In a 2021 survey conducted by Morgan Stanley, corporate travel managers in the US, Europe, and Asia suggested their companies would replace about a quarter of typical business travel with virtual meetings in 2022.
Their predictions were pretty spot on.
Air travel has nearly bounced back to pre-pandemic levels in the US and Europe, led by a strong recovery in tourist demand. But business travel is lagging, with several big airlines reporting that corporate sales are still 20% below 2019 levels.
In their recent quarterly earnings reports, the four biggest US airlines—Delta, American, United, and Southwest—all told investors that their corporate travel sales were at roughly 80% of pre-pandemic levels. “Our largest corporates are the ones that are lagging, particularly banking, consulting, and technology who previously were amongst our top-tier travelers, now are on the lower side,” Southwest chief commercial officer Andrew Watterson said on a July 28 call.
Leisure travelers are picking up the slack, however. The number of air travelers passing through US security checkpoints now hovers somewhere around 10% below 2019 passenger totals.
Europe is seeing a similar trend, according to Eurocontrol data.
A recent case study from the Peterson Institute for International Economics confirms that the recovery of tourist and business travel are on two separate trajectories. The study, published July 28, examines ticketing data from a major European airline (which the researchers did not name as a condition for getting access to the proprietary data). They found that bookings to tourist destinations on this airline had already recovered to 2019 levels, but bookings to business destinations had only recovered to 80% of their 2019 levels.
Airlines have told investors they expect the lucrative sale of business travel flights to recover soon. But corporate travel managers—the people in charge of booking flights for big businesses—aren’t so sure.
Less than a fifth of the 150 travel managers surveyed by the consulting firm Deloitte in February predicted that their companies’ air travel would be back to 2019 levels by the end of the year. That’s a much more pessimistic outlook than when Deloitte ran the same survey last year, when a majority of respondents thought business travel would be back to normal by the end of 2022.
Business travel’s slow recovery may be a sign that companies are following through on their plans to trim the fat from their travel budgets. The most expensive and least necessary business flights have been replaced by video calls, and those trips—the final 20% of business flights that haven’t returned—may never come back. “Corporate travel’s return has begun,” Deloitte consultants wrote in an April report, “but the conferencing technology that replaced nearly all of it beginning in early 2020 will likely continue to replace some of it for the foreseeable future.”