Risk Management

Changing Flight Patterns

Will the attacks significantly alter corporate travel?
Jennifer CaplanSeptember 19, 2001

On the day before the terror attacks, many CFOs were looking to cut the costs of corporate travel through such methods as streamlining expense reporting and cutting out travel agents. Now, however, with the new knowledge that a commercial jet can be turned into a weapon of mass destruction, finance chiefs were worrying much more about safety. Yet while some were considering changes in their companies’ travel patterns, no one was talking about significant cutbacks in trips.

The attacks moved a number of executives to re-examine the way their companies fly. Michael Umana, CFO and senior vice president of Saucony, the Peabody, Mass.-based maker of sneakers and sporting apparel, noted that his company is looking at some “creative options” concerning corporate travel. Suddenly, non-stops don’t seem all that attractive. For flights to the West Coast originating in Boston, the company’s managers are considering itineraries that include connecting flights. The thinking is that since shorter trips don’t require as much fuel as non-stops, they’re less attractive to hijackers seeking to convert passenger planes into flying “bombs.” For the same reason, Saucony executives were also thinking of rerouting the flights of employees traveling from Boston to Asia to go through Europe rather than via California, Umana says. The company suspended travel for the week after the attacks. James McDevitt, CFO at Clarus Corp., a procurement-software provider based in Suwanee, Ga., is also taking some precautions. “We will try not to put a number of executives on the same aircraft, so that if something were to happen, we would lessen our losses.”

Employees, however, remain intrepid. Umana reports that he struggled to restrict Saucony employees who wanted “to get on the road” in the week just following the attacks. Lynn Atchison, CFO at Hoover’s Inc., has seen a similar response at her company, which cancelled some appointments for last week and early this week out of respect for clients that were more directly affected by the attacks. “But we are already starting to re-book appointments and get back out there. We will shortly be back to business as usual,” she said last week.

Corporate managers will now need to walk a fine line between business needs and employee concerns, however. “There is a heightened sensitivity to employees right now,” concedes Atchison, “but I don’t believe that companies will or should change the way they fundamentally do business as a consequence of these events.” Some corporations, in fact, have no choice but to keep employees traveling. Employees at J.D. Edwards, for instance, spend a large chunk of their time training customers and installing and maintaining software at client sites. “We will definitely put a finer screen around all travel,” says Rick Allen, the company’s CFO, “but the business we are in requires us to be at customer sites frequently.” Fifty percent of the company’s 4800 employees travel on a regular basis. Allen notes that employees who feel uncomfortable getting on an airplane will be given the choice of driving to the location, if that option is reasonable. “We are also fairly well distributed throughout the country,” adds Allen, “so wherever possible, we will have resources closer to the location handle the business issue.”

Besides the threat represented by attacks, corporations will have to cope with airline and governmental responses to it. Managers at J.D. Edwards are beginning to assess the challenges that heightened airport security will impose on corporate travel, no small part of which will be a reduction in daily flights. “It is our understanding that United is cutting back flights significantly enough to make us look for other alternatives,” says Allen. Based in Denver, J.D. Edwards relies heavily on United Airlines, which has a hub in that city. Allen notes that management is considering leasing a private jet as a way to cope with decreases in commercial flights. “We would use it in situations where commercial travel may not be able to get us where we need to get, in the time we need to be there,” he says. Travel at the software company was suspended for 48 hours following the terrorist attacks, but has since resumed.

For her part, Atchison admits that managers at Hoover’s have not yet identified the greater implications of the events of Sept. 11 on the company’s corporate travel policy. “We haven’t stopped to create new restrictions or regulations on employee travel, and I don’t know whether those will come in the future or not,” she says. Only about 5 percent of Hoover’s 250-person workforce travels regularly. The company’s sales representatives, typically a big chunk of frequent fliers in most corporations, are in telephone sales, which significantly reduces the need for them to travel.

Might the attacks prompt companies to do more business via video, teleconferencing, or Webcasts? Atchison thinks not, although she accedes that managers may now be more inclined to experiment with alternative technologies. “If you need to meet with clients face-to- face in order to sell them a high dollar product or service, I think companies will still do that,” Atchinson says. “Maybe you do a better job making sure that a lead is good before you jump on a plane, but you should have been doing that all along anyway,” she adds.

McDevitt, the Clarus CFO, maintains that Webcasting is a good alternative to travel. Clarus employees have been using Webcasting technology as a sales and marketing tool for some time. While McDevitt admits that the first impetus to implement the technology was to shave off unnecessary travel expenses, “the less employees we have traveling, the safer everyone will be.” He believes that some companies might now eliminate some of the steps of the sales and marketing process through the increased use of telephone sales and telemarketing. Overall, however, McDevitt doesn’t think the attacks will have “a significant impact” on how most companies companies conduct business. While there might be some short-term blips in our ability to close some business, I think business, and the economy as a whole, will come to terms with our new reality.”