Neither of those things is happening the way US airlines had counted on.
“Delaying back-to-office has an effect on business travel,” said Philip Baggaley, chief credit analyst of transportation companies for Standard & Poor’s. “It’s harder to put together a trip where you see a bunch of different clients. And company travel policy can become more cautious.”
In July, a survey of members by the Global Business Travel Association found 68% said they planned to begin business travel sometime in next three months. By August, that had dropped 35%.
“It’s a pretty dramatic change of plans,” said Adam Sacks, president of Tourism Economics. “We expected to see some traction from business travel in the fall. Now we’re not certain when it will happen.”
Hot summer for travel
But more-lucrative business travel is far more important for the airlines’ finances, and they had been counting on a fall rebound as the summer began.
But those expectations quickly changed as the number of Covid cases climbed and offices delayed reopening.
“It certainly seems that with delayed returns to office that those plans will probably be a little more muted,” Vasu Raja, American’s chief revenue officer, said at a subsequent investor conference just five weeks after the remarks by Isom. “We do anticipate that there will be a slower recovery in business demand than what we’ve seen, but there will still be a recovery in business demand.”
But Baggaley said if the delayed rebound in business travel is a setback for the airlines, it should only be a temporary one.
“It’s been a pattern of a choppy recovery, but with a clear trend up,” he said.
Just as there was pent-up demand for leisure travel, Sachs said, there’s been even greater pent-up demand for business travel.
“If the last year and a half has shown us anything, it’s difficult to look through each wave of the pandemic and see where travel is headed,” he said.