Business travel is in demand especially among employees of US small- and medium-sized businesses, but it may be job security concerns behind the push in traveller sentiment

27 July, 2021

There have been some encouraging signs that business travel is bouncing back as part of a general COVID recovery across the United States of America. While a return to the pre-pandemic normal will still deliver significant changes to how, why and when we travel, it is increasingly expected that levels will soon match those seen before coronavirus struck and return to growth.

The movement we had seen earlier in the year in the domestic market are now being replicated across the international markets, where government rules allow. “We are starting to see signs of a resurgence of business in international travel both of which are supporting the next leg of the revenue recovery,” acknowledged Ed Bastian, CEO of Delta Air Lines during the carrier’s 2Q 2021 earnings call.

According to the airline’s president Glen Hauenstein, domestic business travel is on “an improving trajectory” with corporate volumes 40% recovered in the month of Jun-2021, doubling from the 20% recovery rate in Mar-2021. Small and medium sized enterprise volumes continued “to outperform corporates by 10 points and are now 50% recovered,” he said.

Still, corporate travel volumes accelerated in May-2021 and Jun-2021 with almost 95% of the airline’s accounts booking travel in the month of Jun-2021. “We're also beginning to see a return of consulting and sales related travel and higher volumes in traditionally business heavy markets like New York City and Boston,” noted Mr Hauenstein.

The airline’s recent corporate survey results show that over 90% of its corporate accounts anticipate travel volumes to increase in the Sep-2021 quarter, up from just 33% in the Mar-2021 quarter. “In addition to these survey results our close engagement with customers give us increased confidence of the acceleration of business travel,” added the Delta executive.

Andrew Nocella, executive vice president and chief commercial officer at United Airlines, said on the carrier’s own recent 2Q 2021 earnings call that the facts point to a strong recovery across all business segments even still limited international long haul demand, where business demand and yields are improving faster than expected.

“We still face significant headwinds for the second half, with borders being closed and business traffic not fully back but ultimately we expect these headwinds will transition to tail,” he said.

At the US major, business travel was still down over 90% for most of Q2 versus 2019, but inflected sharply in Jun-2021 and is currently down about 60% versus pre pandemic levels. Mr Nocella expects two more inflection points in business demand first at the end of the summer and second when the new budget cycle beginning in January.

“Our advanced business bookings for September are now only down I think about 50%. And we expect that number to continue to get better… We expect business demand to improve by the end of the third quarter to be down about 40% to 45% versus 2019,” he anticipated.

A recent survey of the airline’s business customers now indicates over 90% plan to return to travel, including international travel in the second half of 2021. That is up from around 55% earlier this year.

While business demand is down, United has used special incentives to get its MileagePlus members back onboard with better access to superior seats via awards and upgrades. “Premier members of the MileagePlus programme are rapidly returning to flying on United, a great sign for 2022 business demand,” explained Mr Nocella.

Year-to-date, three quarters of the airline’s top premier members have already flown with the carrier or have booked a flight, he acknowledged, while of the premier members that have not planned to fly yet, the airline’s research shows that they tend to be fliers focused largely on global long haul markets that simply haven't opened up yet.

“Overall, things are returning to normal,” said Mr Nocella. “The booking curve isn't exactly normal yet, but it is quickly getting there, particularly from the domestic point of view”.

We all want things to go back to normal, it’s just that none of us know what normal looks like anymore. One thing is certain, though.

“When it comes to business travel, normal isn’t the way we used to do things,” according to a recent statement from SAP Concur, the American SaaS company that provides travel and expense management services to businesses.

It cites a recent Wakefield Research study of businesses of under 1,000 employees that showed that 95% of corporate travellers are willing to travel again, with almost two-thirds (65%) very willing. The research indicates that they want to get going again, because they want to make sure they’re getting the job done – four in five (81%) of them were particularly concerned about their careers if travel doesn’t increase in the next 12 months.

Specifically, they’re worried about developing and maintaining business connections (40%), about signing new deals (35%), about building new relationships (33%) and about making less money (38%). “They are eager, in other words, to be face to face with the people who make it all possible,” according to SAP Concur.

As you might expect in the current environment, seeing customers comes with conditions, however. As the study states: “travellers want policy and procedural changes that give them the flexibility and control to travel in the most safe and sustainable manner”.

The new normal will see a more responsible approach to travel that incorporates the well-being of travellers and the environment. Employers may take a tighter control over approvals and budgets, but ultimately we should all see benefits when travelling in the future.