The Airline Business Travel Problem Is Real And Deep

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About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Gary, that was a great YouTube presentation. I am retired but maintain Platinum status on Delta because I enjoy travel. I recently had fourteen segments from IND to LAS the last six weeks. I was upgraded on all. My seat mates had interesting stories I would never have heard just a couple years ago. Silver medallions told me upgrades are easy as I know how hard they are to get from LAS to MSP or DTW where Delta hubs are. They all stated business travel is way down. Also two of the flights had empty seats In first. Are you kidding me? It’s obvious the planes had no other medallions to be upgraded. Don’t agree with your politics. Do agree with your mask stance on planes. The flight attendants on twelve of the fourteen were great. Keep up the non political interesting stories as this.

  2. I work for a place that has curtailed all business travel for the UnVaxxed and all business travel for the Vaxxed needs Director & VP approval. It won’t be processed by our OTA without the approvals. A justification for must be filled out why it CAN’T be virtual. Needless to say travel is severely curtailed.

    My personal side of this is that I could care less how much the airlines are hurting from the lack of business travel. I have always had a us vs them view. they gouged us for ~10 years because they could. What goes around comes around. Eff em.

  3. After the offices get filled back up with office workers, office travel will then pick up even more. Work-paid travel is also a tool that gets people an escape out of the office or even family life, is used as a reward mechanism in offices, and is part and parcel of office hierarchy signaling. For all these reasons and more, work travel will eventually recover … after offices start filling up again stay pretty filled up. But this sort of assumes that eventually “be back in the office” employer mandates become more widespread.
    more wide

  4. The video about business travel focuses quite a bit on domestic travel. For international business travel, a decidedly more profitable endeavor for large airlines, it’s certainly much worse and likely to stay depressed for a generation. I work for a large global company that is likely representative of others like it. My team alone typically spent $600k to $700k per year for T&E up to 2019, with most of that cost being international business class fares. That plummeted to $120k in 2020, with nearly all of that spending in the first quarter. After March 2020, it was nearly zero. By spring 2021 (before the delta variant was a concern), the world started opening up, international travel restrictions started to lighten, offices started re-opening, and masks were coming off. So one might think that would translate to some brisk T&E spending, but the numbers say otherwise. So far in 2021, we have spent only $5k, even despite those halcyon days earlier this year. That $5k represents zero international business class travel, with absolutely none planned for the remainder of 2021. And with delta now out of control (and the lamda and other variants right on its tail), hospitals at capacity, and breakthrough infections increasing for the foreseeable future, that travel pattern is unlikely to change anytime soon booster shots notwithstanding. The original wave of Covid hit its apex in January 2021, so if its follows the same seasonal pattern, by January 2022, we would be at another crisis and total standstill of T&E spending.

    As we plan budgets and strategic plans for 2022-2025, we are looking at permanent significant reductions in travel budgets, as the standard for meeting is now virtual and will remain so after the pandemic has subsided. Going forward, there must be a compelling reason stated that meeting must be in person. And with increasing attention on sustainability, filling jets with travelers who could exchange the same information (without the jetlag, expense to the business, or carbon emissions) is not a realistic future. Perhaps for those in sales or related fields, there may not be an easy substitute for in-person meetings and demonstrations, but for the rest of the corporate staff, the demand just won’t be there. Likely by 2023 some of the business travel will have resumed, with slow growth in the years after that. But it’s difficult to envision a time when travel–especially the very lucrative international business-class travel– will ever return to 2019 levels. At least not in this decade.

  5. This is an aside, but it ties in with personal contact vs. remote conferences. My daughter (MA in writing) is looking for an editing assistant or writing staff assistant job. She has been told the competition is really steep IF she wants remote work, because everyone and his brother–a college grad with a BA degree in any field considers him/herself a ‘writer’–wants to work from home or become a digital nomad.

    However, if my daughter is willing to relocate and/or go into an office setting (which she is more than eager to do, she hates being isolated at home), then there are job openings available.

    The takeaway is that even in organizations which don’t require a physical presence, a physical presence with personal contact is still preferred.

  6. The adaptation that airlines will probably make for a loss of business travel is eliminating first class and business class seats, and the services around them, and more coach seats + higher coach fares.

    It’s also going to push airlines towards revenue-based loyalty programs (that represent straight rebates) and away from “we’re going to let you redeem miles for aspirational travel where you get arbitrage on your miles”. If you’re not selling the occasional million dollar glass of lemonade to a corporate customer, you can’t give the occasional glass of lemonade to someone who is redeeming miles. You’ll just turn the excess J/F seat inventory into premium economy or economy.

    I would think what you will see happen is secondary/tertiary markets lose longhaul service, and we see more Southwest and EasyJet and less United and Singapore Airlines. More WFBF and less upgrades.

  7. @ GU Wonder — But, the offices will never be filling up again. We will ever return to the 9-5 office grind. I’m seeing much better offers on office space in my market, and they will get WAY cheaper as companies shrink their office footprints. There will be a bloodbath in the office real estate sector within 5 years. No Fed bailout will stop that new reality.

  8. So how do or did the federal bailout funds to airlines play into this? Are they included in the revenues noted in the video?

  9. Sucks for the airlines that they bet everything on OPM travel in 2018/2019 with the stupid revenue requirements for status that catered to mainly those who only fly for their corporate overlords.

  10. By 2025 you WILL be paid less unless you are executive level if you work remote. Business consultants are already advising clients of this, and their preliminary research has shown that over 60% of people are willing to take a pay cut in order to work remote. The 90’s and 2000’s were all about offshoring manual labor/factory jobs. The 2020’s will be all about remote offshoring white collar jobs. You’ve been warned if you think your white collar job is safe. Sure it will be nice to work remote, until the same accountant or business analyst in India will do it for half the salary remote as well. In office meetings and relationships were the only thing preventing this from happening. With those gone, kiss those mid level white collar jobs goodbye.

  11. Gene,

    I don’t disagree and thought the same as you, but I’m seeing more and more employers mandating employees back into the offices or preparing to do so. And while I think that it generally makes little sense to spend money on office space more than minimally “required” and that there should be a realization that an increased mix of remote work is good all around, on-site management of employees has a way of working that remote management doesn’t — even more so with new hires and possibly even those who may be more able and willing to jump ship more frequently in a world more full of “remote work” opportunities.

  12. GU Wonder what makes you think the offices will fill back up. In my state many employers have give up their physical office space in lieu of theyr’e employees working remotely usually at a big savings. The office space vacancy rate is the highest in recent memory. The pandemic changed the way we live and work permanently

  13. No need to worry about the airlines. The government will just continue to bail them out. They are more relevant to infrastructure than many things in those bills so I would expect some cash to be tossed their way out of the 4 trillion or so.

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