January 17, 2021

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Empty skies: Business travel has lost $710 billion in the pandemic. Will hotels and airlines ever claw that back?

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Bill Gates, the billionaire founder of Microsoft Inc., told CNBC in November that “over 50 per cent of business travel and over 30 per cent of days in the office would go away” — a prediction dismissed by Ed Bastian, chief executive of Delta Air Lines, who countered that the Microsoft founder was not qualified to forecast the future of corporate travel.

Yet even within the travel industry, there is uncertainty about how much business travel will return.

Jeffrey Goh, chief executive of Star Alliance, the world’s largest airline group, predicts there will be a “structural change in terms of the business travel segment” that could leave the sector up to 30 per cent smaller. Yet Carsten Spohr, chief executive of Germany’s Lufthansa — a Star Alliance member, insists that business travel is set to return quickly. “Whenever I talk to corporate customers, there’s such a backlog of travel needs,” he told a recent analyst call.

“There is a grey area and lots of unknowns in relation to business travel,” says Martin Ferguson, vice-president of public affairs at American Express Global Business Travel, one of the world’s largest corporate travel management companies. “At the moment you can’t travel so even if you wanted to, you can’t.

“(What) we don’t know,” he adds, “is how many people will choose not to (travel) when they can.”

A seat in business or first class is on average five times more expensive than in economy, according to The International Air Transport Association, (IATA), the global airline trade group, and airlines rely on these premium seats for 30 per cent of their revenues. Photo by Kevork Djansezian/Getty Images

Pre-emptive action

The explosion in air travel during the 1950s and 1960s triggered exponential growth in the number of executives criss-crossing the globe. They have long propped up the industry by expensing higher priced, refundable airfares and more expensive hotel rooms with space for work and, more recently, Wi-Fi facilities.

Financial Times


2021-01-14 14:42:14


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