Return to Transcripts main page

Business Traveller

Business on a Budget; The Latest Technology to Keep Costs Down; Affordable Down Time in Oslo.

Aired June 14, 2008 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ADRIAN FINIGHAN, CNN HOST: Hello. Welcome to the show. I'm Adrian Finighan, this month reporting from Oslo.
We're here because this is the most expensive city in the world, according to a survey conducted by the Swiss bank, UBS. 59 percent of visitors are business travelers. And believe me, if you try to buy a (inaudible) getting by on minimum expenses then you're going to feel the pinch. $12 bucks for a baguette.

Now with record fuel prices, rising food costs and the general economic gloom, the clamp down has begun. We're all going to have to be a little more frugal or noisome (ph) as the Norwegians say.

So on this month's CNN BUSINESS TRAVELLER, we're doing business on a budget.

Coming up, we look at how the credit crisis is affecting business travel and the latest technology to keep costs down. And affordable down time in Oslo from "Sunrise to Sunset."

So the challenge for us this month is to keep costs down and to stay within a budget. We flew economy to Oslo. I took a train rather than a cab from the airport. Expensive restaurants are off limits. And I'm staying at this budget boutique hotel.

Now we're all having to tighten our belts in this current economic climate. But traveling for business remains essential. And as we're quickly finding out, it's a very different experience.

Travel managers are tracking our every expense more than ever before. Some of us have been down a peg or two, which means staying in three and four star hotels and flying premium economy or economy class.

Now with this new phrase of frugality, hotels are already fighting to retain their share in the market.

ALLYSON STEWART-ALLEN, INTERNATIONAL MARKETING PARTNERS (PH) COMMITTEE: It isn't too early to tell how the credit crunch is affecting business travel. One of the challenges that the hotel industry faces now that you have a credit squeeze is being able to keep the customer that you had before and hope that they don't downgrade to a more budget-conscious hotel.

But the other challenge is on the cost side. Hotels need to make sure that the amenities they've always offered are still at the same quality. So you also have to be clever in your marketing and realize that actually reattracting the loyal customer that you've always had is the right way to go.

FINIGHAN: With marginal shifts in occupancy rates, the hotel industry hasn't been hit so hard by the rising oil prices, unlike the aviation industry. There may be a global slow down, but we're still flying more than ever before.

CHRIS PICKARD, AVIATION INDUSTRY CONSULTANT: All the figures show that there's still an increase in the demand for travel. OEG that tracks all the airlines and what's being made available, they have seen month after month, year after year the number of seats, the number of flights being offered by all the airlines is increasing.

Even now, the latest figures for May is another 2 percent globally. I mean, we're talking about 200 million-plus people flying around every month. We're talking about 2.5 million flights every month. They're staggering figures.

FINIGHAN: Even so, we've seen how volatile the market is with the recent collapse of the all-business class carrier Silver Jet. It joins fellow failures Max Jet and EOS, leaving Paris-based carrier Levian (ph) as the last man standing. No one is safe. It's the survival of the fittest.

The aviation industry is undergoing an extreme weight loss program, slimming down operations and shaving off the pounds where they can.

It's all about the fuel burn. With the price of oil having touched $130 a barrel, an increase of more than 100 percent in a year, that's a level at which virtually no airline can make a profit.

Air France announced its first quarterly loss in five years. And like JAL and ANA, has increased its fuel surcharges for the 17th time since 2004.

JEAN-CYRIL SPINETTA, CEO, AIR FRANCE: It's a real challenge for the whole industry. I think the only way to cope with that is, first, to renew the fleet, to invest, to have the most efficient air craft; second, to adjust the passenger fees; and third, of course, to cut and streamline the costs but also to increase the fares. That's the only possible way for an industry which is vital for the world economy.

FINIGHAN: Every dollar increase in the price of oil drives up aviation industry costs by about $1.6 billion dollars. Hedging fuel will now become difficult, leaving airlines to look elsewhere to buffer these increases.

British Airways is feeling the strain despite record profits this year.

WILLIE WALSH, CEO, BRITISH AIRWAYS: We haven't seen any evidence of people moving away from the premium cabin. We're certainly seen some evidence of that in short haul (ph). The performance there has been weaker. I think that is as a result of the impact of the credit crunch. We certainly get confidence from performing very strongly when other airlines around us have been failing.

