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BUSINESS air travel will continue to face headwinds even though the Covid-19 vaccine has given much hope to the travel sector.
Moody’s Investors Service says about 10%-30% of business travel could be replaced by alternatives such as virtual meetings.
This segment of travel is unlikely to reach its 2019 level before 2024 at its earliest, as recovery prospects remain highly uncertain.
Full service carriers globally will face greater pressure from a slow recovery in business travel, it adds.
This is the segment that makes the most money for an airline, accounting for about 75% of profit, even though it represents only about 12% of total global travellers.
In 2019, reports said global business tourism spending reached US$1.28bil (RM5.3bil).
However, domestic business travel will return sooner, favouring carriers in larger countries such as the United States, Brazil, Australia, Russia and China.
So will sectors with high site-specific activities such as manufacturing, real estate and construction.
Moody’s says the airlines’ recovery from the pandemic will be multi-stage. It forecasts overall revenue passenger kilometers to remain around 5%-10% below 2019 levels by the end of 2023.
With that, airlines will adapt and focus on leisure travel, efficiency and savings. Pricing structures will change with fewer deeply discounted economy fares, it adds.CLICK TO ENLARGE
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