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.
I agree with only the last sentence of the last paragraph. The rest of this, not with you here. From what I see within the elite communities I am a part of and my own experience, biz travel is still there, it just looks different. AA is making a mistake taking its focus off at least attempting to serve the market.
Other than trips for intra-company “team building” meetings/retreats, a lot of other pure business travel trips are shorter in duration than they used to be. But leisure and hybrid travel trips have taken less of a hit.
And for those Monday-Thursday on-site consultant types, those trips seem to involve smaller groups of traveling consultants than before. Why pay for more business travelers than minimally required.
Dont overlook the growing pressure to meet or atleast appear to pursue environmental and sustainability goals.
For large corporations, one of the easiest ways to do this is by reducing air travel.
Most of my travel now is international in business or first so my observations may not cover the overall experience.
Business class etc pre-pandemic was, by my observation, largely business travelers. Today, I would say at least half are older leisure travelers. That’s reflected by what I see in the *airline* lounges too. I emphasize airline lounges because what I see in, say, the PHX Centurion club is non-business travelers, often with families in tow.
Didn’t Isom recently report that demand for premium cabins was strong? Which makes we wonder why the dullards running AA insist on doing away with their first class seats in the 777-300s.
My business travel is 10% of 2019.
One area of travel, litigation is down because one court’s docket has barely moved.
Mixed business/leisure travel, possible because of remote working, has allowed more affluent travelers to work wherever they want and be in the office less than before covid.
Add in a post-covid willingness of more people to “buy up” to nicer experiences – not just on airlines but throughout the economy – and it really doesn’t matter how airline revenue is composed because it is doing just fine.
I’m not sure what Gary’s point is in coming back to his narrowly understood thesis over and over again.
If this is the case, why is it that elite programs are still oversubscribed? Lots of ink spilled over Delta’s recent moves, but in addition, the number of United 1K’s boarding early still feels like an entire boarding group, and I haven’t seen any year-end “catch up” incentive programs out there that make it seem like airlines are bleeding high frequency customers. Delta may still have COVID-hangover due to their overgenerous rollovers, but it just doesn’t feel like the high volume travelers have receded. Is the hypothesis really that leisure travelers are becoming high frequency travelers too?
Can’t stand all these media articles. They actually help plant the idea that it’s dead. Gary is not any kind of aviation expert.
Why is Delta and so many other airlines adding so much premium ? Take a guess …. It’s not so you can use your miles.
From the comments it sounds as though more research is needed. Still, casual observations may back up his contention. My son, for example, manages a team across the western U.S. for business telecommunications. He has never met most of his people in person as they are scattered across several states and he only has to travel to the corporate HQ once or twice a year. Yet he is very effective at managing their work. And the other day a Halifax resident told me that his city was growing because of all the people from Toronto who suddenly discovered they could move away and still work as well. That’s not “business travel” as such, but implies that more people can leave their corporate areas without harming productivity. It’s an easy step from there to saying that they don’t have to get together over space either.
The dirty little secret of all this remote work stuff is that some of these remote “workers” are not as productive as they could be and that a subset of them are working full-time (or part-time) for multiple employers in a way that is unethical and incompatible with being fully available and engaged with each employer to the extent that the employer should be reasonably expected to expect from the employment provided.
It will be interesting to see if any employers start asking for remote working employees to authorize the employers to directly access their tax filings from the IRS to see what is going on.
drrichard,
you are right. People that can are leaving the big cities esp. if they are expensive or have less desirable climate.
There are lots of companies that have allowed employees to work remotely and some employees do a very good job working that way.
However, it is very hard to instill company culture when you never know people. Companies that aren’t willing to invest in bringing people together and requiring some in-person interaction will have nothing distinctive about them – which is why people will just bounce from one employer to the next; there will be nothing distinctive in the product or service that is delivered to the customer.
I am seeing more and more companies requiring employees to come into the office for at least a couple days per week in part just to interact w/ each other unless they are working remotely w/ a client and then as part of a team.
GU,
you too are right. It is hard to believe but there are some people that work multiple jobs while others do the bare minimum or expect the government to carry them. This all started because of incessant lockdowns.
I doubt seriously that companies will be able to ask employees to provide their IRS records and the government doesn’t care if a relatively small number of people pay even higher taxes than if those same 3 jobs were done by 3 separate people.
I don’t think we fully understand what happened to work and business because of the pandemic but it is probably too late to do anything about it.
This whole article is full of crap. I work for one of the largest consulting firms and our North America teams (including myself) have been traveling more now than pre 2019. All clients want consultants back in office to justify the cost and we have a strict 3 days on site with the client. The only accurate information here is that Tuesday-Thursday travel is now a thing, rather than strictly Monday-Thursday
Actually, a couple of good points here…
…corporate work travel is definitely down. My 2019 work travel was 12 trips. 2023? 3 trips.
But, I have done a lot of hybrid travel. Work by day from the hotel in Nashville, New Orleans, etc. and be “free” at night.
Your last point, doesn’t that mean less revenue per passenger.
The airline execs are complete liars. Biz travel is way down, there are still fewer meetings and conventions, and zoom, teams are not going anywhere. Many court hearings are now done by zoom. Also there is no de-peaking as we see from the crowds at Thanksgiving and Xmas.
