Corporate travel slump threatens network carriers

A delayed return of corporate travel will pose serious problems for network airlines such as British Airways, but reconfigured aircraft and networks could boost the leisure sector.

However, some long-haul routes could be hit by a significant decline in business travellers.

Deloitte partner David Gard told a Travel Weekly Insight report launch event: “We’re going to see a fundamental shift to lower-cost, shorter-haul travel which supports the leisure community because business travel will be less relevant.”

Gard explained: “One upside of Covid is that we’ve experienced new ways of working and some dynamics have fundamentally changed. Business travel will be one of those. We’ve found we can be effective on calls rather than having to travel.

“There is also greater seriousness about carbon emissions, so we have a fundamental challenge to the level of business travel.

“Many network airlines rely on front-of-the-bus flying for a key element of their revenue. But you can imagine less long-haul flying because it won’t make sense to have as much connectivity as pre-Covid. We’re just starting to work through what financial impact this could have on some of the big network carriers.”

Gard said: “Business and first-class travel make a significant contribution, particularly long-haul travel. If you’re going to have much less business travel, you need to reconfigure aircraft to have greater density towards the back of the plane because you’re not going to generate the revenue at the front.

“You could also rethink the size of aircraft. We’re already seeing the retirement of [Boeing 747] jumbo jets. The Airbus A380 has probably taken a hit in terms of value and lease rates.

“I see long-haul travel being particularly impacted by loss of business, with less of an impact for shorter haul. In our business, if a flight is less than a certain number of hours you would not fly in business class anyway. I see an impact on long haul. How are Club Class and First Class going to get footfall if there is much less business travel?”

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