Why Traditional Business Travel Is Dead – Even Years After The Pandemic
In early 2020 white collar professionals stopped going to the office. People worked from home, and went online. They stopped flying. And there were varying schools of thought on how much they’d return to office and return to business travel.
Some people were waiting for the economy to tighten, expecting employers to insist that everyone go back to office and get back on the road. Others thought it was just a matter of time.
Regardless, the return of business travel has been greatly exaggerated. And it’s not just that zoom calls work for many meetings that used to be in person, or that people got used to them. The biggest driver of the drag in business travel is work from home. ‘Rreturn to office’ isn’t changing this.
- Most airline executives report that business travel has returned to 75% – 80% of pre-pandemic levels.
- But this exaggerates how much of business travel is back, because it’s relative to 2019 and not to the trend that was in place at that time. 2023 is far more than 20% – 25% below trend.
When people aren’t in their office every day that makes it tough to coordinate visiting clients in their offices. It happens, but it is more involved. You need to be there when the right group of people are there and there’s less chance they overlap compared to the past.
More importantly, a huge component of managed corporate travel was the road warrior consultant doing Monday to Thursday fly outs to work on-site at client offices. That is largely gone. When the client doesn’t have everyone in office every day, the consultant doesn’t need to be in-office.
Crucially here is what has happened not to the number of companies working from office, but to the number of work days – even people with office jobs aren’t working from office every day.
- There’s more than 3 times as much work from home compared to before the pandemic
- This hasn’t changed much in the last 3 years
The percentage of paid full days worked from home, per CNBC: pic.twitter.com/AW2pauWDeX
— unusual_whales (@unusual_whales) December 12, 2023
Even claiming that business travel is thriving Delta CEO Ed Bastian says it is “about 20% below” 2019. And he acknowledged that traditional corporate travel is largely dead, “people aren’t traveling for managed business.”
However he sees remote work as good for leisure travel, and it de-peaks holiday travel days as people work remotely and take longer trips. And he thinks it’s easier than ever to get on the road for work, too.
The trend clearly suggests that managed business travel isn’t just lagging but also that it isn’t rebounding. Ryan Bingham just isn’t flying like he used to.
I think the American Airlines hypothesis takes things too far. They’ve basically fired their sales team and eliminated most corporate deals as well as dedicated customer assistance, not to mention gutting their small business rewards program (replacing Business ExtrAA with AAdvantage for Business). They think that they can fill their planes without this discounting, so they’re giving away revenue. They can both improve revenue and save costs without this component.
That may not work well in any downturn when they aren’t filling planes, and it doesn’t work as well paired with revenue management that seemed to overprice flights for the Thanksgiving holidays and left them with lower load factors (more empty seats) than competitors.
Consultant road warriors aren’t filling planes like they used to, but planes are full. More of the professional class find themselves taking trips, and working from wherever they are. And they bring their families with them!
They also need to travel to the office to get together with co-workers, maybe quarterly, twice a year or just annually, but these bring people together for team and culture-building who did not even used to travel. All of this means that the typical airline customer is different from who they used to be.
