AirPlus Turns to China for Business Travel Growth — China Daily
AirPlus International, a global business travel management services company, hopes to accelerate growth in China, one of its fastest growing markets, in a move designed to help it recoup losses incurred during the global economic downturn.
“Expansion of our presence in China is a strategic priority and our competitive advantage during the downturn has enabled us to continue to increase our investments here,” said AirPlus President Patrick Diemer.
Diemer declined to give specific details on investment or expansion plans for China.
The Neu-Isenburg, Germany-headquartered company saw a significant business decline in almost all of its markets globally except China in 2009, posting a 10 percent decline in net revenue to $276 million.
The decline was mainly caused by slowed business travel and lower ticket prices, but growth in emerging markets such as China has significantly helped soften the recession’s impact on its global business, Diemer said.
AirPlus managed to gain about 1,000 new corporate clients during the crisis in 2009, 100 of which were Chinese.
Diemer said the company’s objective for 2010 is to regain 65 percent settlement volume it lost during the economic recession.
AirPlus, a subsidiary of Lufthansa, sees great potential in the Chinese business travel sector which demonstrated itself to be robust despite being hit by the economic crisis in 2009.
AirPlus became the first mover in the Chinese business travel payment market in 2008 by establishing a strategic partnership with Air China, the country’s flag carrier.
The Air China AirPlus Company Account is the first centrally billed lodge account in China which corporations can use to invoice airline tickets.
The company has also teamed up with China Merchant Bank to launch a co-branded corporate credit card, which allows corporations to better monitor and manage their employees’ travel expenses occur on the road, such as hotel and restaurant bills and telephone calls.
Although the concept of business travel payments is relatively new in China – a country that still remains a cash-based society – the corporate credit card industry is expected to see further growth in the future.
So far only 13 percent of Chinese companies uses credit cards for travel payments while 87 percent conduct payments through cash or bank transfers, according to a recent report of Maverick China Research.
But the situation is changing as the volume of business travel grows and demand increases for travel payment management and cost control measures from Chinese companies.
The World Tourism Organization projected that China will become the No 1 tourism destination by 2020 and earn an estimated $69 billion on business travel annually.
Diemer said that China currently accounts about 5 percent of AirPlus’s global business but the number is expected to grow significantly higher over the next five years.