Speaking at a conference yesterday, Delta and United both claimed business travel is on the rebound, with each airline pointing to recent improvements in traffic. US Airways president Scott Kirby also pointed to recent growth in the business travel sector as a sign of better days ahead. “We’re certainly seeing evidence of business travel recovery,” he said.
But Southwest chairman Gary Kelly was singing a different tune. “I’m not comfortable enough to report any improvement in that market,” he said, though he noted that business travel no longer seems to be weakening. Kelly, however, said he does not expect a big recovery next year.
So why two different outlooks? And why should you care?
Because “[business travel is] where the money is,” says Eric Torbenson, writing for the Dallas Morning News‘ Airline Biz blog. “That’s where the profit has always been for the industry and it’s the leading indicator that investors care much more about [than] raw traffic.”
In short, as the biz travel market goes, so go the airlines. This is not news, but it’s worthwhile to remember how vital these high-profit travelers are to the airlines. For leisure travelers, however, a continued business travel slump would likely mean lower leisure fares as the airlines try to attract a high volume of vacationers and casual travelers. Good for your wallet, but not your carriers’.
As for the difference in opinion, there’s a few possible scenarios. Torbenson reminds us that Southwest has “a different mix” of passengers than other airlines, notably a higher reliance on leisure travel and a somewhat less established core of business travelers.
Larger airlines like Delta and United have been doing the business travel thing forever, and more importantly rely on it in a way Southwest does not. Because of this, Southwest can afford to underestimate the business travel market while execs from the legacy lines try to turn these small sparks of recovery into true momentum.
Business travelers, are you taking to the skies more now than earlier in the year? Or are you still holding back, content perhaps to simply check out “Up in the Air“? Leave a comment below with your thoughts, thanks!
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