Air travel is recovering in many parts of the world, but most airlines are anxious about the return of business travel. Why does it matter?
That air travel recovery is different in different parts of the world, isn’t surprising. The timing of the pandemic, different restrictions and differences in demand for air travel, will do that. But even in places like the United States, where recovery is strongest, some types of travel are still far from catching up.
Long-haul travel is what we most often think about, in terms of long-term recovery. We’ve seen how coordination efforts between countries have struggled to help in this regard. But business travel, domestic or international, could be just as tough a nut to crack. And what some don’t realize, is that this was actually a pre-pandemic trend.
Business travel isn’t simply about CEOs, meeting to sign agreements and smile for the press release photo. Companies were routinely sending their management and/or employees for many day-to-day tasks. The sort of things many of us now use Zoom and Teams for! However, online meetings were expanding rapidly, even before 2020.
Of course, the pandemic turned what was a rapid expansion of online meetings, into a proverbial explosion. And in the process, we learned some unexpected things… like the fact that some business people didn’t like to travel! This, plus the cost of such travel, means that many companies will likely re-adjust their travelling budgets, downwards.
Business Travel And The Airlines
So, what does this switch away from business travel mean, for the airlines? For one thing, it is a sizeable part of their business. The sheer volume of people travelling for business purposes is substantial in itself. Also, it’s much less seasonal than vacation travel. This reduces periods of low utilization for airline fleets, in itself a key factor.
Note here that business travel doesn’t equate to business class seats. While they are certainly a perk for many, a lot of day-to-day travel for work purposes involved the same economy seats most of us know. And this puts to bed another common assumption, i.e. that low-cost carriers don’t care for business travel.
Some believe that this is why LCCs are expected to lead aviation recovery. This isn’t entirely true. Companies frequently have to make last-minute travel arrangements and will fly with whichever airline they find. And last-minute tickets generally aren’t cheap, even with LCCs. So everyone values business travellers, even if they don’t have business-class seats on their planes.
And this is part of the reason why some LCCs want to move into more central airports. We’ve seen that easyJet in Europe wants to follow in US JetBlue’s footsteps, in this regard. Operating costs from these airports mean that Easyjet would struggle to compete with the likes of Ryanair and Wizz Air. Instead, the airline could compete with the likes of British Airways. The short/medium-haul operations of these airlines now have many low-cost traits, anyway. Except for the airports!
Knock-on Effects
As with holiday travel in the pandemic, changes in business travel affect more organisations. These include city hotels and conference centres. But most observers believe that this isn’t a permanent change; at least not at the level it now appears. Other events, like an increased interest in corporate jets, suggest that companies still care for timely travel.
Also, in many cases, business travel is a perk – at least for those who don’t do it too often. And some believe that there is room for another perk, to replace it. “Workations” are vacations combined with work, and until recently were almost exclusively for the self-employed. But the proliferation of online meetings could change that. If it’s OK to do that online work meeting from home, why not do it from your hotel room, while your partner looks after the kids?
The normalization of online meetings could have such an effect, on many companies and their employees. If so, then business travel could give way to these “workations”. For the airlines, this could be a net loss; this is not the kind of last-minute premium travel they like. But not all airlines will suffer to the same extent. Business-only airlines, and some flag carriers that depend on lucrative premium seating, could face a tough few years.
