UK: FLYING OUT OF RECESSION. - The perk factor may be down but it's certainly not out.

Last Updated: 31 Aug 2010

The perk factor may be down but it's certainly not out.

Once it was the works canteen. Whether you are in the hourly paid or staff canteen, or in the boardroom, was a hugely important indicator of status. More recently business travel has taken on something of this role. Apparently trivial differences in style of transport came to signify an awful lot about one's place in the corporate pecking order. Then came the recession.

Before the recession, the perk factor played a significant part in deciding who went where, when and by what class. As soon as the economy dived, companies became much more cost-conscious, not to say niggardly, in their attitude to travel. Many downgraded their staff to economy class. Many more imposed restrictions, permitting business class, say, only for journeys of five hours or more. But now the corporate travel market is booming again. According to British Airways, premium air traffic has been growing at twice the rate of ordinary scheduled business, and the carrier's field sales force reports that the last three or four months have seen a general trading-up. The pendulum is not about to swing right back however.

Companies are continuing their quest for cost savings. They are pressuring airlines to tweak their offers, using corporate buying power to force down rates. Or they are passing budget control down to heads of departments and rewarding those who save the most. Moreover, "once new policies are imposed they tend to stick," notes Alan Coles, vice-president of business travel at American Express. "The chairman and chief executive are still travelling Concorde to the same degree, but below that level there is far more control."

Shell International offers an example. The company reviewed its travel policies before the recession bit hard, and downgraded all executive flights from first class to business class. Except, that is, for the top three grades who still go first class. Says John Thomas, Shell International's head of travel. "Nowadays we expect people to take the most direct route, with no stopovers. But the most important thing is to get the appointed place fit to do business," While the perk factor may be down, it is certainly not out. UK companies, it seems, are still pretty status conscious. "If you are in a large organisation, everybody judges themselves by what their peers are doing."

Some businesses deliberately take a different view. "We want to avoid the worst aspects of big corporations' behavioural norms," declares Simon Lester, managing director of Cott Europe, the own-label soft drinks company that's taking on Coca-Cola and Pepsi. "For example, why have expenses policies? The more we can let our people work for themselves, and feel themselves to be entrepeneurial partners, the better. You may have to account for why you spent such and such. But we are not going to say that you must travel by second class on a journey of less than 65 miles. We are just not doing that sort of stuff."

But if the seat you sit on continues to send a message about how far up the greasy pole you've got, that may be about to change. As in the works canteen, class divisions are becoming blurred. Last year, British Midland introduced a fully flexible economy fare at slightly higher than usual cost. "It's a halfway house between business and economy, and it is doing tremendously well," proclaims a spokesman. Shell saves money by using three-day business fares than it would if people travelled economy class, Thomas estimates. And a few airlines such as KLM are actually abolishing first class altogether.

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