TRAVEL BRIEFCASE:
Once-leery business travelers are now turning to ride-hailing services.
When the ride-hailing services Uber and Lyft first came on the scene, business traveler managers were leery of the services.
Are they safe? Are the drivers reliable? How you do you file expense reports for the rides?
Seven years after Uber was founded and four years after rival Lyft launched, the ride-hailing businesses may have overtaken taxis and car rental companies as the favorite mode of transportation for business travelers in the U.S.
Maine-based Certify, a software company for business expense management, analyzed several million expense reports for the first quarter of 2016 and found that 46% of all ground transportation transactions for business travelers were for ride-hailing services, compared with 40% for car rentals and 14% for taxis.
Over the last two years, the Certify analysis shows, taxis have lost the biggest share of the business travel market, dropping from 37% of all ground transportation expense transactions at the beginning of 2014. Car rentals dropped from 55% of all ground transportation expenses, while ride-hailing services have grown from only 8% of the transactions at the beginning of 2014.
Some taxi drivers have been so devastated by the drop in business that they have started driving for Uber or Lyft.
But car rental companies don’t agree with the conclusion of the data. They say Uber and Lyft may generate more individual expense reports because travelers use them for multiple, short rides. Car rental companies say they continue to be popular with business travelers.
Greg Stubblefield, chief strategy officer for Enterprise Holdings, the parent company for Alamo Rent A Car, Enterprise Rent-A-Car and National Car Rental, said his company is thriving, although he declined to release revenue or profit numbers for the privately held company.
“Our business is growing handsomely,” he said.
Avis-Budget Group, parent company of the Avis and Budget car rental brands, reported adjusted net income of $333 million for 2015, a 7% increase over 2014, on 5% growth in revenue.
Uber and Lyft representatives say ride-hailing services are gaining popularity with business travelers primarily because such rides are less expensive and more convenient. Both companies have added features to their smartphone apps that make it easier for business travelers to file expense reports.
Legislation took effect in January that ensures California’s 228,000 state employees will be reimbursed for the cost of using sharing-economy businesses for business travel, including ridehailing services such as Uber and Lyft.
“The No. 1 thing for business travelers is that we are more convenient,” said Amit Patel, director of enterprise partnerships for Lyft. “This is something that they use in their personal life and now use in business life because it’s supported by their company.”
More airlines to offer no-frills tickets
The idea of a no-frills airline ticket that can’t be changed or upgraded and probably lands you in a cramped middle seat may sound unappealing, but it is making Delta Air Lines executives happy.
The carrier launched the socalled basic economy fare in 2012 and later expanded it to about 1,650 of Delta’s about 20,000 domestic routes. It was created to compete with low-cost carriers such as Spirit Airlines and Frontier Airlines, which are threatening to steal budget-minded fliers away from the big carriers.
The airline announced recently that the no-frills ticket has generated $20 million in incremental revenue in the first three months of 2016, and Delta’s executives plan to expand the bare-bones ticket to more routes.
“So if you’re shopping for just solely price, we want to have a product that can compete effectively and provide the best services against carriers who are providing a much lower quality of service,” Glen W. Hauenstein, Delta’s chief revenue officer, told analysts. “And I think that’s what this is designed for.”
Hoping to cash in on the same fliers, American Airlines and United Airlines will introduce later this year a class of ticket that is cheaper and offers even fewer amenities than the regular economy section seats.
James Compton, chief revenue officer for United Continental Holdings, United Airlines’ parent company, told analysts that the new ticket will complement the carrier’s higher-priced tickets that include food, drinks and entertainment but instead “will appeal to the purely price-sensitive customer.”