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After a brief hiatus due to the pandemic, business travelers are returning to business as companies step up return-to-office policies and in-person meetings with customers.
— Meghna Maharishi
Airlines have reported record business results every quarter since the pandemic. International travel and premium travel are the main drivers. But in the most recent quarter, airlines received a big boost from business travel, a segment many thought was gone.
Delta Air Lines saw a 14% increase in corporate bookings, with financial services, technology and customer service industries leading the increase.
Delta President Glenn Hauenstein said 90% of companies surveyed about corporate travel said they planned to increase travel in the second quarter. This could help Delta Air Lines achieve record corporate profits in the second half of this year.
Return to pre-pandemic norms
Before the pandemic, corporate travel was a multi-trillion dollar business. But it was too late to get back. As people return to the office, companies are cutting back on travel budgets and instead meeting with customers over video conferencing platforms like Zoom.
Jonathan Kretzel, PwC's U.S. aviation and travel practice leader, said that while business travel is not quite at pre-pandemic levels, higher airfares are leading to higher revenue for airlines.
“We're at a point now where enough volume is coming back at a good price that people are saying, 'Okay, corporate travel is back,'” he said.
Kretzel said the growth in corporate travel is primarily being driven by large companies with large travel budgets and return-to-office policies.
“We're seeing a lot of businesses getting back to work, and as they get back to work, they want their suppliers to be there as well,” Kretzel said. “I have the opportunity to visit clients.”
Corporate bookings drive revenue in Q1
United Airlines also saw a 14% increase in corporate bookings in the first quarter. “The strength of resilience in business passenger numbers is an excellent development for an airline like United,” Andrew Nocera, United's chief commercial officer, said on a call with analysts.
And West Coast-based Alaska Airlines said it is seeing a surge in business travel as the technology industry recovers from the pandemic. Corporate bookings to Alaska increased 22% in the first quarter, and the company's business travel has now recovered to 2019 levels.
American Airlines has seen somewhat similar results to its competitors, but it hasn't seen a significant increase in bookings among large companies that contract with business travel booking platforms.
Vasu Raja, the U.S. chief commercial officer, said the airline is seeing an increase in bookings from small and medium-sized businesses.
“What's really causing the mismanagement are unmanaged companies that keep coming back to American Airlines,” he said on a conference call with analysts. “Growth rates for managed, contracted, and enterprise businesses are slightly lower, but still high, in the mid-to-high single digits.”
Year-to-date performance of airline industry stock indexes
What am I looking at? Performance of aviation sector stocks within ST200. The index includes publicly traded companies on global markets, including network carriers, low-cost airlines, and other related companies.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than $1 trillion into one number. See more of our aviation division's financial performance.
Read the complete methodology behind Skift Travel 200.
Photo credit: Traveler with boarding pass at the airport. Joshua Woronicki/Pixabay
