Skift Take
— Meghna Maharishi
Since the pandemic, airlines have reported record results quarter after quarter. International and premium travel have been the main drivers. But in the most recent quarter, airlines got a big boost from a segment many thought was long gone: business travel.
For Delta, corporate bookings were up 14%, with the financial services, technology and customer service industries leading the increase.
Glen Hauenstein, Delta’s president, said that 90% of the companies it surveyed on corporate travel said they plan to increase travel in the second quarter. That could set Delta to deliver record corporate revenues during the latter half of the year.
Returning to Pre-Pandemic Norms
Pre-pandemic, corporate travel was a trillion-dollar business. But it’s been slow to return. As people returned to offices, businesses cut back on travel budgets — meetings with clients were instead conducted over video conferencing platforms like Zoom.
Jonathan Kletzel, PwC’s U.S. airline and travel practice leader, said business travel is not quite completely at pre-pandemic levels, but higher airfares have led to revenue gains for airlines.
“We’re at a point now where enough of the volume has come back at a higher price that people are saying, ‘OK corporate travel is back,’” he said.
Kletzel said mostly bigger corporations with bigger travel budgets and return-to-office policies have driven the uptick in corporate travel.
“You are seeing a lot of companies go back to work and because those companies are going back to work, now they want to see their suppliers there as well,” Kletzel said. “So there’s an opportunity to go visit clients.”
Corporate Bookings Fuel Q1 Revenues
United Airlines also saw corporate bookings increase 14% in the first quarter. “The strength of the business traffic rebound is a nice development for an airline like United,” said Andrew Nocella, United’s chief commercial officer, during a call with analysts.
And West Coast-based Alaska Airlines said it is seeing a surge in business travel as the tech industry rebounds from the pandemic. Corporate bookings for Alaska were up 22% in the first quarter, and business travel for the carrier has now recovered to 2019 levels.
American is seeing slightly similar results as its competitors but hasn’t seen the same significant increases in bookings among larger corporations that have contracts with booking platforms for business travel.
American chief commercial officer Vasu Raja said the carrier has seen more bookings from smaller- and medium-sized businesses.
“It’s really being driven by unmanaged corporations that continue to come back to American Airlines,” he said in a call with analysts. “Managed corporates, contracts and corporations are growing a little bit less than that, but still high — in the mid- to high single digits.”
It’s not just airlines. Earlier this month, Hyatt said it was seeing strength in business travel as well. Revenue from hotel stays by transient business travelers rose 6% in its most recent quarter, and forward bookings were showing substantial gains.
Airlines Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance.
Photo Credit: A traveler holds a boarding pass in an airport. Joshua Woroniecki/Pixabay