Business Travel in Decline in Post-Covid Era

“Business travel will be hit harder than leisure,” said Pascal Fabre, a managing partner at the firm in Paris. “There will be a long-lasting effect from hybrid working and reduced corporate spending on travel.”

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European airlines like Air France-KLM and IAG SA’s British Airways benefited from a rebound in regional travel this summer and are adding more capacity after the U.S. lifted border restrictions this week. Yet a full recovery to pre-crisis levels of overall flying worldwide isn’t expected until around mid-decade, AlixPartners said.

Airlines, financially weakened and debt-laden coming out of the Covid crisis, are holding out hope. Shai Weiss, chief executive officer of Virgin Atlantic Airways Ltd., said this week that he expects a full rebound in business travel by 2023. But IAG chief Luis Gallego said it is likely to remain as much as 15% lower than 2019 levels by then.  

In the meantime, the sector is pushing ahead with more cost cutting, aggressive fleet deals and simplification, and the sale of non-core assets. Consolidation could also be in the offing, as stronger carriers wear down weaker ones with lower pricing. 

“They are trying to keep discipline on capacity but there is a high risk of a market-share fight,” Fabre said. “The conditions are ripe for fare wars.”

For the lucrative business-travel segment, the biggest threat comes from cutbacks in internal meetings — which make up roughly 40% of corporate travel — while trips to meet customers are more likely to be maintained.

“It’s going to be very complicated for some airlines,” he said, predicting a rethink of networks and cabin configurations.

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