Saturday, April 20, 2024
Cracks emerge in business travel rebound.

Cracks emerge in business travel rebound.

The recovery of business travel from the pandemic has been slow, with recent economic fluctuations posing a challenge for airlines. First quarter earnings for US airlines have been less than expected, with Delta Air Lines, United Airlines, and Alaska Air Group all experiencing a decrease in traditional booking patterns. Before the pandemic, business travelers would frequently buy flights closer to the departure date, even if it meant paying a premium. However, with the corporate travel industry still lagging, airlines cannot rely on this backstop. Meanwhile, leisure travelers have shown willingness to purchase plane tickets in advance but also to cancel them at the last minute if necessary. This fickle behavior may harm airlines in a downturn. Moreover, airlines have abolished change and cancellation fees during the pandemic, which may contribute towards this behavior. Although corporate travel has always been vulnerable to economic downswings, technology companies’ layoffs and tighter cost controls have made it particularly susceptible. Despite this, airlines remain optimistic about the summer travel season, particularly in international markets. However, demand in the fall and winter remains uncertain, particularly if a mild recession occurs. Companies have spoken about their resiliency and preparedness, indicating that they do not expect a quick economic recovery.

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