The Grounding of Business Travel Perks

Some airlines are de-emphasizing business travel, creating a dilemma for firms looking to strike a balance between saving costs and finding new business.

It has been part and parcel of being a top executive, flying often and always in business class. But even post-pandemic, the need to fly for business has become less urgent—and airlines have taken notice.

Indeed, with domestic business flying still well below its pandemic level—down 26% by dollars—airlines are focusing more on leisure travelers. And in the process, they've made business travel far less glamorous or smooth for the business traveler, and pricier per trip for firms. One airline let go of 40% of its 350-person sales team for corporations and agents, while others have made lounge access harder or pulled back on fancy in-flight meals and drinks. “If it’s less cushy, workers will pull back to only essential travel,” says human resources expert Ron Porter, senior client partner at Korn Ferry.

Depending on the CFO’s perspective, this could be positive—or a negative. While still below pre-pandemic levels, US firms alone spent more than $110 billion on travel last year, and individually, it eats anywhere from 12% to 27% of company revenues. “Travel and entertainment budgets have gone down drastically, and many firms want to keep it that way,” says Radhika Papandreou, head of the travel, hospitality and leisure practice at Korn Ferry. But at the same time, surveys show that business travel can account for significant business—through meeting clients, attending conferences.

Indeed, experts worry that some budget-minded companies in this tough economy are pulling back too much, or putting too many restrictions, on traveling. “Down the road, those relationships you built at a meeting three years ago sometimes pay off,” says Porter.

Airlines have long cherished the business traveler, because while business travel accounts for a small portion of trips it can make up as much as 75% of revenue. That percentage though has been declining at some carriers as workers themselves decide they’d rather travel less. That’s particularly true of the newer generation of workers; unlike the generation before them, younger workers prioritize greater work-life balances. They are also more budget-conscious, and more likely to book travel themselves, according to an April report by Morning Consult. Overall, this means fewer dollars spent, and therefore less ensuing miles, status and perks.

Porter suggests firms rethink their business travel strategy carefully for the rest of the year, mindful of both costs but also lost business. To encourage executives to hit the road, he says leaders should show some empathy toward staffers making long trips. Cross-country or international trips can be particularly brutal without lounge access or spacious airplane seating, and airplanes are expected to be very crowded for the rest of the year. “People might not be at their best when they haven’t had a pleasant trip,” says Porter. While most professionals will soldier through it, he counsels thoughtful scheduling. “After eight hours in tight seating in overcrowded terminals and airplanes, people might not be as productive, or as willing to share ideas in group settings.”


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