Even if a vaccine for Covid-19 becomes widely available – and widely used – around the globe, and if the very onerous government restrictions on international travel largely disappear, airlines still will continue to struggle with extraordinarily weak demand for business travel through the end of 2021, and likely beyond.
And that could be devastating for already cash-depleted airlines that are guaranteed this year to report losses that, even for an industry with a long history of red ink, will be record-shattering.
The economic importance of business travel for all conventional airlines and even for most so-called “discount” carriers simply cannot be overstated. It is the kind of travel that historically has generated more than half, and in some cases as much as 75% of carriers’ profits. In effect, cheaper seats sold mostly to leisure travelers are “loss leaders” that serve to fill 75% of the industry’s available seats so that the carriers then are able to offer near-on demand flights to their big-spending business travel customers.
In 2018, business travelers globally spent $1.4 trillion on airlines, hotels, ground transportation, food and other travel services. Half of that was spent in just two countries, the United States and China, according to the World Travel & Tourism Council. About 20 percent of the remaining global business travel spending occurred in Europe.
But since the arrival of the pandemic early this year travel has plummeted to unprecedented lows. U.S. air travel fell by as much as 95% in