Volcanic Ash Air Closures Affect 80% of Companies
Friday 23, April 2010
A survey by the NBTA Foundation – the research arm of the National Business Travel Association (NBTA) – of corporate travel managers at major corporations across the globe found that the volcanic ash over Iceland and much of Europe negatively impacted travel for 80 percent of companies, at an average cost of nearly $200,000 per affected company, and highlighting the importance of effectively managing corporate travel.
The 234 survey respondents indicated that on average, more than 160 travelers from each company were stranded away from their homes, costing the company more than $197,000 in unexpected travel expenses. Across the roughly 2,000 companies represented in the survey, the data indicates more than 310,000 travelers experienced travel disruptions, costing the surveyed companies more than $367 million collectively.
Michael W. McCormick, NBTA Executive Director & COO, said, "This has been a natural disaster for the record books, and one the travel industry will remember and learn from for years to come. The immediate lesson is the power of travel management at work. Travel managers have been working extended hours over many days -- along with supplier partners at travel management companies, hotels, extended stay properties, airlines, railways, and car rental companies -- to accommodate those who were stranded by the air traffic closures."
The closure of European air space also forced the cancellation of many business trips and meetings before they began. NBTA found that NBTA-affiliated companies cancelled nearly 5,600 scheduled corporate meetings and more than 165,000 total trips that had not yet taken place.
McCormick continued, "The direct financial impact of this incident in terms of additional travel spend is astounding, but just imagine how much more loss companies will experience due to lost opportunities. Meetings were cancelled, clients were not met, hands were not shaken, and deals were not made. Those missed business opportunities will take their toll, and companies will have to get their people back on the road quickly to make up for it."
Despite the financial loss, a crisis of this magnitude proves the value of managed travel. Seventy-six percent of affected companies were able to secure hotel stays for stranded travelers, and 62 percent made alternative travel arrangements, such as a chartered plane or bus. Travel managers also provided emergency funding for displaced travelers (35%) and adjusted policies or caps or expense reimbursement (23%).
One survey respondent noted, "We have a comprehensive disaster recovery plan. We just activated it and our travelers and travel management company knew exactly what to do."
McCormick commented, "We often forget the human aspect in a crisis like this. People have been stranded for days, many without sufficient funds or even an adequate amount of clean clothing. We've heard from travel managers helping single parents who had to make arrangements for their children, mothers who missed their daughters' weddings, and even a traveler who couldn't get home for his father's funeral. Travel managers remained in constant contact with these folks as they personally dealt with this ordeal, working diligently to get them home as soon as possible."
He continued, "The companies that don't have strong travel management programs in place likely did not meet their duty-of-care responsibilities through this crisis. In the coming weeks, I expect they will be examining their policies and deciding to implement travel management best practices, such as centralized booking and people tracking."
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