By Tyler Durden
Everyone has seen some version of the following chart which shows that a year and a half after the covid pandemic first struck, airline traffic as measured by TSA traveler throughput is roughly at 80% of where it should be.
But what the chart above fails to distinguish is the chasm that has opened up between regular “coach” travel and business class.
A new study from the American Hotel & Lodging Association (AHLA) found that the rising number of COVID-19 cases associated with the Delta variant has caused business travelers to plan fewer trips.
According to the survey conducted by Morning Consult, 67 percent of business travelers are planning to take fewer trips, 52 percent are likely to cancel existing travel plans without rescheduling and 60 percent expect to postpone existing travel plans. Meanwhile, another 66 percent of respondents are likely to only travel to places they can drive.
As Travel Pulse notes, while leisure travel has seen an uptick over the summer, the long-term outlook for business travel and events is not expected to return to pre-pandemic levels until 2024 at the earliest. As a result, hotels are expected to end 2021 down nearly 500,000 jobs compared to 2019.
“Hotels were already on pace to lose more business travel revenue this year than we did in 2020,” AHLA CEO Chip Rogers said. “And now rising COVID-19 cases threaten to further reduce the main source of revenue for our industry.”
“Hotel employees and small business owners across the nation have been pleading for direct pandemic relief for over a year now,” Rogers continued. “These results show why now is the time for Congress to listen to those calls and pass the Save Hotel Jobs Act.”
Travelers likely to attend large gatherings, meetings and events were also interviewed, with 71 percent saying they would attend fewer in-person events due to coronavirus concerns and 67 percent likely to have shorter meetings or events.
The study also found that 59 percent of respondents are likely to postpone existing meetings or events until a later date, while another 49 percent said they are likely to cancel existing meetings or events with no plans to reschedule.
The news is devastating for most airlines who make the bulk of their profits on business class travel, which coach is often breakeven if not a cost. Alas, in a world where most business interactions have shifted to zoom calls, this is the new reality of airlines.
The silver lining: it is only a matter of time before airlines have no choice but to slash prices for business and first class until they find an appropriate level of unsubsidized demand that ends up filling said classes.
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