‘Green shoots’ but no lush growth (yet)
When analysts talk about green shoots of growth, you know it has been a long, cold, lonely winter. The phrase featured in a recent report on the prospects for business travel from Deloitte. It detected encouraging signs, if not the imminent promise of lush growth after the dark Covid-19 winter.
“Corporate travel, which took a big hit during the pandemic, is showing green shoots again. But will it approach pre-pandemic levels any time soon?” questioned the report. To supply the answer, Deloitte surveyed 150 travel managers and executives with travel budget oversights for US corporations between May 28th and June 20th.
The report – titled Return to a world transformed: How the pandemic is reshaping corporate travel – concluded corporations’ essential-travel-only rule was starting to be relaxed. Corporate travel should see a significant fourth-quarter improvement in the US, if there is no resurgence of the virus. But it predicted full recovery was more than a year away. International travel will remain down until borders reopen fully and there is an easing of travel restrictions covering quarantines and Covid status requirements.
Anthony Jackson, Deloitte’s principal for transactions and business analytics and US airlines leader, thought the changes adopted during the pandemic combined with sustainability commitments are creating a new normal for corporate travel. “However, the importance of in-person interaction for business success is clear, creating opportunities for the airline industry to continue to attract and serve business travellers,” he predicted.
To gauge the health of the green shoots of corporate travel in business aviation, I spoke to a range of industry insiders. Different commentators detected different shades of green. David McCown, president of private charter company Air Partner, Americas told us business travel is slowly but surely returning. Last month, the company witnessed a 184% increase in overall corporate traveller bookings compared with July 2020. Air Partner also noted a 24% increase in bookings by corporate travellers from the first quarter of this year to the second quarter. US bookings were up by 152.9% year-on-year and the number of new US JetCard members rose by 225%.
More corporations are now considering private charter. “The appeal of private charter lies in the degree of control and enhanced protection we are able to provide companies,” said McCown. “Travelling is opening up, but there are new challenges from the corporate side with changing entry requirements, vaccine passports to limited flight schedules amongst commercial carriers.” Air Partner can manage these variables by developing a custom charter solution specific to a company’s needs, he said.
McCown also noted a steady trend of new customers for private jet services. “We estimate that a large proportion of new customers will continue to fly privately to some extent. With this growing trend, we also anticipate there will be a greater demand for private jet usage as business travel continues to bounce back, which is already happening sooner than originally expected.”
Brian Foley, founder, Brian Foley Associates, thought it too early to predict when business travel would return to pre-Covid levels “Leisure travel is quite robust now, but the business season won’t kick off for another month or so,” he told me.
“The corporates comprise a large share of the market and are the big question mark as to when they recover their prior flight activity. There are still restrictions regarding travel at many firms and, at least initially, less business travel is anticipated this fall [autumn].”
While the proportion of new clients is “notionally quite high”, the test will be whether the trend continues as airline travel bounces back, adds Foley. “Full business utilisation recovery won’t be immediate, but I have every confidence it will eventually come back even stronger than before.”
Sharing Foley’s cautious optimism is Robert Walters, commercial director, London Biggin Hill Airport. He reports the return of one or two corporate clients. “The pent-up demand does seem to be there,” he tells me. “A lot of corporates are looking to get into the space – either buying [aircraft] or going to the charter market because of the travel restrictions. But it would be wrong to say they are returning in large numbers. We are not seeing that at the moment.”
The corporates who are flying have widened the passenger list to include more middle management staff. “They are flying using their airplanes to ferry larger groups of people – the more middle management group. So, they are utilising their aircraft more,” said Walters.
Cost sharing in business aviation, using the per seat model, is another post Covid-19 trend, he says. “This is coming to Europe, for sure. In the new world, the shared economy is accepted, and we very much hope that Biggin Hill will be part of that.”
Cheery news for Walters, and European business aviation in general, came earlier this week with the latest WingX report. It confirmed European business aviation saw a 14% boost in activity compared with July 2019, led by the light jet segment, which exceeded 2019 levels by 30%. In North America, business aviation activity rose by 12% last month compared with July 2019 and was 46% ahead of July 2020. Worldwide there were 13% more flights by business jets and turboprops than in July 2019.
Walters, at London Biggin Hill Airport, ends with a comforting thought: “It takes only a minutia of a percentage point in the airline travel world to move across to create a huge ripple in the business aviation world.”
So, perhaps Covid winter could yield to springtime for business aviation worldwide.
Above: Corporate travel is expected to revive in Q4. But full recovery may be over a year away.
Below: London Biggin Hill Airport‘s Robert Walters reports some corporate flights are returning.
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