After showing signs of a revival, business-class air travel among Europe’s three major airline groups has begun to level off, according to the carriers’ most recent earnings reports.
The average premium-class airfare in Europe has risen to a record $4,395 this year from $3,666 in 2019, the Global Business Travel Association reported, due to inflation and the recent recovery in oil prices.
Air France-KLM, British Airways owner IAG, and Lufthansa reported corporate bookings at a rate of 60 to 70 percent of pre-COVID levels in this year’s second quarter. Business bookings had been higher in the preceding three months.
Business travel in the U.S. recovered briefly as the COVID War ended but fell flat over the past 12 months, the Financial Times reported, plateauing at 75 percent of pre-2020 volumes, analysts at Melius Research found.
“Business travel may not be coming back,” JetBlue CEO Robin Hayes told an earnings call earlier this month.
His counterparts at Air France-KLM and Lufthansa “said they have written off a full recovery in domestic business travel,” the FT noted.
“It’s clear that rising costs and pricing pressures will likely continue to be a significant factor in business travel for the foreseeable future,” Suzanne Neufang, CEO of the Global Business Travel Association, said in a comment quoted by the FT.
Business travel has been worth about $1.2 trillion annually to airlines, hotels, credit cards, and other related businesses, AmexGBT calculated.
TREND FORECAST: Following politicians launching of the COVID War and people forced to work at home, in numerous Trends Journal articles, including “Bid Farewell to the Business Travel Economy” (29 Sep 2020) and “Europe’s Banks Permanently Slash Business Travel” (4 May 2021), we correctly forecast that business travel will never return to pre-COVID War volumes. What is now becoming clear to airline executives has been clear to our readers for three years: while business travel will recover to a degree, Zoom has persuaded budget-conscious executives that, in most cases, road warriors can spend most of their time off the road.
The bottom line is money, and the more money businesses can save by having less office space and cutting down on business travel, the higher their revenue stream flows.