How Business Travel Will Rise from the Ashes of Covid-19

Of all the industries that have suffered during the coronavirus pandemic, travel is among those hit hardest. Not only did people stop vacationing, but business travel — a huge driver of the broader industry — came to a screeching halt. Prior to the pandemic, business travel made up 60 to 70% of airline industry sales. McKinsey estimated that busines travel spending topped $1.4 trillion, or 21 percent of the global travel and hospitality sector, in 2018. When the world essentially shut down in early 2020, the industry was left reeling.

The jury is still out on the question of whether business travel will return to normalcy soon. Bill Gates, for one, believes it won’t: in an interview at the New York Times DealBook conference in November, he estimated that “over 50%” of business travel would essentially disappear because in-person business meetings aren’t the “gold standard” anymore.

However, there are good reasons to expect that business travel will recover eventually. The latest GBTA BTI Outlook Report predicts a 21% growth in business travel volume for 2021, 38% percent growth in 2022, and a full recovery by 2025. Over the long term, the pandemic is unlikely to cause permanent damage — especially given these trends.

1. Asia Remains Business Travel’s Epicenter and Will See Quicker Recovery

In the first decade of the 2000s, Asia doubled its share of the global business travel market. It had become the world’s business travel epicenter by 2014, according to a report by McKinsey. In 2019, Asia-Pacific accounted for 43% of global business travel spend, and GBTA predicts it will be able to recover from the pandemic more quickly.

It’s a market that is already acclimatized to protecting itself from infection. Asian travelers have been wearing surgical masks in public ever since the 2002 SARS outbreak. In Japan, wearing a face covering in public and bowing rather than shaking hands are two cultural practices that go back centuries. These habits may have helped to keep the country’s infection rates relatively low.

Additionally, consider that more than half of Asian business travelers view travel as a perk of their jobs, according to the McKinsey report. Moreover, several Asian countries minimized infections by reacting quickly to the pandemic with strict lockdown measures. It will then come as no surprise that business travel in Asia-Pacific dropped only 44% in 2020 compared to 60% in the U.S.

2. Technology Will Transform Air Travel

The past year may have been a quiet one for travel, but not for tech. Significant progress has been made with systems to increase travelers’ safety and confidence. Intelligent airport and airline operations that can adapt to changing requirements are critical to the industry’s growth.

Touchless biometric self-service devices will make digital automation the norm at business travel destinations. An excellent example of this is SITA’s Smart Path which has been implemented at Beijing and Miami airports. It uses facial recognition to enroll passengers. Once enrolled, there is no need to handle documents, touch devices, or transact with staff. Passengers use their personal devices to interact where necessary.

Health ETAs (Electronic Travel Authority) will enable travelers to provide the information necessary for governments to reduce the risk of infection from travel. When implemented with Advance Passenger Processing (APP), authorities can deny travel at check-in if the traveler’s health status doesn’t meet requirements. As vaccines are rolled out, governments may require visitors to be vaccinated or produce test results showing they have Covid-19 antigens. If a mutation occurs that voids these precautions, requirements can be changed and enforced in real time.

3. Digital Nomads May Be the New Business Travelers

Although not a new concept, the term digital nomad has usually been reserved for young expats who live in exotic foreign locales and work remotely. Plenty of retirees, semi-retirees, and independently wealthy individuals have also opted for the digital nomad life.

But the pandemic potentially changes the profile of these nomads. Remote work is now a viable option for many more conventional employees. In some cases, employers have reduced office space or done away with it entirely. And because remote work can be done literally anywhere, some countries are seeing this as an opportunity to attract foreign-income earners.

How these new digital nomads will affect business travel is not totally clear yet. However, it could boost the number of people who live far from their company, but must still travel back for the odd meeting every now and then, or perhaps a few times a month. There is some anecdotal evidence that people are leaving pricey urban areas, like San Francisco, but still keeping their jobs and moving to cities with lower costs of living.

4. The Revival of Supersonic Travel

Earlier this year, Boeing-backed Aerion Supersonic and NASA’s Langley Research Center inked an agreement. Their goal? To find ways to travel anywhere on the planet in under three hours. Aerion’s Virgin Galactic-backed competitor, Boom Supersonics, is after the same thing.

It’s well known that the Concorde — the British-French supersonic airliner — was never a commercial success. But advancements in engineering mean that modern-day supersonic planes could come in at a quarter of Concorde’s costs. Blake Scholl, Boom’s CEO, says the pricing of initial flights should be equivalent to business class flights. However, he’s convinced that scale will mean the shortest flight in the world will eventually also be the cheapest.

The combination of reduced travel time and costs could be a game-changer for both leisure and business travel. Japan Airlines has already pre-ordered twenty Boom Overture supersonic aircraft. At this stage, both Boom and Aerion only expect to have their planes ready mid-decade.

Closing Thoughts

It seems clear to me that the business travel sector will eventually recover, though it won’t look quite the same. The pandemic may have done business travelers a service. Now that we’ve seen that many in-person meetings really can be replaced with Zoom, companies may not automatically default to putting people on a plane, unless there is a significant business need for someone’s physical presence.

Video conferences won’t replace all business travel, but it could replace the kind of trips travelers abhor: those red-eye flights to attend a single meeting only to fly back exhausted the same night. Business travel may become faster, more efficient, and maybe even pleasant.

David Geithner is a senior finance executive who draws upon nearly three decades of experience to serve as chief financial officer (CFO) at ReactiveCore.

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