CIBC: The future of business travelTransportation and Aerospace weekly
Key points
VistaJet/WSJ published a report this past week titled, The Future Of Business Travel, which surveyed over 200 executives on business travel. One thing that has stood out during the pandemic was that commercial aviation took a big hit while business jet traffic proved resilient, hovering at ~10%-15% of pre-pandemic levels in H2/20. The main takeaways we had from this report were:
1) 60% of respondents expect more in-person meetings in the future;
2) a third of companies saw missed opportunities and fewer deals closed due to limitations on travel, highlighting some of the limitations from video conferencing versus in-person meetings; 3) 81% of respondents said business travel will be more important than ever to driving success; and
4) future travel demand is dependent on regulations, with 46% of respondents waiting for destinations to reopen.
NetJet's volumes in May support the finding of this report with the company noting flight volumes for customers in May were 20% above levels seen in 2019. Private aviation continues to benefit from ongoing challenges facing commercial aviation with an influx of new customers switching over because of reduced airline schedules and health concerns.
While the VistaJet/WSJ survey and NetJet's recent results are a positive for private aviation (bodes well for BBD and CAE), we believe they also show an improving outlook for corporate travel overall. While the recovery in business travel will lag the recovery leisure traffic, as economies re-open we also see corporate travel picking up. In the Global Business Travel Association survey released June 17, we continue to see business travel sentiment improve across multiple metrics. For example, 51% of companies plan to resume domestic business travel in the next 1-3 months, up nine points from the May poll. Looking at international business travel, 21% of companies plan to resume travel in the next 1-3 months, an eight-point improvement from May’s poll. Similarly, corporate travel in the U.S. is down ~66% currently according to the Airline Reporting Corp. versus down almost 90% in January.
Time will tell whether corporate travel returns to pre-pandemic levels, but we believe there is a growing recognition that the recovery will be stronger than originally anticipated a year ago. COVID-19 has been a tailwind to the private aviation industry, while recent data points do suggest there is pent-up demand for business travel as economies re-open, benefitting commercial airlines.