Going back to the office and traveling are 2 different things. The office will come first.
And lest we forget - some of the biggest corporate clients, namely in tech, did
tell their employees they could work remotely for the foreseeable future.
Business travel should start to return in 2022 but I agree - it’s going to be slow and it certainly won’t get back to 100 percent of what it was for a long time, if at all
The idea that business travel will never return to 100% doesn't make sense to me, since business travel is tied to GDP. Since as the economy grows larger, naturally more business travel is necessary no matter what % of the workforce is working remotely, effectively meaning business travel would eventually come back to 100% unless you believe the economy will never grow again.
Using an example of Company A, even if Company A says they are cutting back business travel to from 2% down to 1% of expenses, 5+ years down the line as the company is 1.5x+ larger that 1% of expenses will be larger than it is today or next year, and therefore Company A will see a natural return in business travel overtime.
Let's not forget that there are also plenty of companies who won't cut travel at all vs. pre-covid in the coming years. That segment is the largest slice of the pie currently, and more companies are switching to that camp by the day.
If anything, the past year and half have proved most of the white collar jobs can be done from home. Manhattan commercial real estate is a complete disaster. A lot of companies allowing more people to have flexible WFH options and/or have decentralized offices outside of the city. Which means, they are looking to downsize their current real estate footprint.
I'm sure business travel will get back to 2019 level in a few years. But the question is when will it get back to the same % of total revenue as pre-COVID (if it ever happens). On TPAC flights, I see the corporate travel restrictions remain in place for many years.
it's a huge disaster for legacies if LCCs/ULCCs are already seeing daily booking revenue at 80+% of pre-COVID by early summer due to the domestic leisure recovery while business travel revenue is still under 70% of pre-COVID level by next summer.
TPAC is more of an issue for UA, less so AA and DL. TPAC wasn't that lucrative for the latter two (less TPAC flying might actually improve margins for AA), and for AA it only made up ~3% of pax revenues, and for UA it was ~11% of pax revenues (Q3 2019)
I wouldn't consider 70% of business travel revenue next summer a huge disaster.
Do we have any data on business class purchases? In my anecdotal experience, a lot of people are buying business class fares, albeit at a cheaper price, to improve social distancing and comfort. It’s also cheaper to upgrade; I know I’ve taken advantage of that and I know plenty of people who have done that as well.
Again, it’s anecdotal but it would be interesting to see if it’s a positive trend.
Pre-covid for Delta at least, most premium cabin purchases weren't from business travel:
"I think when you think about our premium products and services, you also ought to think that these are not only filled by corporate travelers. As a matter of fact, only -- less than a third of the seats are actually filled by the corporate travelers, and two-thirds are filled by non-corporates."https://www.fool.com/earnings/call-tran ... -transcri/