A new study by IdeaWorks and reported by the Wall Street Journal is the first detailed look at the effect of Covid-19 on longer-term airline business travel. The study breaks down the reasons people have traveled for business, assesses the effects of technology, work at home changes, and overall risk tolerance, and validates this with a wide range of industry and travel experts. As a result, this study is robust and more complete than any done since the pandemic began.
The four largest US Airlines should take note and all airlines will be affected in some ways if this estimate proves to be accurate.
Multiple Reasons For Business Travel
The study determined the reasons people travel by air for business, and then used data sources to size each category as a percentage of the total. In September, United CEO Scott Kirby said “I think it may take a year or two until you get back, but we’re firmly in the camp that believes business demand is going to come back.” He stepped back a bit from this a month later, but like others he may have been thinking about business travel in too limited a way. I have heard some industry people say things like “As soon as a business loses a million dollar client, they’ll be back on a plane to repair the relationship”. This may be true, but travel to support sales and revenue generation is just 25% of the total business travel population. Intra-company meetings make up a surprising 20% of all trips, and 5% are even people who commute by air for their job.
By looking at the multiple reasons that people travel, this study was able to better assess the reasons it may or may not return. This could be because of technologies like Zoom and Microsoft Teams, but also could be because more people will work at home or some may have changed their personal risk profile. Since people travel for different reasons, it is logical to assume that their approach to future travel would be affected in different ways. Consider a commuter who has flown every week from a home in Florida to a job in NY, for example. Going forward, they may still make this trip but will they make it as often? If the company is more comfortable with technology and more workers are at home anyway, would an every week trip still be necessary? The point is is that for each category, it’s not as if it is all or nothing. Yes, people will again travel for business reasons but not at the rate they used to
Using this idea and testing it with multiple industry-knowledgeable people, the study concludes that between 18% and 36% of the total business traffic base will not return to the skies. This is based on ranges for each category of business