Colin Nagy | April 15, 2021
The Business Travel Edition
On flying, premium cabins, and turnarounds
Colin here. There are clear signs that the travel industry is recovering. Passenger volumes are up at airports to the point that if sat in a popular spring break terminal and squinted, you might think there was no pandemic going on.
Judging by the highly anecdotal posts and volume of jobs and hiring announcements from friends in the hospitality industry, there’s an expectation that a full recovery is coming soon.
But the big question for the industry is what will happen to business travel? Pre-pandemic, companies would think little of flying executives around the US, and around the world, in highly expensive business class cabins, often for a one or two-day meeting on the ground. Some of these international flights cost the price of an entry-level Rolex—an astounding price per hour.
Why is this interesting?
The existential question for airlines and hotels that served this market is: in the days of comfort with Zoom, will these glory days of profitable premium cabins and hotel nights ever return? Sure, there’s the ever-present argument for face-to-face interaction when it comes to building rapport and closing deals, but did we go a little overboard in the pre-pandemic days? The CEO of Virgin Atlantic tends to think so. In a recent interview with the FT, Shai Weiss shared his thoughts:
The airline expects corporate travel will be 20 per cent lower over the next two years compared with pre-pandemic levels, with questions over whether business class will ever make a complete recovery, Shai Weiss said in a Financial Times interview.
“Will business travel return in the same way? No, I don’t think so. But do I think there will be a return to business travel? Absolutely,” he said.
Airlines have reported strong demand for leisure trips when borders open and people can travel, but one of the biggest questions facing the industry is how many lucrative corporate clients will be lost forever to remote working and the successful rollout of video conferencing technology.
PWC says that business travel, often in the front of the plane, contributes to up to 75 percent of revenue on many flights. A United flight attendant remarked to me back in the day on their now-defunct PS transcontinental service that “even if the back of the plane was empty, if our premium cabin is full, this flight can make money.” So what will become of business travel? If the CFO had the final say, everything would likely be a video conference. On the other hand, there’s also a chance that many more people in the company will now travel. I have heard a few stories of companies that have gone fully remote planning all-company offsites in a new city.
At the end of the day, it is the soft power of business travel that will give it a fighting chance—seeing colleagues in other offices, a change in pace from the day-to-day life at home, sometimes the occasional boondoggle in the form of a conference with some R&R attached. I can attest to the business value of seeing new markets, getting inspired, and the disassociative yet familiar feeling of jet lag. But there’s also an irrational element to business travel that, good or bad, is a factor that has to be priced into these predictions. It was never entirely logical. (CJN)
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Thanks for reading,
Noah (NRB) & Colin (CJN)
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