While a lot of news articles have focused on the pent-up demand for vacations, which is already making itself seen in a modest revival of air traffic and hints of profits for airlines, nothing much is happening to revive business travel.
And quite a few experts think that’s a long-term trend. During the pandemic, businesses have gotten used to working remotely and meeting remotely, and finding that it works fairly well for most purposes. When restrictions are gone, it seems likely that many business trips that were routine won’t be. True, there are those that really need face-to-face conversations, but not so many.
How much? No one can say for sure, but Bill Gates has a guess: “We will do some business travel but dramatically less. Over 50 per cent of business travel will go away.”
The implications of that are serious for the airline and hotel industries that have, over the past few years, put a heavy emphasis on the business end of the market because it’s the end that’s less price-sensitive, that’s more willing to pay $1200 for a seat at the front of the plane, while leisure travelers choose between $200 basic economy and $250 economy.
But with business casting a different eye on costs and needs, that focus may have to shift; the disparity between the two classes may shrink as airlines try to win business travelers back. But so far what has happened is that the airlines have been moving planes to where the passengers are: All of the major U.S. airlines have been reducing frequencies on business-heavy routes like New York to Chicago or Seattle and focusing on warm-weather and leisure routes.
So far, that’s working for the airlines, but the ‘business class’ hotels don’t have an option like that; they are where they are. And while they can try to compete for more leisure travelers, many are located in urban centers that are not where the leisure travelers are headed just now.
