Henry Harteveldt on US Airline Travelers And The Economy

Distribution, Fares

Thanks, Brett, for the opportunity to guest post on your blog.

Hi everyone, Henry Harteveldtmy name is Henry Harteveldt. I’ve been a friend of Brett’s for several years, and I’m delighted to have been invited to post while Brett is on vacation.

I’m just as much of an airline dork as Brett, maybe even more so. Hmm. No, scratch that. No one can match Brett for his airline dorkiness. Regardless, my “day job” is that of a Vice President & Principal Analyst at Forrester Research, a leading technology market research firm. I’ve been at Forrester since January 2000, and lead our airline and travel industry research practice. The majority of our airline research is on topics related to eBusiness, product and channel management – think distribution, Web sites and self-service – as well as social computing, mobile, customer experience, brand loyalty/CRM and interactive marketing. We also do some IT research – for example, we just did a joint study with the OpenTravel Alliance, a trade group that helps to establish XML development standards for the travel industry.

Now, I have a confession to make: Despite doing a lot of research on social computing and its role and impact on the travel industry, this is the first time I’ve blogged. So, if I’ve done something wrong with this post, go easy on me.

When Brett and I were discussing what I should blog about, he jokingly – well, maybe not jokingly – suggested I write about airline premium cabin service (to me, the economy class seat is an icon of inhumanity). Tempting as that was, I thought there might be something more interesting and relevant to write about: How US airline travelers view the economy. We just completed a Q1 2008 online study of 4,488 US travelers (1,970 took at least one airline round-trip in the preceding year), giving us fresh insight.

In general, US online air travelers – that is, air travelers who use the Internet at least once a month for any purpose – are doing a bit better than US online travelers overall. For example, we asked travelers to evaluate how their personal financial situations changed during the preceding 12 months. Among air travelers, 21% said they were financially worse off; 31% said things had improved. Among all travelers, nearly 29% reported a decline, while 29% said their personal financial situations had improved.

What about their outlook for the next 12 months? Air travelers are a tiny more optimistic than the general traveler population. Thirty-eight percent of air travelers believe they’ll be financially better off 12 months from now than they are today, slightly above the 36% we see for all travelers.

When we asked travelers how their travel behaviors might change, most indicated a desire to keep everything at current levels – for example, 54% of air travelers said they’d spend just as much on leisure travel in the next 12 months as they did in the preceding year, and 61% said they’d take just as many trips. These opinions, to me, reflect travelers’ perspectives that travel is a right, not a privilege. Travel is an activity we view with almost the same level of importance as paying our rent or mortgages, putting food on the table, and saving for our retirements or kids’ educations.

So do the airlines have anything to worry about? Of course they do – the drama in the airline industry is never ending and takes multiple forms. Remember that question we asked about future leisure travel spending intentions? Nearly 28% are considering cutting back to some degree – just 18% say they’re considering spending more (we didn’t ask the dollar amounts they’d consider increasing or decreasing their spending by, nor did we ask whether any increases were to account for expected higher fuel costs). And while 15% of air travelers said they’d consider taking more leisure trips, nearly one in four say they’re contemplating traveling less.

The fact that more air travelers are considering cut-backs than are open to increases is a cause for concern. Against the extraordinarily high cost of fuel, the softening economy will only intensify travelers’ desires to get a good fare – good fares that are less likely to exist because airlines simply can’t afford to profitably offer these anymore.

I’m finalizing a more detailed report for our clients on this topic, and expect it will be published on the Forrester site within two weeks or so. This is a topic we expect to follow throughout the year. After all, as I recently stated at TravelCom, the travel industry is a lot like the Tennessee Williams’ character Blanche DuBois (in “The Glass Menagerie” “A Streetcar Named Desire”): We’re dependent on the kindness of strangers. How so? The travel industry, including airlines, depends either on the largesse of business executives who determine their firms’ business travel budgets, or consumers who choose how to spend their disposable income. Blanche DuBois, of course, goes crazy at the end of “The Glass Menagerie” “A Streetcar Named Desire” – let’s hope the airline industry is able to better withstand this latest challenge.
Updated 5/7 @ 1032a to reflect Blanche DuBois association with “A Streetcar Named Desire” and not “The Glass Menagerie.”

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6 comments on “Henry Harteveldt on US Airline Travelers And The Economy

  1. Hi Henry,

    Thanks for the post. Excellent analysis. One minor correction:

    Blanche DuBois is from “A Streetcar Named Desire”, not “The Glass Menagerie”. Despite this small error, your comparison is apt. Hopefully the airlines won’t go crazy :)


  2. Having just taken a trip in premium class on a non-US carrier, I would have been really interested in hearing your thoughts about this, Henry. But the study results were quite interesting. Do you think Cranky could let you do semi-regular posts on your research? That would be great!

  3. Heya…just to confirrm Matthew’s correction. Yes, Blanche DuBois is in fact a carachter from “A streetcar Named Desire”. But here’s where you’re right..she was infact created by Tennessee Williams.

  4. I flew first class on Thai from LAX to Vietnam, then business class on Asiana to Seoul, then Business Class on United to Narita then on to Chicago. Was there a difference?

    IT WASNT EVEN CLOSE! (Though I must say that I and my buddy got special attention from the flight attendant on UA. The other poor folks were not quite as lucky.)

  5. Matthew and John,

    Thanks for pointing out my incredibly stupid mistake about Blanche DuBois. Of course Blanche DuBois is from “Streetcar.” It’s doubly embarrassing considering I graduated from Tulane University, which is in New Orleans. My apologies.


  6. Hi Henry,

    Congratulations on your first post! An aviation-themed Forrester blog would make for riveting reading, IMO.

    The findings you have posted here are interesting; I was wondering, though, if your sample is made up of domestic (US) travelers only, or if international travelers are also included.

    I myself have always tended to consider only domestic travel a right while viewing international travel as a luxury. However this year looks to differ from any I’ve seen so far, and has me thinking of canceling an annual family visit if I don’t see a serious fare sale soon…

    Keep blogging,

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