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B2C Approaches 95

to track the changes in corporate policy. In the leisure travel
market, consumers fund their travel with either cash or
credit. For the American consumer, it is predominately credit,
which is fueled by the availability of credit. This credit is
particularly driven by equity in the housing markets.
Therefore it is important to track not only the credit markets
but also the housing market.

In economic downturns, typically businesses curtail
overall business travel as well as change policies relative
to flying first or business class. As economic cycles get
worse, many may institute moratoriums on travel, which
significantly impact the airline industry. In such cases, busi-
ness demand cannot be stimulated by traditional levers.
Changing pricing strategy would do little or no good if
businesses stop using business or first class travel com-
pletely. Therefore, the industry has to understand corporate
pricing policy changes and the timing of those changes
relative to economic cycles.

In the airline industry, premium business travel is the first
segment to soften. This softening then extends to the broader
business travel market. The next area is a broader softening
of business travel demand. In this case, airlines typically
have to just “wait it out” until businesses free up funding
for premium business travel.

In the leisure travel market, airlines can typically still apply
different pricing strategies to affect demand. While business
travel is completely driven by corporate edict, leisure travel
is driven by discretionary income. Therefore, the airline
industry must understand what the source of funds of
discretionary income is for their customers. This varies
by factors such as geographic region and socioeconomic
segment.

While the leisure travel market still has responsiveness to
changing pricing strategies in downturn economies, there
continues to be a tradeoff between achieving a higher load