Here’s why airlines need more road warriors to hit the skies until the holidays

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As summer vacations wind down, airlines are counting on the return of more business travelers to continue their pandemic recovery into the fall.

Air travel has nearly recovered to pre-pandemic levels in the United States, boosted by large numbers of tourists — including 2019 numbers over the Labor Day weekend.

Inflation — and especially this year’s sharp increase in airfares — raises concerns about how often vacationers can afford to fly at current rates. Airlines said they saw no sign of leisure travel.

Business travel, however, remains 25% to 30% below 2019 levels, with airlines and apparel tracking sales.

And it’s unclear when — or if — the Road Warriors will return to their old travel habits.

“The overall challenge for the industry is whether the corporate traveler is coming back and coming back in sufficient volume and frequency to support these airlines,” said John Grant, analyst at travel data provider OEG. .

As the summer season approaches, air tickets have fallen

The Global Business Travel Association recently predicted that corporate travel will not fully recover until mid-2026 – 18 months later than the trade group previously predicted. Business travelers generally pay higher prices, so their absence affects the airline’s revenue and profits.

Business travel is slow to rebound because it’s more complicated than deciding whether to take a vacation after staying home for the first two years of the pandemic, said Chuck Thaxton, who heads data research at Airline Correspondence Corp., a ticket settlement firm that acts as an intermediary between airlines and travel agents.

“On the corporate side, there are so many moving parts that it just takes a little bit more to get that started again,” Thaxton said. “If you want to visit clients in New York, it means there’s no one in the office in New York. That’s slowly building back.”

Conventions and other large gatherings are another key driver of business travel, and they seem to be making a comeback, Thaxton said.

Airline officials said travel by small business operators has fully recovered, but many corporate travelers are not back on the road or in the skies. During the outbreak, some companies imposed stricter restrictions for health and budget reasons — requiring top executives to approve all travel, he said.

Andrew Watson, chief commercial officer of Southwest Airlines, said that since business travel began to pick up this spring, “it has been skewed toward small businesses and government and education have been traveling.” Our biggest companies, especially banking, consulting and technology, are lagging behind.

Watson says that among the Southwest’s largest corporate accounts, all have employees who travel — but not many, and not often.

Southwest officials said Tuesday that the next two weeks will be critical in gauging business travel demand.

The nature of business travel is changing as companies practice smaller travel budgets. Some travel is being replaced by video calls, perhaps permanently. Prospective sales trips can be especially easy for companies to cut.

Conventions now routinely offer a “hybrid” format with the option to watch online from the back – even if that means missing out on the auditorium’s talks and other networking opportunities.

In Dallas-Fort Worth, the Gaylord Texan reported operating income and pretax profit for the three months ended June 30. Grapevine Resort is a popular destination for company and group meetings. It had revenue of $134 million in the first half of 2022 – a 156 percent increase over the same period last year.

Standard & Poor’s said this week that many convention center operators are running summer and fall schedules as early as 2019, but an economic downturn or a new strain of Covid-19 remain risks.

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American Airlines chief commercial officer Vasu Raja said demand for day trips, where a person gets up in the morning and flies home in the evening, has declined.

But interestingly, we’ve seen demand for coordinated trips where someone goes from Dallas to New York on Thursday, they don’t come back on Friday, they don’t come back on Friday – they stop over the weekend and come back on Sunday. he said. Sometimes a spouse goes with them, he added.

Business travel is big business around the world. Global Business Travel Association It was estimated to be worth more than $1.4 trillion in 2019, then fell by more than half over the next two years. The trade group estimates that trade travel will reach $933 billion in 2022 after being hampered by the Omicron gap earlier this year – still 35% below pre-pandemic levels.

The spread of vaccines and better treatment for COVID-19 — along with the relaxation of mandatory quarantines and other travel restrictions — has boosted leisure and corporate travel. However, the trip is now under threat due to worsening economic conditions, including rising inflation and labor shortages. New strains of Covid-19 continue to be a concern for travel managers, particularly in Asia.

It is expected that the cost of travel will increase, putting pressure on the budget of companies. Travel management company CWT’s latest report predicts that prices paid by business travelers will increase 50% this year and 8% next year, and hotel prices will increase 19% this year and 8% in 2023.

Most US airlines posted profits in the April-June-June second quarter. It was the first profitable quarter for the U.S. and United excluding government aid since the pandemic began, and they should be in the black for the third quarter, which ends in a holiday-heavy July and August.

Business travel usually enjoys a peak in spring and another in September and October. The airline is close to finding out if that will happen this year.

“There’s been a lot of talk about, yes, business travel is coming back, and American airline CEOs are very bullish about it,” said Grant, the OAG analyst. But the hard evidence has yet to come.

David Koenig, Associated Press

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