Moderators: richierich, ua900, PanAm_DC10, hOMSaR
32andBelow wrote:Goldman is going back to the office next month. The fake work from Home jobs are about to end.
Nicknuzzii wrote:Going back to the office and traveling are 2 different things. The office will come first.
joeblow10 wrote:Nicknuzzii wrote: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
tphuang wrote: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.
avi8 wrote: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.
Midwestindy wrote:joeblow10 wrote:Nicknuzzii wrote: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.tphuang wrote: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.avi8 wrote: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/
tphuang wrote: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.
32andBelow wrote:tphuang wrote: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.
No they proved you can work from home in an environment where everyone is working from home. They have not proved they can work from home while their competitors are on the road making in person visits.
tphuang wrote:32andBelow wrote:tphuang wrote: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.
No they proved you can work from home in an environment where everyone is working from home. They have not proved they can work from home while their competitors are on the road making in person visits.
Do you have any idea how many people work in white collar jobs that don't require making road trips?
Nicknuzzii wrote:Going back to the office and traveling are 2 different things. The office will come first.
32andBelow wrote:tphuang wrote:32andBelow wrote:No they proved you can work from home in an environment where everyone is working from home. They have not proved they can work from home while their competitors are on the road making in person visits.
Do you have any idea how many people work in white collar jobs that don't require making road trips?
Those people aren’t relevant to this conversation. Also I’d say if those people continue to work from home some of them may move. And then they WILL be traveling several times a year to the home office.
FluidFlow wrote:Midwestindy wrote:joeblow10 wrote:
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.tphuang wrote: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.avi8 wrote: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/
I think the problem is not the return to 100%, that will naturally happen as you said, the problem for the legacy carrier and what they are saying is the mixture of business to leisure traffic might never reach the level of 2019.
Very simple: If in 2019 two People travelled for business and 8 for leisure and the two people paid 10 dollar each per ticket and the leisure pax 1 dollar each, the airline industry made 28 dollars. Now DL as an example can offer 5 seats and offers 2 business and 3 leisure, they have 50% market share and make 23 dollars while F9 offers 5 leisure seats and makes 5 dollars. To cater to business clients the operation of DL costs 20 dollars and the operation of F9 costs 4 dollars.
DL has 3 dollars profit, F9 has 1 dollar profit.
Now if in 2030 there are two People travelling for business and 18 for leisure: DL offers 4 business seats and 6 leisure seats, F9 offers 10 leisure seats. 2 leisure travellers find no ticket.
DL spends 40 dollars on operation, but only makes 26 dollars --> massive loss
F9 earns 10 dollars and spends 8 --> good profit.
Even if Delta would offer 2 business seats and 8 leisure they only make 28 dollars and would have to spend roughly 24 dollars. Delta would still make a profit, the growth was only from 3 to 4 dollars (+25%) while F9 grew 100%.
This also includes for Delta to change their fleet less business seats, and in the long run a reduction of comfort to reduce costs to compete with F9.
frmrCapCadet wrote:About no one has said business travel has come to an end. But an awful lot of it was simply not economically justified. In the end the ultimate customer has to pay for it. And those ultimate customers are going to trim business travel to some degree. I would tend to go along with Gates's 50%. Those companies will win who can discern what the most important business travel is essential, or almost essential.
Midwestindy wrote:FluidFlow wrote:Midwestindy wrote:
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.
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.
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/
I think the problem is not the return to 100%, that will naturally happen as you said, the problem for the legacy carrier and what they are saying is the mixture of business to leisure traffic might never reach the level of 2019.
Very simple: If in 2019 two People travelled for business and 8 for leisure and the two people paid 10 dollar each per ticket and the leisure pax 1 dollar each, the airline industry made 28 dollars. Now DL as an example can offer 5 seats and offers 2 business and 3 leisure, they have 50% market share and make 23 dollars while F9 offers 5 leisure seats and makes 5 dollars. To cater to business clients the operation of DL costs 20 dollars and the operation of F9 costs 4 dollars.
DL has 3 dollars profit, F9 has 1 dollar profit.
Now if in 2030 there are two People travelling for business and 18 for leisure: DL offers 4 business seats and 6 leisure seats, F9 offers 10 leisure seats. 2 leisure travellers find no ticket.
DL spends 40 dollars on operation, but only makes 26 dollars --> massive loss
F9 earns 10 dollars and spends 8 --> good profit.
Even if Delta would offer 2 business seats and 8 leisure they only make 28 dollars and would have to spend roughly 24 dollars. Delta would still make a profit, the growth was only from 3 to 4 dollars (+25%) while F9 grew 100%.
This also includes for Delta to change their fleet less business seats, and in the long run a reduction of comfort to reduce costs to compete with F9.
