Global financial crisis forces travel cuts

Posted by admin on April 15, 2009 under Financial crisis, Global financial crisis |

Due to the economic instability in the investment market, many people are seeing adverse affects in their financial lives. The current global financial crisis, the whole world in enduring, has caused tremendous financial setbacks to many businesses and they have been forced to economize and cut back their expenses.

Due to this falling economy, many luxurious services have been cut back to overcome the crisis and the losses that resulted. Travel industry has faced tremendous losses due to this economic crisis that has resulted decrease in travel demands especially by businessman and regular travelers.

Current statistics show that at least one third of all the major companies have halted their business trips to minimize their business expenses. About 40% of the companies surveyed from 14 different countries said that they have established a complete and total travel freeze, while 25% said that they have cut their air travel only. Almost 75% of the companies admitted that the cutbacks will stay in place until further notice or even until a certain change in the economic market takes place. Researches done also showed that the cuts in travel budgets have been fine news for most of the low cost carriers present in the USA.

Many firms began cutting on air travel expenses at the beginning of the year due to the worsening of financial data points. This pullback trend was not noticed in the surveys made in the first quarter of the financial year. However, by the middle of the year, it was broad based.

As the need of the travel increased the growth of the business, the travel cuts have certainly brought bad news to big firms. As a result, alternatives have been admitted to replace this essential need. They have started conducting video conferences, canceling, overnight trips and even train travels.

Other firms have established new policy that limits the staff’s traveling needs and forces them to use some no-frills airlines. Another survey suggested that about half of the corporations polled have the goal of reducing their travel budgets before the end of March 2009.

These travel cuts have deteriorated the travel industry and led to major losses to numerous international airlines. Some airlines are actually forced to reduce the number of annual flights especially from places that have encountered a decrease in travel expenses. These cutbacks will stay in effect until there is a certain change in the economic situation.

The current economic crisis has certainly been a bad news to thousands of industries and corporations. Though the travel cuts might have helped some low budget businesses decrease expenses, but it has certainly affected the high income businesses that depend mainly on traveling. The next financial year will surely state the precision of any further responses and policies that the corporations will follow. The current policies will surely remain running for quite some time until the financial crisis starts to vanquish.