19 August 2009 - During the Business Travel Market conference here in June, Virgin Atlantic general manager of sales Paul Wait participated on a panel discussion addressing business travel and the future of the airline. A portion of the dialogue with attendees follows.
How are you encouraging business travelers to buy your product?
Individuals know what they want and maybe they are unable to choose it because the corporates dictate, saying to them, "No, you don't know what you want." Our job as providers of service is to communicate to those corporates that these procurement guys shouldn't just be buying a price. They should be buying based on value, and they should be providing accessibility to individuals so they don't need to go through the procurement process in order to select the product that suits them best.
There is no doubt that the passenger numbers on business are down. That's because some businesses are no longer in business, and there has been a temporary reduction and pressure on people traveling. In the case of the investment banks, they can't wait to give the [Troubled Asset Relief Program] money back so they can get the government out of interfering with their business, so they can get back to doing business the way they wish to. However, from our perspective, the demand is there but as an industry we are guilty of encouraging people to book later. The only problem is that capacity is coming out at a rapid rate, so where they want to go isn't necessarily what is going to be available.
How are you dealing with business travelers trading down?
One of the benefits of us introducing Premium Economy [class] all those years ago is that when you have situations like we currently have--if people have to move from business class to economy--there is sort of a midpoint, and that Premium Economy is proven to be a great fusion cabin. For people traveling for personal reasons who want the extra comfort, we see a lot moving from economy to Premium Economy. Also, some people say one way they will fly with Premium Economy and the other way they will go in Upper Class to sleep.
The area going forward that is susceptible to this situation is that people have to rethink the routes and destinations where first class just isn't used. That doesn't apply to the Middle East and Far East but certainly Europe and North America; those kinds of places where that particular product is in question.
How important is an airline alliance to Virgin?
Our perspective is really that we are very individual in our particular style of service and offering, and if you try to mix that and code share, it will cause confusion for the passengers. Is it a question of a survival and growth strategy as a business or is it something that can be defined as a benefit to the customer? For ourselves, being part of an alliance provides an opportunity to have a growth spurt particularly from our overseas destinations. It's one of those things that we are taking into consideration.
What do you see as future travel trends?
Travel is a necessity, particularly for doing business, and as the pace of globalization quickens and as we see major corporations emerge from the Middle East and the Far East, the western countries in Europe and North America are going to have to travel even more to make sure that they are going to stay alive. It will be as cyclical as ever, and it will still suffer its downturns in the future, and in order to help your forward strategy as specific to an airline, it is important to know what type of aircraft [airlines] will need to be able to retain a degree of flexibility to cope with the growth and to also cope with downturns as they happen.
Listening to everyone in the airline industry, there are some themes-- differentiation, choice, individuality, easy to do business with--all of which would suggest that it would lead to a higher level of productivity for the traveler. We believe in all of those things that help to create a higher productivity level in the individual and that is the reason why we are differentiated. There are airlines out there that have followed our lead on this particular model. The challenge with the airline business--as with anything in relation to people that go through procurement processes--is, how much of those things, which lead to higher productivity, are actually taken into consideration within the corporate program?
How much is green a part of your future planning?
We are just taking a look at waste--not just on aircraft, but the whole business--and the way we are dealing with stuff in the office and choice of food onboard. How much is left behind is a balance for us because if you don't have enough food and water for your passengers onboard, then you have a problem and it's not acceptable to say, "I am very sorry, but we have gone green, therefore we are not feeding you enough." It is a bit of a challenge. To be fair to the aviation industry, ourselves and others recognize it as an issue and one of the things that we have got to do.
The president [Richard Branson] has put his own money into ways of rewarding people who come up with solutions. People said it was a bit of a stunt to take one of the engines and put bio-fuels in it, but you have to start somewhere. The light bulb wasn't invented overnight. You have to try and try, and that is exactly what he has been doing. He set up a Virgin fuels company and put a lot of money into looking for alternatives. The airline manufacturers are trying to come up with lighter materials--not just durable, but a lighter aircraft, a more fuel-efficient aircraft. However, an Upper Class product or a business class product is actually heavier per seat than the economy [seats], so that is going to be important, and that's where a lot of the innovation is going to be.
