US airlines suffer from business class blues in age of Covid

NEW YORK (AFP) – The Covid-19 pandemic has ushered in the era of video meetings. But can Zoom really replace in-person meetings that require business executives to travel?

United States (US) airlines have suffered a steep decline in this lucrative category of travel.

They do expect a rebound – just not right away.

“I suddenly stopped travelling in March because of the concerns around Covid,” Market strategist at TD AmeriTrade JJ Kinahan told AFP.

The halt was a bit of a shock for someone who typically spent about 75 nights a year away from home for work. Now his company only authorises travel on a case-by-case basis.

While Kinahan said he does not miss the flights, he does miss the personal connection with hotel doormen and receptionists he would encounter regularly in his travels.

As for Zoom meetings, he said, “you don’t have the same back and forth.” Airlines are really feeling the pain – the four largest US carriers – American, United, Delta and Southwest – together lost nearly USD11 billion in the third quarter.

Americans have tentatively resumed leisure travel.

For the first time since mid-March, the number of travellers passing through airport security on October 18 exceeded the one million mark. But that is still far below the 2.6 million recorded on the same day in 2019. Many companies have begun to authorise travel, but only in very limited amounts.

Companies have to consider the legal ramifications of asking employees to get on a plane.

Alexandra Cunningham of the law firm Hunton Andrews Kurth notes that travel is unavoidable in some cases, such as repairs that require a specialised technician.

While some workers in enclosed places, like slaughterhouses and cruise ships, have claimed compensation after falling ill, it is not clear if an employee would be able to successfully prove they contracted Covid-19 while on a business trip, she said.

Even so, “an employer’s best protection right now… is to follow the guidance of the CDC, to limit travel to essential business,” she said, referring to the Centres for Disease Control and Prevention (CDC).

Different quarantine rules in some US states also can make short trips impractical.

The disappearance of business travelers is a big problem for airlines. While they comprise only about a third of passengers, they account for half of annual revenue, according to the industry group Airlines for America (A4A).

“Business travel is incredibly important to United,” the airline’s chief Scott Kirby said on a recent conference call.

“It was our bread and butter,” he said of the segment that has collapsed by 85-90 per cent.

Kirby tried to remain upbeat though he said he does not see a rebound until late next year, while volume will not return to normal until 2024.