And the challenge of high oil prices is a challenge that everyone in the industry faces, not just us.

FINIGHAN: B.A. plans to scale back flights by 2 percent in the winter season. The airline has even worked out that it can make aircraft ordered for a refit 400 kilograms lighter if the old paint is stripped off before re-spraying. Desperate measures perhaps, but some argue that times aren't as tough as airlines would have us believe.

PICKARD: They had to bring their prices down, especially the back of the plane, to compete with the low-cost carriers. So they won't be actually that worried about making the public think that the fuel element is such a high-price of the ticket, or a high percentage of the price of the ticket, that they're going to need to push prices up. And they, like any other commodity, are just going to see how far they can edge it up and will be acceptable to the public.

FINIGHAN: An airline testing those boundaries is American. It began this month charging domestic passengers $15 each way to check their first bag into the hold, and $25 each way for a second. They will also reduce flights as well retire at least 75 old fuel-guzzling aircraft.

Other U.S. carriers are also following suit. Continental will ground 67 aircraft, United 100 by next year.

Scandinavian Airlines is doing all it can to keep passengers flying with them.

OLA STRAND, CEL, SAS NORWAY: We try to do the business world. And we have introduced third-class cubby where will have built this premium economy class. So by doing this, we hope people won't buy down from business to economy, from business to premium economy. And we hope that wouldn't damage so much the cabin factor and perhaps they won't change airlines.

FINIGHAN: Virgin Atlantic, however, thinks that it's in pretty good shape.

RICHARD BRANSON, CHAIRMAN, VIRGIN GROUP: It is strange. If you read the press it looks like, you know, the complete doom and gloom and the end of the world. But actually, the reality is not that. But fortunately, it's more upgrading into premium economy than downgrading from upper class.

And our fuel bill has gone up from 250 million pounds three years ago to 1.4 billion pounds this year. And obviously, the only way of surviving is passing it on to the consumer. At the moment, the consumer seems to be able to take it. But, you know, the concern is that at some stage, that if fuel prices continue to rise, that that's going to have an effect on the consumers' ability to be able to go travel.

FINIGHAN: With concern for the future, airlines must now sweat it out and get themselves in shape to prepare for the worse, a decline in demand for premium seats.

Coming up after the break, hailing an air taxi, the low-cost alternative to private jets. And fly less and talk more, the latest video conferencing.

(COMMERCIAL BREAK)

FINIGHAN: Welcome back. Now this month, we're keeping costs down. We're looking BUSINESS TRAVELLER is a global economic slow down. We're doing our best to (AUDIO PROBLEM). $80 bucks gets me three days of unlimited travel on the city's trams, buses, metro trains and ferries.

Now with the price of oil forecasting it as much as $150 a barrel as early as this year, no sign of the end of the credit crisis in the future seems pretty bleak. Air lines, in particular, find the way going very tough.

But one sector that is looking forward to the future is private air travel. The sector has seen record numbers this year in terms of orders and deliveries. And everyone wants a piece of the action, from Russia to China to Germany.

There's an increasing trend also to make private air travel more affordable, in some case, even cheaper than business class.

Get ready for the era of the air taxi.

Here at Farbra (ph) Airport outside London, the new low-cost charter service, Blink, is ready for take off. Just a month old, Blink has 30 customers already signed up.

Business travelers, like Jackie Russell, can immediately see the benefits.

JACKIE RUSSELL, ENTREPRENEUR: Arriving at an airport like this is a much more pleasant experience. You know what you have to look forward to, which is a brief introduction from your pilot and you're on the plane. And you're off within 15 to 20 minutes. It doesn't get much better than that.

Time is money and that is always going to be the case. I think if you have to get things done, you have got to look at the most cost-effective way to do that.

This allows me the route I want and at a price that I can afford. If I compare it to what I would have done in the past, flying B.A. to most locations, the chances are I wouldn't come back on the same day. So there's that added of staying over night. Blink allows me to travel competitively from a cost point of view.

FINIGHAN: Using a four-seater Cessna Mustangs, just a business day for the flight, Jackie flew to New Jersey and then on to Sherburne at a cost of $4,000. Three other people making the journey with her would have reduced the price to $1,000 each.

