Business travel recovery…what business travel recovery?

23 June, 2021

Last week, Ed Bastian, CEO of US major Delta Air Lines revealed that the airline expects domestic travel in the United States to make a full recovery this summer and that business travel could return to pre-pandemic levels from as early as 01-Jul-2021.

It is positive to hear such optimism and positivity from one of aviation's respected leaders, but Mr Bastian's view is not universally accepted and research suggests that it will not be until Sep-2021 that we will really start to see a rise in the trajectory of business travel recovery, and that will be purely on a domestic levels with international movement still a major unknown, given the lack of clarity about border reopening, requirements for testing, mobility for the vaccinated and quarantine rules.

Delta's CEO was speaking on The Claman Countdown show on the FOX Business channel when he made the bold assumptions. He said: "I think if you take the period from 01-Jul-2021 forward, we're going to see business travel at levels that were consistent with where we were pre-pandemic." "There are so many businesses that need to get back out to their customers that have created new contacts they haven't been able to serve during the pandemic period while they couldn't travel that need to be back out with their teams," he added.

He predicted that as businesses open this summer, we are "going to see a huge surge in business, just as we've seen with consumer leisure demand". He even offered a upbeat outlook for international travel despite the continued travel restrictions in many parts of the world with international bookings "very strong," especially to European countries like France, Greece, Portugal, Spain and Italy.

Mr Bastian's views add to the many observations on the timing and scale of the business travel recovery. But what is clear is that we are seeing movement in the right direction. US Corporate travel air ticket sales are slowly climbing, according to latest data from Airline Revenue Corporation (ARC), with US travel agency seven-day average corporate air ticket sales volume was still down two thirds (-66.4%) on pre-pandemic levels (2019), but at their highest level since Mar-2020.

Independent research from TravelAgain, the not-for-profit project focused on restoring traveller confidence, shows a business traveller confidence index rising month by month. In Apr-2021 it had a score of 3.18, increasing to 3.77 in May-2021. Around two in five business travellers have been 'Ready' or 'Willing' to travel, steady across both months.

While this is all positive, we cannot even think about talking about recovery. There are encouraging signs we are moving forward, but we are still a long way from "becoming successful or normal again after problems", as recovery is defined by the Cambridge English Dictionary, or "a return to a normal state of health, mind, or strength," as per the Oxford English Dictionary.

Derek Sadubin, managing director of CAPA - Centre for Aviation, highlighted just how difficult this will be at the Jun-2021 edition of CAPA Live where he presented research from both CAPA and CTC - Corporate Travel Community. Highlighting that between Apr-2020 and Dec-2020 global spending on business travel had fallen -68% (versus just -11% and -7.5% in prior downturns in 2001 and 2009), he revealed that "billions or dollars are at stake" in the recovery process.

CAPA and CTC research projects that around 25% of global corporate travel could be lost in the future with internal company meetings being the hardest hit area and where demand could be cut to half pre-pandemic levels. Reductions are expected across all areas to different degrees from around 40% in employee training and development, 30% in supplier meetings, 25% in service and support trips to customers, 15% in conference, convention and event traffic, to 10% in sales and account meetings to customers. This reduction, based on travel spend in 2019, would leave a USD370 billion revenue hole for the industry, highlighted Mr Sadubin.

You can learn more about the CAPA and CTC corporate travel revenue black hole projection and some of the factors that will speed and slow the recovery of business travel in Derek Sadubin's CAPA Live Business Travel Outlook presentation.