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The Covid-19 omicron variant has firmly recovered from business travel since mid-February and through the spring, after halting travel recovery in late 2021. The airline reported a business travel recovery in March – measured by demand or revenue – from 50 percent to 80 percent compared to 2019.
The total revenue of some carriers is even surpassing the level of 2019, thanks to continued strong retirement demand and rent increases. In April, average U.S. air fares rose 156 percent year-over-year, the highest level in seven years, according to the Airlines Reporting Corporation.
Rents have also risen because carriers are still lagging behind in terms of capacity and network recovery, while demand continues to rise and supply is surpassing. As a result, fewer airlines will want to roll over the rates this year, so corporate travel buyers should come to the negotiating table with as much data as possible to back up their demand for discounts.
Buyers will want to take a closer look at carrier routes and schedules when ramping up their business trips, as many options have changed significantly over the past two years, especially when it comes to the secondary and tertiary markets. While certain carrier routes are gone, other destinations are now served with stopovers as opposed to direct flights. As a result, some buyers may need to increase the number of airlines in their program.
While scoring the best deals will still be important for the bottom line of corporations, some companies have focused more on the welfare of their travelers than pre-epidemics and they have relaxed their policies so that more employees can book higher classes. A word of service caution, however: leisure demand for premium seats has filled the void when business travelers were off the road and carriers don’t see it declining.
This trend can make it difficult for business travelers to secure the desired seats, especially as corporates tend to book closer to departure. Some carriers are “managing” the expected increased business demand by holding some premium inventory for corporate clients for a little longer, but that’s by no means a sure thing. Buyers can resolve premium access during contract negotiations.