The Global Business Travel Association predicts that by 2027, business travel spending will reach $1.8 trillion. The global aviation industry expects global business travel to exceed pre-pandemic levels by 2024, reaching $1.4 trillion, with Southwest Airlines and other carriers scrutinizing their efforts more rigorously.
The Business Travel Index Outlook report released by the Global Business Travel Association shows that in 2022, supported by the accelerated recovery of suppressed travel demand and more employees returning to the office, global business travel spending grew by 47% to reach $1.03 trillion. By 2027, travel spending is expected to continue to accelerate, reaching $1.8 trillion.
Business travelers have been a group that airlines have tried to attract during the pandemic; they are not only significant customers for the airlines' expensive flights but also a key group for airlines to earn additional revenue. Suzanne Neufang, CEO of the Global Business Travel Association, stated that it can be cautiously said that business travel has passed the worst of the pandemic.
Under the pressure of economic recession, business travel spending stagnated, and both airline and hotel industries suffered significant hits during the pandemic, while corporate and leisure travelers were also hindered by pandemic-related restrictions. Today, as the economies in Europe and America continue to grow post-pandemic, companies are intensifying efforts to have employees return to the office, and the travel industry is feeling a huge demand from business travelers.
Dallas-based advertising agency Firehouse, which has 30 employees, sees great value in face-to-face interactions with clients, according to CEO Steve Smith. Although employees do not travel frequently, the frequency and demand for business trips by company employees have noticeably increased.
From 2020 to the end of 2021, Southwest Airlines added 18 new markets, including Chicago O'Hare, Houston Intercontinental, Colorado Springs, Miami, and Syracuse. Dave Harvey, Vice President and Chief Sales Officer at Southwest Airlines, mentioned that as more companies require employees to return to the office this year, many of the company's business customers are "getting off the bench."
In an interview with The Dallas Morning News, Ryan Green, Executive Vice President and Chief Commercial Officer at Southwest Airlines, emphasized that nothing can replace handshake agreements and face-to-face talks, and the demand for business travel is rising compared to before the pandemic. Green expects the industry to continue to grow with the economy, and the company is optimistic about its ability to gain more market share through investments.
The Business Travel Index Outlook notes that as companies push for employees to return to the office, high-frequency business travel shows more and more signs of recovery. Although the explosive growth in the early stages of recovery is normalizing, the report anticipates that the growth momentum will continue.
Fort Worth-based American Airlines has also adjusted its view on business travel. Vasu Raja, Chief Commercial Officer and Senior Vice President at American Airlines, said during the latest earnings call that business travel has recovered to 80% of historical levels. The company's business is composed of 35% leisure travel, 30% business travel, and 35% mixed travel.
However, Deloitte is not optimistic about the recovery demand for morning travel. Its 2023 business travel study shows that on one hand, climate issues will limit the gains from business travel, and on the other hand, one-third of American companies need to reduce each employee's travel by more than 20% to achieve the aviation industry's sustainable development goals by 2030.
