Business travel remains down on pre-pandemic levels according to British Airways’ parent IAG. Ian Taylor reports
Business Travel Association (BTA) members meet at their annual overseas conference in Gibraltar this week to take stock of the state of the sector, key trends and priority asks of the new government.
When the association last met overseas a year ago, it registered conflicting signals on the extent of the corporate travel recovery post-pandemic.
BTA chair Suzanne Horner, chief executive of Gray Dawes, noted “most people report being ahead of 2019” and leading members agreed. Flight Centre Europe chief financial officer Adam Murray said: “We all see our businesses back.” Kevin Harrison, managing director of Good Travel Management, suggested: “Demand in the managed travel sector is stronger [than pre-Covid].”
However, major network carriers reported business travel volumes in 2023 significantly below those of 2019, with British Airways parent IAG and Lufthansa reporting corporate bookings 30%-40% below pre-Covid levels.
Some senior industry figures acknowledged the mismatch. Clarity Travel chief executive Pat McDonagh told Travel Weekly: “Business is not back at 2019 levels in terms of transactions. [But] revenue is back because air fares have risen 40%-50%.”
He noted impediments to a full return, saying: “You have more distributed workforces, corporate rail travel is not back because of the state of the rail network, and airlines have restricted capacity.”
In July this year, the Global Business Travel Association (Gbta) acknowledged transactions have not returned to the 2019 level with executive director Suzanne Neufang noting travel companies “are making more money on fewer trips”.
Neufang suggested the one-day business trip by air “went out the door at the beginning of Covid and hasn’t come back” and Gbta forecast corporate travel spending, adjusted for inflation, would not return to pre-pandemic levels until 2027.
That triggered a Financial Times editorial (August 16) hailing “the welcome demise of ‘day return’ business air trips”, describing “many claims” for business trips to be indispensable as “self-aggrandising bluster” and arguing: “Technology, cost-cuts and climate change are at last curbing out-and-back work flights.”
The latest BA/IAG results for the half year to June make no better reading for the sector. Despite IAG reporting “continuously strong demand”, chief executive Luis Gallego told analysts: “Business travel continues to recover at different rates across our airlines and regions. In BA, we are still around 65% in volume and revenues around 80% compared with 2019.”
BA chief executive Sean Doyle acknowledged: “What we see through corporate channels is 65% [of the 2019 level].”
However, he suggested some business bookings may have moved direct, arguing: “When we look at purpose of travel, the volumes travelling for business are probably above 70% and revenue more like 85% because we see some traffic that used to book through a business channel now booking through direct channels.”
BTA members may dispute that and see what is happening in the market differently.
How much disagreement comes out at the BTA conference may be a different matter, as BA is a key partner of BTA member travel management companies and disputes in the corporate travel sector are not generally conducted in public.