We’ve written a lot about the rapid decline in business travel on Live and Let’s Fly. I’ve even opined that it may never return to pre-pandemic levels. But United CEO Scott Kirby puts forward two reasons why he believes that business travel will return.
United CEO: Business Travel WILL Return With A Vengeance
Speaking to investors this week during the Q3 earnings call, Kirby was asked about the recovery of business travel. I think it is important to place his entire answer in context:
“I’m not going to be able to, I think, accurately predict it today, the fact that we’re still early in this process. Clearly, we’re going to be agile in the short to medium term and move capacity around to reflect where we’re seeing demand today. And clearly, we’re seeing more leisure oriented demand. And that reflects how we’ve tilted the capacity in in Q4 with more sunshine capacity, more Caribbean capacity, more Hawaii capacity. But we fully expect that business travel is going to get back on the road someday when the vaccine is out there and widely distributed. We are big believers in that.
And so, we think business traffic will rebound. 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’ve otherwise had planned. But there will be a day in the future and, hopefully the near future, where business traffic is back to the new normal. And clearly, the types of trips being taken will be different.
And as I’ve said before, this new remote work environment, I think, actually could be a stimulus to business traffic and that workers need to return to their corporate office a few times a month to do the work. And so, business traffic may be different, but we think it will return.”
Kirby mentions he has said this before, but it is the first I have heard of it. I find the theory interesting…and plausible. I’ve been so pessimistic because many of our Award Expert corporate clients have been clear and unequivocal that business travel is not only frowned upon, but strictly forbidden. In one case, I saw a memo threatening to terminate any employee who travels on behalf of the company.
Certainly bookings will return at some point, but I remain on the pessimistic side.
Asked further about business travel, Kirby noted:
I’ll start with my personal opinion, which I recognize is not the consensus, but as human beings, we are social creatures. And I think business demand is going to come back. I don’t think it’s coming back immediately. I think demand sort of starts to recover in earnest end of next year, beginning of 2022. And business demand getting back to normal, I would guess, 2024.
But I think it will come back to normal. I’ve been fond of saying the first time someone loses a sale to a competitor who showed up in person is the last time they tried to make a sales call on Zoom. There’s a great commercial from United that’s over 30 years old that you can go Google, but it ends with I’m going to see that old friend. That was true 30 years ago. That will be true in the future because that is what human nature is.
And business travel is incredibly important to United. And it was our bread and butter before. I think it will be our bread and butter in the future. It’s going to be a few years before it comes back in earnest. But one of the things that I think is great when we talked about United being the leader in global aviation, we were headed in that direction before this all started. I think we’re going to make a decade worth of progress during the pandemic.
And when we emerge, particularly given our seven hubs, given what our pilots agreed to do by keeping everyone in their seats, given everything that we’re doing to invest in the customer experience, eliminating change fee, everything that we’re doing with our loyalty program, we’re going to emerge as the world’s number one business class airline. I think it’s 2024 before it all comes back. But in that world too, I think we will have picked up share, frankly. So, don’t even have to come back for 100% for that to be really successful for United.
I will caveat it, however, and say, we’re staying flexible, as Andrew [Nocella – United’s Chief Commeical Officer] said. We’ve got airplanes that are parked in the desert. And if we recognize that that’s not the certainty, what I just described, and if it’s wrong, we won’t do it. And we won’t go there.
But that’s my guess for what’s going to happen that business travel demand is going to recover and United is disproportionately going to win in that environment.”
Perhaps it is the CEO’s duty to be optimistic, but Kirby is such a straight-shooter that I have to imagine he means what he says.
By the way, here’s the commercial he is referring to:
One of my all times favorites!
I love this one too:
While I remain on the pessimistic side, I certainly hope Kirby is correct. I would love to see a swift return of business travel. Humans are indeed social creatures and maybe that return is inevitable. But only time will tell.