...but there are structural impediments to recovery that are becoming more apparent
At the same time, there are structural impediments to the recovery that are becoming more and more apparent.
Video-conferencing has become pervasive and offers a convenient and inexpensive alternative for face-to-face meetings, particularly for those that are internally facing.
At the same time, this technology has also helped a shift towards work-from-home and hybrid working arrangements. This is producing some structural changes of its own, igniting new demand for ‘blended’ travel – with workers combining personal and business travel into (sometimes extended) travel arrangements.
Sustainability and the environmental cost of air travel garnered significant public and corporate attention during the COVID-19 pandemic, and this is also starting to shape the business travel recovery.
In some domestic and short haul markets there has been substitution towards road and rail. For longer trips there are few viable alternatives, but enterprises – large firms in particular – are more sensitive to the emissions cost from this kind of travel, which may be leading them to reduce air travel overall.
Corporate travel’s importance for airlines may be diminished
None of this is particularly good news for airlines.
Business travellers have historically been a major profit centre. They’re more likely to book later, seek flexible fares, and travel in premium cabins – all of which adds up to higher fares for airlines. As a result, accommodating the corporate traveller has been a key plank of global airline strategy.
Although business travel spending and volumes are certain to recover to pre-pandemic levels eventually, corporate travel’s relative importance for airlines may end up being diminished. As a result, airlines may need to permanently adjust their strategies and operations to account for a reduction in the global appetite for business travel as the market continues its post-pandemic realignment.
Author: Simon Elsegood
Head Of Research at CAPA - Centre for Aviatio