Private travel has all the flexibility and convenience for the price.

PETER LEIMAN, MANAGING DIRECTOR, BLINK: We're really scanning the forefront in a revolution in how people will travel. For the first time people can experience the efficiencies and the productivity gained and the cost savings that come and are associated with a business jet, but they're the same price as flying business class on British Airways within Europe.

FINIGHAN: Supermarket chain Wal-mart was a source of inspiration for Blink.

LEIMAN: Wal-mart has the largest fleet of corporate airplanes in the world. And if a company like Wal-mart, who's as renowned and revered for its low-cost merchant business, to be as progressive as they are in using aircraft to make their employees more productive and to save them money, then there's got to be an opportunity to corporations to extract that same value.

FINIGHAN: The concept of a low-cost air taxi is so new that it's hard to predict is it will be a success.

KATE SARSFIELD, GLOBAL FLIGHT: The new breed of air taxi operators is, I think, going to revolutionize the market. What they have basically done for one generally is a low-cost carrier. I've yet to see how the credit crisis is going to effect private aviation. But what people do need somewhat, if it does affect them, there's a safety net. If you still want to stay in private aviation, there we are, there's an option for you. I think this concept will definitely take off, but it might take some time.

RUSSELL: I think people's perception as they understand the pricing structure and the service that comes with that, I think people will start to view part of that problem a different way. I think it has historically been perceived as something that is unattainable for most people. And we'll all look at this as a viable starting point anytime we're taking a journey.

FINIGHAN: International calls and the roaming charges that go with them are a bug bear to any company. There are ways to minimizes costs, like hiring a local SIN card from any country regularly or perhaps renting a local mobile phone.

But what if you could receive international calls for free and be charged up to 80 percent less for those that you make?

That's what United Mobil claimed. For example, if you have a U.S. mobile and made calls to the states from here in Norway, it would cost around $1.29 a minute. With United Mobile, it's just 45 cents a minutes.

Now if you'd rather not spend any money at all, you can download FRING. It gives you to choose how you communicate with colleagues and friends. Download FRING onto your mobile and you can use SKYPE and other VOIP service providers or leave a message on MSN, Google or Yahoo!.

AVI SCHECTER, FOUNDER, FRING: The FRING does save me money. It provides a rich Internet experience. It's online. We're connected. The only thing is connectivity to the Internet. And then you can call anyone without boundaries. You can call all your friends whether they are in this country or in your homeland, and call them without any extra costs, and also be available to receive digital files and check messages, files that they sent to you and so on.

FINIGHAN: Now the easiest way to keep costs to a minimum is to, of course, only travel when absolutely necessary and tele or video conference instead.

Well, here in Reading, just outside of London, the latest technology is now on show. It's called Tele-presencing. And here to tell us more, from San Jose, California, is Martin De Beer.

Martin, this is just amazing. So this is working over the Internet? There's no satellite technology involved?

MARTIN DE BEER, GM, EMERGING TELNOLGIES CORP., CISCO: It is a fascinating innovation. And it's really the first time that you're able to use the network as a platform, to put people face to face long distance and, you know, highly finished in full HD. You don't see an image of yourself, which I think is a big problem with traditional video conferencing. So you take away the self consciousness that people often will feel by not showing themselves. It is (AUDIO PROBLEM).

However, what we have seen is that it is so highly utilized that people -- that these rooms tend to pay for themselves within three months.

FINIGHAN: And Martin lives by what he preaches. While he's based in San Jose, his secretary is tele-present from Dallas, more than 1,400 miles away.

DE BEER: Out of the more than 100,000 meetings that CISCO employees have conducted around the world, about 16,000 meetings avoid travel. We've taken 8,000 cars off the road. We've saved an estimated $100 million in travel avoidance. Instead of being in one country flying, I can now be in five countries in any given day.

FINIGHAN: Of course, I'm seeing you in 2D at the moment. Will there become a day when I'll see you in 3D?

DE BEER: We showed one of our future experiences, which was a full- body on-stage experience when we went to our campus on Bangalore, India. John Chambers, our chairman and CEO, was on stage in India and I joined him here from San Jose and was projected right next to John on stage in using one of our future tele-presence prototypes.

