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US Economy Challenges Limit Business Travel Rebound Opportunities – Simple Flying

Although there are some challenges to the recovery of business travel, there is still reason for optimism.
Recent economic turbulence is slowing America’s rebounding demand for air travel, especially in the business travel sector. With COVID-19 era travel restrictions winding down, business travel is returning – but the US economy is not supporting a full return just yet.
Between Russia’s War on Ukraine, rising fuel prices, and other global inflationary pressures, businesses are having a tough time balancing the books. Reducing business travel is an easy way to control costs, but there is still an underlying need for face to face meetings. With the rise of remote work, the need for in-person networking only grows. This is helping rebuild business travel, but the effect is not equal in all geographies.
TripActions is a software company helping businesses facilitate business travel and expedite travel expenses processing. The company's recently released research suggests that business travel is starting to pick up following the COVID-19 pandemic in Europe. This is helped by the increase in remote work. Michael Riegel, general manager, EMEA, TripActions, explained that,
The big change that remote work has brought to business travel has been a shift to more retreats and team meetings.
One of the things that TripActions does to help restart business travel is to ensure proper reimbursement of business travelers. In a follow-on report by TripActions called “The State of Corporate Travel and Expense 2023”, the firm stated that,

Nearly half (49.1 percent) of respondents who said they travel for business “strongly agreed” that business travel is important for driving their company’s growth, and another 35.1 percent “somewhat” agreed with this statement. That collective 84.2 percent response was up 11 percentage points from the 2021 survey, when business travelers were asked the same question.

In the US, by the early Fall, domestic business travel was sitting at around two-thirds of pre-pandemic levels. That's a good sign, but the trend since then has been companies cutting back as the reality of the economic situation begins to bite.
Employers are increasingly looking to book business travelers in economy, rather than business class. But business travelers are pushing back. According to Henry Harteveldt, a travel industry analyst for Atmosphere Research in the New York Times,
“Travelers are telling managers they won’t fly long-haul in economy if they have to go directly to a meeting when they arrive.”
Furthermore, with flight schedules becoming less reliable due to disruptions ranging from maintenance issues to airline understaffing to unruly passengers – customer loyalty to airlines is declining. Business travelers want a direct flight at a good time more than they care about building up their frequent flyer miles.
The rebound of leisure travel is also rebounding business travel. In its Q3 2022 earnings call, American Airlines' Chief Executive Officer Robert Isom said that demand from small and medium-sized businesses alongside customers traveling for a combination of business and leisure continues to outpace the recovery of managed corporate travel. Nonetheless, American Airlines is, “very bullish about overall demand” for the airline’s services despite the economy.
Alaska Airlines’ Andrew Harrison – Executive Vice President, Chief Commercial Officer – stated in the airline’s Q3 2022 earnings call business travel is up to 75% to 80% of 2019 levels. Harrison also noted that while some corporate accounts are slackening travel demand, the airline is,
“…benefiting from employees at these companies taking more personal and hybrid travel as they move around and work remotely. I fully expect that we can restore 100% of business revenue.”
Southwest Airlines has seen similar results. In their Q3 2022 earnings call, Andrew Watterson – Executive Vice President and Chief Commercial Officer – went so far as to state business travel has been recovering unsteadily, with revenues at 75-80% of 2019.
Ultimately, despite the economic uncertainty, it appears business travel is perceived by many to have value. One can only hope…
Are you able to return to business travel in the friendly skies? Please let us know in the comments.
Sources: November 22, 2022 TripActions + Skift; November 27, 2022 New York Times
Journalist – When not reading and writing about aviation, Joe is photographing it. Joe Loves educating the public about aviation, and generating enthusiasm around flying while supporting all those who work in aviation. Based in Skagit County, United States

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