With business travel the bread and butter of carrier like United Airlines, the projection that it will take a long time to recover and may never recover fully is an unwelcome notion. During the airline’s third-quarter earnings call, both Andrew Nocella, Chief Commercial Officer, and Scott Kirby, Chief Executive Officer, were fairly bullish on demand coming back, saying that United would emerge as “the world’s number one business travel airline”.
Business travel will get back to a new normal
For airlines like United Airlines, business travel is at the heart of what they do. As such, the drop in demand has hit their bottom line hard. During the airline’s third-quarter earnings call, Chief Commercial Officer Andrew Nocella noted the decline in business travel. He said,
“Business demand is still down a large percentage … anywhere from 85 to 90% down. It has improved a little bit, and it has improved more with smaller corporations than larger corporations at this point.”
However, despite the downward trajectory, United remains confident that it will come back.
“We’re still early in this process. We’re going to be agile on the short to medium term and move capacity around to reflect where we’re seeing demand today. Now, we’re seeing more leisure-oriented demand, which is reflected in how we tilted the capacity in Q4 with more sunshine capacity, more Caribbean capacity, more Hawai’i capacity.
“We fully expect that business travel is going to come back… We are big believers in that. It’s clearly not going to bounce back to 100% on day one, and our network will be different in 2021 and 2022, than what we’d otherwise have planned.
“But there will be a day in the future, hopefully in the near future, where business traffic is back to the new normal.”
While United is clear that there will be a lag in recovery of business travel, the notion that it will return to the same levels as pre-pandemic is in contrast to some informed judgments. Other analysis and opinion has suggested business travel will never come back to the same extent, as business embrace remote teams and a more flexible working program.
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What about remote working?
One of the elements that is considered key to the recovery of business travel is the uptick in remote working. Across the US, and in other countries worldwide, employees have begun working remotely, many for the first time in their lives. This realization of the benefits of working from home and the ease at which it can be done thanks to modern technology has called into question whether business travel will be needed at all in the future.
However, Nocella remains confident that business trips will still be needed, and even said that remote working could increase the need for business travel., He commented,
“This new remote work environment, I think, could actually be a stimulus to business traffic. Workers may need to return to their corporate office a few times a month, so traffic may be different, but we think it will return.”
Scott Kirby concurred and noted that some situations are simply better handled in person, saying,
“The first time someone loses a sale to a competitor who showed up in person is the last time they try to make a sales call on Zoom.”
Kirby referenced an old United ad from 1990 that was used, at the time, to promote business travel and the importance of doing deals in person. You can see it below.
“That was true 30 years ago, that will be true in the future, because that is what human nature is.”
When will it come back?
The big question now is, if business travel is projected to make a return, when will it begin? Nocella predicted 2024, saying,
“I don’t think it came back immediately. I think demand will start recovering in earnest until the end of next year to beginning of 2022. And business demand getting back to normal, I would guess 2024.”
Even with a few years of sluggish demand ahead, United Airlines is already laying the groundwork to become a top business travel airline. Polaris upgrades are ongoing, change fees back been abolished for good, and tweaks to the frequent flier program all add up to put United in a strong position going forward. Kirby was clear on his ambitions for the airline, saying,
“Business travel is incredibly important to United. It was our bread and butter before, and it will be our bread and butter in the future.
“We’re going to emerge as the world’s number one business travel airline, even if that takes until 2024.
“I think that business travel demand is going to recover and that United is disproportionately going to win in that.”
It’s a lot of positive words from United’s executive team, and a refreshing outlook on where business travel will go. Whether it’s misplaced or not, only time will tell.