I definitely agree with you that the mix of business to leisure likely won't ever be the same. Not sure I agree with your point on profits though, since I think future profits are slightly more complex.frmrCapCadet wrote:About no one has said business travel has come to an end. But an awful lot of it was simply not economically justified. In the end the ultimate customer has to pay for it. And those ultimate customers are going to trim business travel to some degree. I would tend to go along with Gates's 50%. Those companies will win who can discern what the most important business travel is essential, or almost essential.
I'll bite:
So business travel is currently at 25% of 2019, what assumptions are you making, that would make business travel only recover an additional 25% in the next 5 or so years?
Also, the customer does not always pay for travel, in fact a large subset of business travel isn't paid for by customers.
32andBelow wrote:Goldman is going back to the office next month. The fake work from Home jobs are about to end.
slcdeltarumd11 wrote:[twoid][/twoid]32andBelow wrote:Goldman is going back to the office next month. The fake work from Home jobs are about to end.
People might be headed back to offices but business travel certainly won't be back in real numbers for a very long time.
The legacies are gonna become even larger domestic leisure carriers for a while. That demand will sky rocket later in summer. They will have the capacity
slcdeltarumd11 wrote:[twoid][/twoid]32andBelow wrote:Goldman is going back to the office next month. The fake work from Home jobs are about to end.
People might be headed back to offices but business travel certainly won't be back in real numbers for a very long time.
The legacies are gonna become even larger domestic leisure carriers for a while. That demand will sky rocket later in summer. They will have the capacity
Midwestindy wrote:Updates this week:
Average fares are 15% higher vs. 2019 than they were in March, yields are even closer to 2019 accounting for the average stage length being shorter.
All outdoorsy tourist spots are above or close to 2019 capacity levels
Mexico & Caribbean continue to carry the vast majority of international traffic.
https://www.airlines.org/dataset/impact ... -updates/#
Rental cars are starting to become a big issue:
I took this at MIA yesterday, didn't think to take a picture until I was almost out of the lot, but the lot was barren and the lines even for rewards members were long. Took another 15+ minutes to exit once we already got the car since the line to exit was so long:
https://www.wtoc.com/2021/05/06/patienc ... -shortage/
"The average price for a four-day rental jumped from $260 in February to $321 in March, and hit $388 during the final week of April, according to data from travel search tool Hopper."
Remember all those flights added to BZN?? Welp:
"Bozeman, Montana, was the most expensive city to rent a car in during the final week of April, with an average price of $259 per day, according to travel search website Kayak. That’s up 278% compared with 2019."
"Hawaii, which has a tougher time bringing in new cars, has also seen steep increases. Four of the 10 most expensive cities for car rentals were in Hawaii, all of which saw prices more than double compared with 2019, according to Kayak."
https://www.chicagotribune.com/business ... story.html
SRQLOT wrote:I flew Thursday and TPA was slammed! And LGA and ORD were also very busy, I have seen the ticket prices skyrocket where I had to reevaluate my summer travel plans. Obviously with most airlines still updating the schedule a month at a time it’s hard to figure out if those prices are set or something of they will drop.
seatown1 wrote:Airports are packed today. I think it'll be the new covid-era record. We'll find out tomorrow.
32andBelow wrote:seatown1 wrote:Airports are packed today. I think it'll be the new covid-era record. We'll find out tomorrow.
I think it will for sure. I think people leave on wed Thur Friday and then it all compresses to Sunday for the return
AmericanAir88 wrote:SRQLOT wrote:I flew Thursday and TPA was slammed! And LGA and ORD were also very busy, I have seen the ticket prices skyrocket where I had to reevaluate my summer travel plans. Obviously with most airlines still updating the schedule a month at a time it’s hard to figure out if those prices are set or something of they will drop.
LGA was packed? Have not heard that in a while. What airline?
Hopefully airlines continue to add back to NYC.
SRQLOT wrote:AmericanAir88 wrote:SRQLOT wrote:I flew Thursday and TPA was slammed! And LGA and ORD were also very busy, I have seen the ticket prices skyrocket where I had to reevaluate my summer travel plans. Obviously with most airlines still updating the schedule a month at a time it’s hard to figure out if those prices are set or something of they will drop.
LGA was packed? Have not heard that in a while. What airline?
Hopefully airlines continue to add back to NYC.
Deltas terminal, my flight from Tampa was full on the A320, it could be just that area though.
And ORD was packed on American side on Sunday during the morning rush, couldn’t find a nice quiet spot. So yeah definitely getting back to normal.
Nicknuzzii wrote:Going back to the office and traveling are 2 different things. The office will come first.
32andBelow wrote:Rental car companies really blew it liquidating everything