It remains to be seen if negative economic forecasts, rising case counts in some countries and fears of a second wave of infections in others will curb the desire by consumers to travel by air. There is clearly some pent up demand for travel, especially for leisure purposes, and airlines, hotels will seek comfort in a trend towards bookings being made closer to the date of travel as fear recedes and confidence to travel rises.
But what about business travel? The outlook after the summer season was already murky, and now with bleak economic projections, the rebound in business travel could be pushed out further. The CEO of US major Delta Air Lines Ed Bastian recently told Bloomberg that the company expects the period after the US Labour Day holiday in Sep-2020 to act as an important milestone and pivot point for business travel, which in a normal environment is when business travel picks up.
But there is nothing normal about where we stand currently. Across the Atlantic, Clive Wratten, the CEO of the Business Travel Association has warned that one in every two jobs in the sector is at risk due to the UK government’s current blanket quarantine plans for all incoming travellers.
“Our government is not listening carefully enough to the grave challenges our sector is facing. They need to wake-up quickly,” he said during the corporate travel industry body’s annual conference, which was held online earlier this month.
Mr Wratten acknowledged that proposed new travel corridors from the UK, which could be announced before the end of Jun-2020 would be welcomed, but warned that these need to also look at business travel needs and not just support leisure travel requirements. “Business travel is a year-round constant for our economy, it is not subject to the peaks and troughs of leisure tourism,” he said.
It is anticipated that business travel will be the last ingredient in the return of air travel, but big question remain how much will actually return. The Blue Swan Daily highlighted last week how different industries will resume corporate travel at a different pace. The dynamics are very different between sectors with some needing to travel more than others. There will always be a need for face-to-face meetings, but just how much business travel can be described as non-essential.
The rise of video conferencing tools such as Zoom and Microsoft Teams have led many to question whether business travel will return in the same form after coronavirus restrictions are lifted. Most would agree that we will lose some percentage of corporate travel. While we can agree on this viewpoint, not many are willing to guess the scale.
In a recent letter to shareholders, Allegiant Travel Company chairman and CEO Maurice Gallagher shared his own appreciation of these technology platforms as a business tool. Having been somebody that wasn’t a big backer of virtual meetings, his endorsement of the platforms may suggest that figure could be a lot higher than many envisage.
Mr Gallagher describes the use of technology “as a viable alternative to business travel” and says it is a “looming problem” for the industry. “Modern streaming capabilities from companies such as Zoom, Google and Microsoft have come into their own,” he says.
Allegiant’s board – like most big businesses – has been doing all of its meetings via this method. Mr Gallagher explains that prior to the pandemic it never considered virtual meetings. “Just like all things new, there were problems in the first few tries but when you have to use it, when you have no choice, you figure it out,” he explains.
And that is just what the company has done over the past 90 days. “I now appreciate the tremendous savings of time and additional productivity,” says Mr Gallagher. Unlike past slowdowns in the 2000s, this time senior executives “understand the power of this technology and appreciate the ability to reduce travel and entertainment expenses in the coming months and years,” he adds. And while direct expense savings are a part of the benefit, a larger part of the equation could be the increased productivity from personnel not travelling.
Right now, Mr Gallagher says business demand “has not shown any increases” in contrast to returning leisure demand, but longer term, he acknowledges “there will be a rebound” in business travel. “Conferences and trade shows still have merit and there are businesses who believe face-to-face meetings are critical competitive requirements,” he says, but the combination of substantial dollar savings and increased productivity “has to have an impact on the return of business travel in the coming months,” according the executive.
“As things improve, old habits will reemerge. But for the next year or two, perhaps longer, the impact of technology on business travel could be substantial,” concludes Mr Gallagher. For those dependent on business travel like hotels, restaurants, travel agents, OTAs like Expedia and others, this is not a positive projection.