At the risk of offering a too simplistic view of airline passenger segmentation, I look at three kinds of travelers; the destination traveler who is going to a specific spot or traveling for a specific reason. A newly married couple off on their honeymoon for example; the second traveler is a family or close friend social visit and the last, but certainly not least is the business traveler. The trends for the first two looks like they will return to normal at a good pace. But the trend for business travel’s return to normal is more complex, and therefore difficult to measure. One thing we know for sure is that normalcy may a different thing altogether.
As a former frequent business traveler, I cannot stress enough how important business travel is to the airline’s balance sheets.
Business travelers almost always paid full fare, and most were permitted to travel business class. At my former company, if you had only a day of advance notice to travel across the ocean, you could travel first class. In addition, international meetings meant several travelers going to the same location from various points in the U.S. Research indicated that while corporate travelers represented just 12% of passengers, on flights they could generate as much as 75% of profit.
The International Air Transport Association, which represents 290 airlines around the world, expects business travel to bounce back more slowly than vacations because companies reduced travel budgets during the pandemic and online conferencing will replace some meetings. But the sooner or later is of lesser importance than suffering a steep reduction of corporate travel income.
For countless executives and salespeople, business trips have been a bedrock of corporate life — loathed by some, loved by others but accepted by all as a necessity (sweetened by millions of frequent flyer miles). Employees needed to fly to meet clients, drum up new business and grab some face time with the boss at headquarters.
Some companies who had a large population of global passengers even had their own airline appointed flight consultant to assist with group fares, meeting arrangements and special bonuses for a higher volume than planned trips.
Then came the coronavirus pandemic, which grounded travelers and forced many companies to find new ways of doing things. Zoom replaced face to face meetings, even if there is something awkward about video chats. Phone calls filled the gaps. Clients stayed clients, deals got done and business continued to attain revenues.
Now, with coronavirus restrictions easing in many countries, the question is how quickly business travel will rebound, and whether the pandemic and efforts to address the accelerating climate crisis will prevent the lucrative sector from ever making a complete recovery.
Another question is this; if we were successful using remote resources, why go back to expensive air travel, hotels and per diem when we can get the revenue without the travel costs? My take on this dilemma for the airlines is that getting customers back may not be a slam dunk. They may have to sweeten the deal to get back their clients, especially the large global multi-nationals who once spent hundreds of thousands of dollars every year on air travel.
Those who view business travel as a great perk may not appreciate the downside of global travel. “For a lot of people, frequent business travel was a burden rather than a perk,” said Scott Cohen, a professor at the University of Surrey in England who studies business travel. There is increasing recognition that frequent work trips can negatively affect health and personal relationships. He added; “A weak recovery in business travel would be disastrous for airlines, which have already seen their finances stretched to breaking point by the pandemic.”.
Waiting for good things to happen may not be enough for the airlines to recapture this segment of their business. They may have to think of new ways to bring these customers back, and show the advantage of face to face contact and exposure to the culture, mores and business environment of the countries they do business.
Once more, I can relate personal experience and say that face to face talks after the work day was over and I was at dinner with a foreign colleague or client were some of the most productive times of my business travel.