Depending on who you ask, business travel is either significantly and permanently changed or could be just taking a couple of years off. Zoom was great fun for a month or two, but it got old fast for most people. But Zoom and the many other video conferencing offerings are cheap, efficient, and a potentially serious threat to the future of business travel.
Business travelers make up 12% of all travelers but account for 75% of profits
Business travel is travel undertaken for work purposes. That could be to attend a meeting, convention, or site visit. The common factor is you interact with people face-to-face. Business travel was worth US$1.28 trillion in 2019. That didn’t all go to airlines. Hotels, convention centers, restaurants, and bars are also big beneficiaries.
Business travelers are usually big-spending travelers. That makes them important from a profit perspective. Business travelers accounted for just 12% of the world’s total airline passengers in 2019, but they contributed about 75% of the airline industry’s profits.
Naturally, airlines everywhere want them back. In their public statements, most airline CEOs are upbeat about the return of business travel. They correctly point out video conferencing can never replace a handshake or quiet one-on-one conversation.
“I don’t believe the people who say ‘everything will be digital in the future’,” SWISS International Air Lines CEO Dieter Vranckx told the recent Routes Reconnected Conference, “I think the balance will be in the middle.”
“Our bet is that business travel is going to come back, and that is because business travel is about human relationships and human interactions,” says United Airlines CEO Scott Kirby. “And as tough as this pandemic has been, it has not changed human desire to be together.”
“Businessmen like to face people, they like to feel people, they like to notice the body language,” Qatar Airways CEO Akbar Al Baker has said.
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Airline CEOs have a clear interest in promoting business travel. They couch their messaging in terms of public safety, timelines, and best practice, but the messaging is all about getting people onto planes and revenue back into the airline’s coffers.
Video conferencing bosses have a different agenda to push. They want more people working at home using their software. Zoom is the best-known beneficiary of this trend. The platform’s earnings have increased tenfold in the last year.
But even Zoom’s CEO, Eric Yuan, thinks his product has its limitations. Video-conferencing may replace a day return flight to nut out some terms in a contract, but it won’t replace that spur-of-the-moment, face-to-face conversation that led to the deal in the first place.
Video conferencing bosses like Yuan see their software helping to entrench the hybrid workplace, where employees split their time between working from home and going into the office. Interestingly, that may increase business travel down the track.
Finding the medium between being at home and getting out and about
Eric Yuan sees a future where employees work from home three days a week and perhaps hop on a flight Wednesday night to whizz over to the office two states away for the rest of the week. Scott Kirby has also suggested that this model might be the future of work for many people. It is one reason why Kirby has remained upbeat about the return of business travel. All those mid-week business travelers would be a tasty revenue stream for airlines like United.
It could work out nicely for both airline and video conferencing CEOs and shareholders if that pans out. After a bumpy year with many online meetings, most people agree there is a happy medium between being at home and getting out and about. Most people also agree there is only so much video conferencing the average human can cheerfully tolerate. Kirby says,
“Business travel is not about transactions. It’s about relationships, building and maintaining relationships, and you just can’t do that through video, and so I continue – we’ve made the bet that business travel is coming back.”