much to their chagrin, I suppose.

Videoconferencing is also playing a role in cost containment, but nothing beats face-to-face meetings, on-site reviews and personal examinations of far away operations. At Waymark, we have seen our work increase significantly as our team members become the clients’ “eyes and ears” in the absence of globe-trotting project managers and more permanent expatriates tending to the localized daily requirements of international operations. It is highly likely that everything in this regard will return to more normal routines in the coming years, but others with whom we discuss such matters on a weekly basis suggest that fundamental changes in overseas travel, foreign expat assignments, and managing distant facilities has taken on new dimensions, what some might tend to call a fundamental shift of operations management – phraseology that has found a home in the 21st century planning assessments of both multi-national firms and medium-sized enterprises. It will be interesting to see which comes back first, tourism or business travel…

The so-called “virtual meeting” is only a quick fix and should not become a normal part of how companies and organizations directly supervise their multi-faceted and multi-country operations. Absence in this case does not make the heart grow fonder; instead posing a substantial risk to maintaining order and prosperity, morale and information exchanges, along with long term profitability and market share growth.