American Express Exec Offers View of Current Crisis

Charles Petruccelli, president of American Express’ Global Travel Service, offers a unique perspective on the travel industry. A 25-year veteran, he offered a global viewpoint of the current economic crisis during a recent American Express Business Travel ConneXion teleconference. In response to questions from the media, Petruccelli offered his views on a diversity of issues ranging from airline commission policy to the effects of the downturn on agents.

What new technologies will impact the industry in 2009 and beyond?

Petruccelli: I see two immediate possibilities. The first one is an extension of the mobile solutions that we provide to the traveler and the services and content that he or she enjoys on the corporate desktop currently while he or she will be on the move. The second possibility is technology solutions that will allow extensive benchmarking and data management and have a very dynamic data reporting of pre-trip and expense control enhancement. Separately, there is an expense category that will come under more scrutiny; it is the whole aspect of meeting space management

Will cheaper oil impact base airfares and fuel surcharges?

Petruccelli: You will expect that as oil prices are going down, fuel surcharges on air tickets will go down. No one can predict how the oil price will evolve in the next twelve months. If there is a speculative aspect to it, clearly the cost of energy will continue to increase over the long-term. So, alternative solutions like rail will be sought after. Already, in Europe, rail has become a major alternative to air for business travel as more and more high-speed train routes are being opened.

Is business travel in a buyer’s market?

Petruccelli: No, because as the demand was dropping, capacity was being reduced and I believe we need to wait for the next few months to see if the market will be shifting to a buyer's market. That is very true for the airlines, but there is certainly more opportunity for a buyer's market in the hotel industry.

In light of the impact of the economy on travel, do you anticipate suppliers changing commission models similar to what the airlines have done?

Petruccelli: I really cannot predict what other suppliers may do, but certainly there will be intense pressure on the economic model and that there will certainly be alternatives that will be developed. Like, for example, airlines unbundling their service and charging for discrete services that they provide.

Is more airline consolidation expected in the near future?

Petruccelli: I don't think I would venture too much by answering yes. I believe the airline industry is poised for another round of consolidation, which started with the Air France/KLM merger, followed by the Delta/Northwest merger. And we read every week in the media the mentions about possible merger talks both in the US and in Europe.

Will the global economic downturn fundamentally change the travel management landscape and if so, in what ways?

Petruccelli: It will definitely set a new benchmark in the way companies will manage and scrutinize their total travel spend, looking for solutions in both process savings and control, and purchasing savings and control. Nevertheless, business travel spend is an essential driver to the growth of the business of a company. Those who will succeed in providing travel services in the current economic environment are those who will be able to deliver true innovative solutions across the entire value chain.

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