Airlines Face New Crisis as Crucial Business Travel Market Experiences ‘Structural Decline’

Business travel is expected to drop 15-25% through 2025 compared to before the pandemic

Content of the article

As the airline industry struggles to recover from a deep, pandemic-induced recession, another crisis is looming in the crucial business travel market, according to a new report.


Content of the article

Businesses are expected to keep travel under control for years to come, resulting in a 15-25% “structural” drop through 2025 from before the COVID-19 pandemic, consulting firm AlixPartners said on Wednesday. The loss could trigger a major overhaul of full-service carrier strategy, as business demand accounts for up to three-quarters of their profits and nearly a third of sales.

“Business travel will be hit harder than leisure,” said Pascal Fabre, managing partner of the firm in Paris. “Hybrid work and reduced corporate travel spending will have a lasting effect. “

Hybrid work and reduced corporate travel spending will have a lasting effect

Pascal Fabre

European airlines like Air France-KLM and British Airways from IAG SA have benefited from a rebound in regional travel this summer and are adding more capacity after the United States lifted border restrictions this week. Still, a full recovery to pre-crisis levels of global theft in the world is not expected until mid-decade, AlixPartners said.


Content of the article

Airlines, financially weakened and in debt after the COVID crisis, remain hopeful. Shai Weiss, CEO of Virgin Atlantic Airways Ltd., said this week that he expects a full rebound in business travel by 2023. But IAG chief Luis Gallego said that it would likely remain up to 15% below 2019 levels by then.

Cost reductions, tariffs

In the meantime, the industry is moving forward with more cost cutting, aggressive fleet deals and simplification, and the sale of non-core assets. Consolidation could also be on the horizon, as stronger carriers exhaust weaker ones with lower prices.

“They are trying to maintain discipline over capacity, but there is a high risk of a struggle for market share,” Fabre said. “The conditions are ripe for tariff wars. “


Content of the article

  1. Businesses should consider cutting back on business travel to help the world meet climate goals, according to a think tank.

    The arguments in favor of a definitive abandonment of business travel

  2. You might encounter longer flight delays and new documentation requirements while you are in line.

    Business travel is back, but be prepared for delays, restrictions and other rusty travelers

  3. The Airbnb logo is seen on a small mini pyramid under the glass pyramid of the Louvre Museum in Paris, France, March 12, 2019.

    Airbnb adds new tools to the bet that remote working is here to stay

  4. (FILES) In this file photo taken on December 02, 2020, an American Airlines Boeing 737 MAX aircraft takes off for a test flight from Dallas-Fort Worth International Airport in Dallas, TX.  - Boeing said on April 9, 2021 that it had recommended that 16 airlines flying its 737 MAX planes respond to a

    Airline pilots without practice make potentially disastrous mistakes when they return to work

For the lucrative business travel segment, the biggest threat comes from the reduction in in-house meetings – which account for about 40% of business travel – while trips to meet clients are more likely to be sustained.

“It’s going to be very complicated for some airlines,” he said, predicting an overhaul of networks and cabin configurations.



Postmedia is committed to maintaining a vibrant but civil discussion forum and encourages all readers to share their views on our articles. Comments may take up to an hour of moderation before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread that you follow, or if a user that you follow comments. Visit our Community rules for more information and details on how to adjust your E-mail settings.