By: David Koenig
With summer vacations winding down, airlines are counting on the return of more business travelers to keep their pandemic recovery going into the fall.
Air travel in the United States, bolstered by huge numbers of tourists, has nearly recovered to pre-pandemic levels.
Inflation — and especially this year’s sharp rise in airfares — raises concern about how long vacationers can afford to keep flying at their current pace. Airlines say they see no signs of a slowdown in leisure travel.
Business travel, however, remains about 25% to 30% below 2019 levels, according to airlines and outfits that track sales.
And it is not clear when — or if — road warriors will return to their old travel habits.
“The whole challenge for the industry is around the return of the corporate traveler, and whether he is going to come back in enough volume and frequency that is going to help these airlines,” says John Grant, an analyst with travel-data provider OAG.
The Global Business Travel Association recently predicted that corporate travel won’t fully return until mid-2026, 18 months later than the trade group had previously forecast.
Business travelers generally pay higher fares, so their absence has an outsized impact on airline revenue and profit.
Business travel is slower to return because it is more complicated than somebody deciding they want to take a vacation after staying home during the first two years of the pandemic, says Chuck Thackston, who leads data research at the Airlines Reporting Corp., a ticket-settlement firm that operates as a middleman between airlines and travel agents.
“On the corporate side, it just takes a little more to restart that because there are so many moving parts,” Thackston said. “If you want to go visit clients in New York, it could be that nobody is in the office in New York. That is slowly building back.”
Conventions and other big meetings are another key driver of business travel, and also seem to be coming back, Thackston said.
Airline officials say that travel by small-business operators has recovered nearly fully, but that many corporate travelers have not returned to the road or skies.
The chief commercial officer of Southwest Airlines, Andrew Watterson, said that since business travel began picking up this spring, “it was skewed toward smaller businesses and government and education were traveling. Our largest corporates are the ones that are lagging, particularly banking, consulting and technology.”
Watterson said that among Southwest’s biggest corporate accounts, they all have employees traveling — but not as many of them, and not as often.
The nature of business travel is changing as companies become accustomed to smaller travel budgets. Some trips are being replaced by video calls, perhaps permanently. Speculative sales trips could be especially easy for companies to cut.
Conventions now routinely offer a “hybrid” format with an option to stay behind and watch online — although that means missing the hallway conversations and other opportunities to network.
Standard & Poor’s said this week that many convention center operators are running summer and fall schedules similar to those in 2019, but a recession or new COVID-19 variant are still risks.
Vasu Raja, the chief commercial officer at American Airlines, said demand has dropped for one-day business trips in which someone leaves in the morning and flies home that evening.
(AP)
