LCCs could experience rise in business travel demand post-Covid
Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here
X

LCCs could experience rise in business travel demand post-Covid

By Globaldata Travel and Tourism 01 Oct 2021 (Last Updated October 1st, 2021 15:56)

As the world eases out of the pandemic, business travel is expected to return the slowest. In 2020, international trips fell by 75%, according to GlobalData traveler demands and flows database.

LCCs could experience rise in business travel demand post-Covid
Credit: Rudy and Peter Skitterians / Pixabay.

As the world eases out of the pandemic, business travel is expected to return the slowest. In 2020, international trips fell by 75%, according to GlobalData traveler demands and flows database. However, as travel restrictions begin to ease worldwide, and government support schemes end, businesses must readjust their travel management programs to meet the financial constraints of the business. As a result, business travelers may switch from traditional legacy carriers and premium cabins to more affordable alternatives presenting an opportunity for low-cost carriers (LCCs) to gain a larger foothold in the business travel market.

Corporate travel budgets have reduced

According to a GlobalData poll*, 43% of respondents said their business has cut back significantly on its corporate travel budget, highlighting Coronavirus’s impact on business travel. With travel budgets scaled-back, business travelers could reduce flying altogether and stricter budgets could mean frugal travel decisions must be made. Low-cost carriers have a prime opportunity to position themselves more aggressively as a cost-effective alternative to the prestigious legacy carriers such as BA, American Airlines and Air France, to name a few.

The pandemic has changed business travel management programs. As a result of slashed corporate travel budgets, organizations will now urge many employees to find the lowest cost itineraries for their trip. Premium travel may be scrapped by some. Therefore, low-cost airlines have a significant scope to evolve its business travel proposition and target new demand.

The concern for full-service carriers (FSCs) is that LCCs have established products. In 2016, Ryanair crafted a bundle package, ‘Ryanair Business Plus’, which provides fast-track security, priority boarding and ticket flexibility. easyJet also offers a business plus memberships, with similar benefits. Other low-cost airlines are emerging in the long-haul space too increasing pressure on FSCs. Transatlantic flights with JetBlue and the anticipated launch of Norse Atlantic show that low-cost airlines are already testing the waters on traditionally high yielding business travel routes.

FSC’s need to adapt

This potential market behavior will put more pressure on FSCs. Cost is likely to be a deciding factor for most travelers, but business travel was more about convenience pre-pandemic. Full-service carriers need to find new ways to offer more value to businesses (not just passengers) and differentiate product offering. Strong relationships with TMC’s (Travel Management Companies) are essential because businesses are more likely to use a singular third party for procurement reasons. Further enhancement to business loyalty programs, such as the Emirates Business Rewards and BA On Business, is an ideal way to appeal directly to organizations looking to extract value from their travel programs. Nevertheless, in these testing times we are likely to see some exciting new product developments within the business travel sector from a multitude of airlines.

*GlobalData Poll, 347 respondents, closed 16th April 2021

Up Next