BA hopes wealthy tourists can plug corporate hole
British Airways is banking on wealthy tourists to help plug a collapse in the number of business travellers. Many airlines are dependent on big-spending corporate travel and there are fears business will never return to pre-pandemic levels.
But BA boss Sean Doyle said there had been significant growth in tourists opting for the airline’s premium seats.
The leisure sector will be a “buffer” until business travel picks up, the head of Britain’s biggest airline said.
Mr Doyle was unsure if corporate travel would ever return to pre-lockdown levels. But he said in a webinar with Aviation Straight Talk: “A lot of people who travel in our premium cabins are travelling for leisure, or visiting friends or relatives.”
It had been growing over many years, and he saw no sign of a let up. “That gives us a very effective buffer if the corporate segment is not recovering at the pace of other segments,” Mr Doyle said.
Much corporate travel has ground to a halt during the pandemic. The rise of video conferencing via the likes of Zoom and Teams, and growing concern in the corporate world about its carbon footprint, has led to speculation business flying will be very slow to recover.
On Monday, the Financial Times reported that European banks plan to slash corporate travel by up to half as the world emerges from lockdown.
The FT said banks are keen to learn the lessons of remote working, as well as save money on travel and bolster their green credentials. Some plan to ban air transport within Europe in favour of using the train.
However, Mr Doyle said that predictions corporate travel will never recover are overstated: “I’ve heard a lot about dissatisfaction with home working and people being fed up with Zoom meetings.”
Executives had recently stressed to him the importance of face-to-face meetings. “People do business with people, not organisations,” he said.
Evan Konwiser, a vice president at American Express Global Business Travel, said there are already signs corporate travel is picking up quickly. “Business travel is returning where [lockdown] restrictions have been lifted,” he told the BBC. “China is back up close to 2019 levels.”
There will always be a need for business travel, he said. “People might be able to sustain relationships using video, but it is difficult to build new relationships through this medium.” Some executives point out that the death of business travel has been predicted before.
Jeffrey Goh, chief executive of the world’s biggest airline group, the Star Alliance, which includes Singapore and United, said the emergence of Skype years ago was supposed to signal the death knell of corporate travel. It didn’t happen.
Nevertheless, he told the BBC’s Business Daily radio show that the aviation industry should plan for, perhaps, a 20% fall in business travel. “The majority of airlines that have depended on business travel revenue should be able to meet the challenge,” he said.
Business travel consultant Scott Gillespie is not sure major airlines will be able to make up the lucrative, high-margin dent to corporate travel revenues with tourism business.
He said that there will be pressure from companies’ finance departments to push more executives towards video meetings. “[Finance chiefs] have seen in the last year that they can do virtually no business travel, and most businesses have still succeeded,” he said.
The last year has proved that virtual meetings are good enough, carbon free, and far cheaper than getting on a plane, Mr Gillespie said. “Even seasoned business travellers are admitting that they don’t need to travel as much as they used to,” he said.
International travel is due to resume from 17 May under the government’s roadmap to reopening, with plans for a “traffic-light” system categorising different countries.
However, the list of countries that Britons can travel to will not be known until nearer the date and will be subject to change.
That has prompted a surge in bookings with tour companies, although there are signs people are delaying holidays until the autumn rather than taking them in the summer.
Mr Doyle said he was confident about the aviation industry’s recovery, pointing to comments from European Commission President Ursula von der Leyen that vaccinated US tourists would be welcome in Europe this summer.
“Opening up an air corridor is something that can be easily achieved if we have the will on both sides of the pond,” he said.