Business travel seen in ‘structural’ decline in post-Covid era

As the airline industry struggles to recover from a deep, pandemic-induced slump, another crisis is looming in the crucial business travel market, according to a new report. Companies are expected to keep a tight rein on trips in the coming years, leading to a “structural” decline of between 15% and 25% through 2025 from before the Covid-19 pandemic, consultancy AlixPartners said Wednesday. The loss could trigger a broad strategy overhaul for full-service carriers because corporat demand makes up as much as three quarters of their profits, and nearly a third of sales. “Business travel will be hit harder than leisure,” said Pascal Fabre, a managing partner at the firm in Paris. “There will be a long-lasting effect from hybrid working and reduced corporate spending on travel.” European airlines like Air France-KLM and IAG SA’s British Airways benefited from a rebound in regional travel this summer and are adding more capacity after the US lifted border restrictions this week. Yet a full recovery to pre-crisis levels of overall flying worldwide isn’t expected until around mid-decade, AlixPartners said. Airlines, financially weakened and debt-laden coming out of the Covid crisis, are holding out hope. Shai Weiss, CEO of Virgin Atlantic, said this week that he expects a full rebound in business travel by 2023. But IAG chief Luis Gallego said it is likely to remain as much as 15% lower than 2019 levels by then. In the meantime, the sector is pushing ahead with more cost cutting, aggressive fleet deals and simplification, and the sale of non-core assets. Consolidation could also be in the offing, as stronger carriers wear down weaker ones with lower pricing. <br/>