But in a few years from now, image me being across a real table from you in full 3-diminsional image of me where you can walk behind me and see the back of my head even though I'm thousands of miles away.

FINIGHAN: With the quality constantly improving, video conferencing could become a viable alternative to air travel, leaving corporations with a healthier bottom line and a smaller carbon footprint.

To find out more, why not log on to our web site. That's cnn.com/businesstraveller.

Still to come on CNN BUSINESS TRAVELLER, what do the experts recommend when it comes to tightening your belt on the road? And down time in Oslo, but on a budget, from "Sunrise to Sunset."

(COMMERCIAL BREAK)

FINIGHAN: Now on this trip, I've done my very best to spend as little as possible. But even now, I've slipped up. $20 bucks for a five-minute cab ride.

So just how do you keep costs down when you're on the road? Well, here's travel expert Simon Calder with a few tips.

SIMON CALDER: The trains are far better than you would expect in many parts of the world. And it can also be an extremely good value, particularly if you book in advance.

I'm always amazed by the business travelers who will not take public transit. This is called an Oyster card. And it just means that you get best value on the tube. And public transit is just so much more reliable than as depending on taxis.

Increasing their extremely good range in low-budget hotels, chains like Premier Inn and Travelodge. Choose one of the new breed of very cheap places to stay, such as Easy Hotel, which is taking the Easy Jet idea and applying it to the bedding business.

This summer, a lot of business travelers coming to Europe, if they're spending dollars, are finding that prices have effectively gone up maybe 35 percent. So it's perfectly easy. Just trade down. It means finding a good family-run restaurant, enjoy a great meal and, if you're going to take any clients or customer, I think they will be impressed if you pick somewhere a little big individual.

When was the last time you cycled? Because increasingly, that is the chic sophisticated and very-low (AUDIO PROBLEM) full of municipal bicycles. You'll get it. You'll enjoy much more of the visit and you'll probably get to your appointments on time.

FINIGHAN: Now it's hard to manage your expenses when you're on the road. But it's even harder when you're in the world's most expensive city. But don't let that put you off going out and exploring Oslo.

As well as public transport, my Oslo pass gives me free access to museums and art galleries. And, of course, the parks are free too. So there's plenty to see and do in Oslo from "Sunrise to Sunset."

In summer, the Norwegian skies shine blue even at 9:00 in the evening. This means, even if you have just one day in Oslo, you can still fit a lot in.

Here at Vigeland Park, there are more than 200 sculptures to admire, all designed and modeled by Gustav Vigeland, after whom the park is named.

The park is just located two kilometers from the city center and Tram 12 took me here in just five minutes.

We all know dealing with time differences in long-haul flights when traveling for business is no walk in the park. So why not take a break between meetings and soak up some rays to combat the tiredness and jet lag.

New York has its South Street seaport, San Francisco it's Fisherman's Wharf, and Oslo has Aker Brygge.

The waterfront along the harbor is teeming with activity 24 hours a day, particularly in the summer. It forms the center of community life.

Norway is famous for its fjords. And you don't have to travel far to see one. You can take a boat from the harbor and in less than an hour you'll be sailing down the Oslo Fjord.

Do what the Norwegians do and cruise down the fjord in a traditional wood sailing ship.

As you said, there's no such thing as a free lunch. Well, with my Oslo pass, the trip and the lunch are included.

The two-hour cruise leaves three times a day from the harbor, at 10:30, 1:00 and 3:30 p.m. And the views don't disappoint.

There were so many opportunities for a photograph I wasn't sure where to point my camera.

As we approach the harbor, I'm told by fellow passengers that one of the best places to watch the sun go down in a restaurant more appropriately named Solsiden, meaning the sunny side. Open only in the summer for four months, it's an ideal spot for dinner, be it for business or pleasure.

Now I know what you're thinking. For a program about business on a budget, that place looks pretty smart. And you'd be right. But there's a lot of business going on here at this restaurant tonight. And after working so hard to come in under budget on our trip to Oslo, well, I thought we deserved a treat. And besides, the sunset costs nothing.

That's it for month's CNN BUSINESS TRAVELLER. Reporting from Oslo, I'm Adrian Finighan. We'll see you again next month. Cheers.

END