Business travel and American Airlines’ gamble
Even as we move away from restrictions and mandatory quarantine requirements, the world of travel has undergone significant changes as a result of the global pandemic. The question is, will it ever return to “normal?”
One area this debate has gained particular traction is within the realms of business travel. PwC identified that pre-pandemic, the business traveller made up approximately 12 per cent of airline passengers but up to 75 per cent of revenues on certain flights making them “an essential segment.” As such, the future of the business traveller is of great interest to the industry.
World Aviation Festival conducted a poll looking at the effect of the pandemic on the frequency of individuals’ business travels. The results lined up with the overriding narrative that COVID-19 has impacted how often people travel for their work.
Whether it’s with virtual Zoom meetings, a shift in corporate spending patterns, or the growth of the “bleisure” traveller, traditional understandings of business travel have been thrown into flux.
However, as the dust begins to settle and a new landscape emerges, American Airlines is “betting against the traditional business of business travel.”
As reported in the Wall Street Journal article, Vasu Raja, American’s Chief Commercial Officer found that some of airlines’ most profitable customers, the typical road warrior “just went away.” The article proceeds to explain over 60 per cent of American’s corporate deals weren’t hitting their goals.
Pivoting, the airline is “diminishing the role of relationships with some corporate travel agencies and customers,” predicted to save the airline millions in travel agent commissions and corporate discounts if the shift pays off.
What remains to be seen is whether other airlines will follow suit or be the true beneficiaries of American’s strategic pivot.
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Article by Jess Brownlow