On CNBC this morning United Airlines CEO Scott Kirby said he likes that pilot wages are going up, which is really saying he likes pilot shortages, because of what that does to competitors. Low cost carriers can’t hire pilots cheap, eroding their relative cost advantage against United.
He also revealed something interesting about business travel: it’s not continuing its recovery, and specifically that it has “plateaued”. In other words,
- A lot of small business travel has come back, while managed corporate travel ahs remained off by at least a third.
- Trips have changed. People working remotely may fly to the office monthly instead of commuting daily. That’s good for airlines. And business travel may get spread out more.
- The traditional consultant week, fly out to a client site on Monday and back on Thursday afternoon, just doesn’t exist in the same way anymore because companies that are back in office may not be in office every day, it isn’t necessary to work from a client’s site week-after-week for many.
This is a natural time for business travel to lull anyway, but as we head into a likely recession, one of the first things many big companies cut is their travel budgets. And with budgets being finalized for 2023 we may not see substantial further recovery in managed corporate travel in 2023.
It’s been a good time for airlines, with capacity still constrained in many markets and travel demand strong. That could soften for leisure without business travel making up the slack. But it also points to longer-term ways in which business travel may have changed.
To be sure, business travel may return to pre-pandemic totals (level) simply by virtue of growth, but it may not return to trend meaning it won’t be as high as it would have been had the pandemic not changed the nature of work for corporate middle managers.