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"Year of Travel Deals" Will Disappear Without Government InterventionMay 13, 2009 By: George Dooley
Sam Gilliland, the chairman and CEO of Sabre Holdings, the world’s largest travel distribution and technology company, and parent company of Travelocity, urged Congress and the Obama Administration to take immediate action help the struggling travel and tourism industry. Gilliland's comments were part of his testimony delivered today to the U.S. Senate Subcommittee on Competitiveness, Innovation, and Export Promotion.
Gilliland, who also serves as the chairman of the Economic Sustainability Subcommittee of the U.S. Travel and Tourism Advisory Board, characterized 2009 as the “year of the travel deal” but cautioned that cheap travel deals would soon evaporate if the health of the travel and tourism industry continued to deteriorate.
“Just as airlines opted to park their planes in the desert rather than operate at a loss, hotels, resorts and cruise lines will eventually reduce their inventory of properties and ships if they cannot realize an acceptable return on these assets – something we’re already starting to see occur,” said Gilliland. “The situation is pretty bleak. Year-on-year industry trends indicate that corporate domestic air travel and hotel stays are down nearly 20 percent, with airfares and price of hotel stays down seven percent. Domestic leisure travel is down by almost five percent with average leisure fares down 10 percent. This dramatic fall in demand is bad news for the industry, the legions of people who work in it, and both the U.S. and global economies.”
Gilliland called on the U.S. government to take action in four areas including energy policy, environmental policy, air traffic control modernization, and Treasury travel guidelines:
1. Energy Policy – “Reduce dependence on foreign oil and provide incentives for research, development and delivery of alternative fuels for commercial use. Without access to sustainable energy – predictable, abundant, affordable and environmentally sound energy - the entire travel and tourism industry will continue to be battered by volatile fuel prices. A biofuel industry could be a major generator of employment and wealth for the U.S. and the developing world, but to achieve this, we need a comprehensive U.S. energy policy that calls for viable fuel competition and sustainable energy.”
2. Environmental Policy – “Establish policies to reduce greenhouse gasses that threaten the environment, and ensure this is fairly shared across all industries. The airline industry should not be a scapegoat for carbon emissions - they only account for two to three percent of the world’s man-made carbon emissions, and have already improved fuel efficiency by 110 percent since 1978 (source: Air Transport Association). Carbon-related revenues raised from the commercial aviation industry should be re-directed back into aviation-related environmental and efficiency improvements to help the industry grow rather than flounder.”
3. Air Traffic Control Modernization - “The 'NextGen' Air Traffic Control (ATC) system must become 'NowGen' to achieve much needed energy, environmental and customer-service improvements for our nation’s aviation industry. Despite significant advances in modern-day technology, U.S. airlines are forced to use 40-year-old radar systems to find their way today. Even technology used in cars and mobile phones are light years ahead of the technology used in the ATC system, which may explain why nearly 25 percent of these flights are late.
'NowGen' will provide the following benefits: Allow all airplanes to fly more direct, efficient routes, significantly reducing fuel burn and CO2 emissions, Reduce congestion and open up access – more flights – in crowded airspace, Reduce flight delays and inconvenience to passengers and shippers, Create or save 77,000 jobs, and be transformational for the broader economy.”
4. Treasury Travel Guidelines – “Recent attention on what the Treasury Department deems 'luxury' and 'excessive' in business travel has prompted companies all over the U.S to cut back and in some cases eliminate business travel altogether for fear of being criticized. Meetings, conventions and incentive travel are proven business tools that allow companies to establish valuable relationships, solicit feedback and reward employees. Corporations need to feel confident that they can once again hold business meetings and conventions in order to achieve their corporate objectives. Timely guidance from the Treasury Department, in the form of an endorsement of the US Travel Association’s model guidelines is urgently needed to achieve this. At Sabre, our GetThere division is already in the process of developing a consulting solution for corporations that will help them manage travel policy governance and compliance, and drive fiscal accountability.”
Gilliland urged the U.S Senate to collaborate with travel and tourism industry to improve the health of the industry. “As the largest industry in the world, we are inherently powerful, but historically fragmented," he said. "But I believe by working more closely together, in tandem with policymakers, the storm clouds that have been hanging over our industry will recede, and we will once again be in a position to make significant contributions to our country’s economy and GDP.”
Gilliland closed his testimony by emphasizing his support for the Travel Promotion Act that was re-introduced this week by Senators Byron Dorgan (D-ND) and John Ensign (R-NV).