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Business Travel Has Not Bounced Back — And There Is No Guarantee It Will

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Business Travel Has Not Bounced Back — And There Is No Guarantee It Will

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Business Travel Has Not Bounced Back — And There Is No Guarantee It Will
Business Travel Has Not Bounced Back — And There Is No Guarantee It Will

Flying is a much more tedious and unpleasant experience than it used to be, with two exceptions. Much safer and, hard to believe now, much cheaper.

A round-trip first-class ticket from Frankfurt to New York cost as much as a new Mercedes-Benz in 1961. But 50 years later, a new Mercedes costs 13 times as much, a German air force chief told me. .

Similarly, when Australia's Qantas began flying overseas in 1935, the journey from Sydney to London cost an average worker 122 weeks' wages, according to the airline's current director, Alan Joyce. In 2010, this could be done for just a week's salary.

But if you've just gotten on a plane, one of the last words that probably comes to mind is "cheap."

In December, I paid more for an economy seat than I ever paid for a flight from London to Melbourne, and not just for Christmas.

Airfares from London to New York, Los Angeles, Rome, Singapore, Dubai and other destinations in 2022 are on average the highest in a decade, according to airline analysts.

The jump in prices comes as airlines and airports hit hard by the pandemic face increased demand from travel-hungry passengers looking to catch up.

Fares on many routes have remained high in this inflationary year and, as OAG analyst Becky Rowland puts it, "it doesn't seem like people have stopped traveling."

This is especially true if your trip is for pleasure. But business travel, which usually takes longer to recover than holidays after a recession, has yet to return to pre-pandemic levels and it's unclear when that will be.

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Unsurprisingly, a round-trip business class airfare on routes like London to New York has been hovering around £7,500 over the past few months.

Travel managers in the US and Europe say rising airfare and hotel prices are currently the biggest hurdles to increasing business travel, Deloitte reported this month.

Managers believe full business travel spending can return to 2019 levels only by the end of 2024. But the latest annual estimates from the Global Business Travel Association suggest a full recovery in spending is not expected until mid-June 2026, and not just because of costs.

The association's chief executive, Suzanne Neufang, said environmental concerns meant business travelers were forced to take "more rewarding travel." That is, fewer, longer, and more productive trips than traveling back and forth to New York for one-on-one meetings.

Ironically, I hear many stories that support this trend. But at the same time, climate activists say that 85% of global companies have not developed a credible plan to reduce emissions from their business flights. Additionally, I know of at least one business traveler in London who is taking more one-day flights than ever before, citing saving on hotel bills.

There's another reason why people think business travel will never be the same again: the advent of Zoom meetings.

In theory it makes sense, but technological developments do not always produce the expected results.

This is a lesson that Vint Surf teaches. An American Internet pioneer once told a colleague that when engineers at the Defense Advanced Research Projects Agency invented e-mail in 1971, they thought travel budgets would decrease because workers wouldn't have to meet in person with as much frequency. But five years later, travel costs have quadrupled.

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Email means employees can work with more people than ever before, in far more remote locations, and even on larger projects. Face-to-face meetings, of course, are still required and more expensive to arrange, so travel costs increase.

I suspect that business travel patterns will continue to change thanks to the expansion of flexible working and, in large part, because of concerns about climate change. But I wouldn't be surprised if the change didn't turn out as expected today.

pilita.clark@ft.com

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