What has changed is that leisure travelers are splurging for biz class, but not at the same fares that corp travelers paid. Also there is an uptick in remote workers who fly in for occasional meetings (I see this at my company) but they are not weekly commuters like the consulting crew.
Sales people are still flying which is probably saving the airlines bacon. But from what I see domestic fares are way down, except for peak holidays.
Greedy corporate america as well as the government have seen what they can take away… And now they will keep going until there’s nothing left.
I am in the same field as Bk93 and agree with their assessment. Gary’s perspective on consulting teams simply doesn’t reflect the reality on the ground. Bastian’s 20% reduction is consistent with the sector-level data I have seen. In many cases, client executives want *more* face time with advisors to make up for the fact that they’re not seeing their own people as much due to hybrid policies.
Are there smaller teams traveling in some cases, sure. The main reduction I have seen is in partners not flying in for single meetings, but instead remoting in. But that is not tantamount to “death”. If we want to continue the medical analogy, I’d say business travel has undergone cosmetic surgery to remove much of the excess fat. But it is very much alive.
Less Willy Loman OPM flyers in the air means a better experience for us all who don’t rely on their corporate overlord to fly in J in peace without having to endure the company of said sad Willy
Interesting take on the state of business travel. With planes so full I wonder what the fleet capacity is related to 2019 and if leisure travel is up. I assume that with most flights full somebody is filling those seats.
My business travel has changed somewhat but not to the extreme that others have. I know employees in traditional travel jobs who no longer travel at all or only a couple of times per year compared to weekly in 2019. Many have even lost fleet vehicles, which I assume have also taken a hit in use.
The issue here is that if you told people in 2019 that “traditional corporate travel” would be down 20%, they would also assume that Delta, United, American would be bankrupt, hotels would be empty and be made obsolete by Airbnb, etc. However, passenger counts are well above pre-Covid levels, Delta and United are making good profits, hotel stocks are at all time highs, etc. And things like first class upgrade lists, hotel and airport lounges, etc are dramatically more crowded than they used to be. So if you are right – and I’m not saying that you are, but let’s assume so for now – the more interesting question is who is actually traveling and replacing that lost traditional business travel.
As far your overall point, there is more nuance needed. Yes, consulting travel is down, and maybe some areas like tech are down too. But I see financial services related travel really picking up, and it could grow more next year if capital markets open up. I also observe a lot more travel from areas like entertainment / sports media than I used to remember. And conventions seem to be coming back too in a lot of industries. So I think the “traditional” picture is a bit more mixed than you admit. 80% of pre-covid volume seems right to me.
Also – hotel companies keep saying that small and medium businesses are well above 2019 levels. Airlines say it too. I do seem to see more small business types who are “traveling” for work, likely putting all their travels on business cards or personal airline cards and booking direct as opposed to “managed” business travel. They can decide when and where to travel and seem to be doing so with more frequency. Also, the flights from NYC to Florida seem to be increasingly filled every month with people “commuting” to work in both direction, staying at one of their homes for a few days on each end. Is that “traditional” business travel?
The fact that the travel industry seems to be navigating this era fine either says that we are not measuring business travel correctly in 2023/2024, or business travel’s importance was always overrated to begin with….
I would also note when I traveled for work the Airlines usually received extra revenue. Paying $700 for domestic economy was not unusual because there was short notice.
These days it’s just conferences, team building or visiting the employers office. All of which are scheduled in advance using cheaper tickets.
I used to go up to HQ almost every week, as a quick day trip. I haven’t been up there since March 2020. I’m in a customer-facing role: everything is Teams or Zoom. Our execs are loving the bump in our margins from the reduced/non-existent T&E and the resulting increase in our stock price.
I am not seeing business travel returning to anything close to the pre-Covid normal in banking, finance, or law and wouldn’t expect it to return anytime soon. I can see how leisure travelers can pick up the slack in the aviation market, but how center city hotels in places that don’t attract many tourists (i.e., Detroit, Cincinnati, Houston, Dallas, Philadelphia, etc.) are surviving.
Bk93 you are the one full of cr..ap. Everyone knows that businesses travel is down and may continue to be down indefinitely. Just because you are traveling a lot does not mean other are. Covid 19 fundamentally changed the way we do business. Instead of criticizing, look at the statistics across the polling agencies and you may come to grasp the new reality.
I don’t travel as much for work because customers realized they don’t need us onsite to accomplish our goals. I’m okay with this. Going from South Carolina to Ottawa to Boston on a single trip and having completely different weather to pack for with each was endlessly tiring. I’ll give up the points for convenience, particularly since points aren’t worth dick anymore
Thankfully for the airlines, the booming economy of the past few years has enriched more leisure travelers so they can buy the first/business seats previously given away for free to road warriors.
You’re right on point Gary. I have been in IT consulting for 20 years (longer in IT) and my work has completely transformed. I used to dread Sunday nights due to 4 am Monday morning wake up times, followed by a 6 am flight, just so I could make it to the client office by 10 am. Then 12 hours on Tuesday and Wednesday before leaving at 3 pm on Thursday and free time on Friday.
Those days are long gone. Since 2020, I have been 100% remote with occasional lunches with my boss and colleagues once every few months (live in the same city as the client). No one seems to want to drive to meet. Some of my colleagues have moved to other states and continued their jobs.