Almost every country in the world has imposed travel restrictions amid the Covid-19 pandemic, forcing businesses to cancel travel, events and embrace digital communications. But as vaccine programmes roll out across the world, many are keen for a return to business as usual.
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More than a year after the outbreak grounded much of the travel industry, and with more travel disruptions expected in 2021, corporate travel managers are surveying a landscape defined by economic crisis, cost reductions and pressure from consumers and employees to go further on sustainability.
“We are way into this pandemic and people are saying that sustainability is further up the priority list than it was before,” says Martin Ferguson, vice president of public affairs for American Express Global Business Travel, which represents companies from 140 countries and processes annual travel sales (pre-Covid) of $36 billion. “People are trying to get down to net zero emissions by whatever target they have set… and this is definitely here to stay.”
Clayton Nelson, vice president for strategy and transformation at Expedia Business Services, the business travel arm of travel website Expedia, says a growing number of customers want to know more about the environmental impact of their journeys, and are asking for carbon neutral travel programmes. Travel managers are using carbon reporting to choose low-carbon travel plans for their customers, she says.
Business travel’s upward trajectory
The business travel sector accounts for nearly a quarter (23 per cent) of all global travel, according to the World Travel and Tourism Council. In 2018, about 1.75 million residents from the European Union made trips to China, making it the eleventh most popular destination outside the EU, according to Eurostat data. Almost half of those journeys were business-related trips. Before Covid, the International Air Transport Association (IATA) projected airline passengers to double over the next 20 years, to more than 8 billion trips annually.
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Sustainability is no longer an add on, it’s risen up the league table of priorities.
Martin Ferguson, vice president, public affairs, American Express Global Business Travel
A return to pre-coronavirus levels of business travel may take years to return, the European Commission has estimated, with business travel likely to be more affected by decreases in GDP due to lockdowns in 2020. During the 2008 financial crisis, business travel from the United States dropped more than 13 per cent, compared to 7 per cent for international leisure travel, and didn’t fully recover for five years.
“When we do get back to a point where travel is permissible, governments are allowing it, and it’s safe to do so, the [business travel] volumes will start coming back, in greater and greater numbers. It might take three years to get back to where we were, but the growth is not going to stop,” Ferguson says.
Deciding who gets to travel
Many see the cutting back of business travel as a boon for health and the environment, and expect the reduction in travel to be permanent.
Microsoft co-founder Bill Gates predicted over 50 per cent of business travel and over 30 per cent of days in the office will disappear in the aftermath of the Covid-19 pandemic, although it is technologies such as Microsoft’s video conferencing service, Teams, and Zoom, Skype and Google that have benefited most from travel disruptions.
“We’ve been forced into using video conferencing at the moment, not by choice but due to government restrictions and quarantines which have kept people grounded,” says Ferguson. “When we come out of this, there will probably be different buckets of travellers. But some people have to travel, meaning their job involves travel, whether that is engineering, manufacturing, or education.”
That will lead to changes in how companies decide who gets to travel. The bar will likely go up for non-essential business travel in the future, as businesses capitalise on the pandemic to further transform their business models and invest in digital technologies to connect their satellite businesses.
“There will obviously be more rigid approval processes going forward to see who gets to go on a business trip,” says Ferguson.
Nick Queale, general manager for corporate travel at Flight Centre Travel Group, predicts that a pattern of three days a week at home and two in the office may become the norm. But big companies tend to require travel between markets. “Corporate leaders with subsidiaries in countries across Asia, with their differences in language and culture, would need to resume travelling to their offices to make sure company messages were heard,” he told the Financial Times.
Permanent changes in behaviour
The bigger question is whether behavioural change among businesses and their travel habits is permanent. In 2019, aviation as a whole emitted around 915 million tonnes of carbon dioxide, which is a little more than 2 per cent of man-made carbon emissions. During its nationwide quarantine, China experienced a 40 per cent year-on-year drop in nitrogen dioxide in January and February 2020, equating to removing 190,000 cars from the roads; as well as an 11.4 per cent increase in “good air quality days” across 337 cities, according to the World Travel and Tourism Council (WTTC).
Will the health and environmental concerns triggered by Covid-19 be a reset for business travel?
Ferguson says the coronavirus has accelerated changes that were already underway in terms of sustainability. Corporates were already pushing suppliers such as hotels towards more sustainable options, and increasingly choosing airlines that use more sustainable aviation fuel. According to a survey conducted in November 2020 by the Institute of Travel Management (ITM), which represents corporate travel buyers in the United Kingdom and Ireland, more than 80 per cent of respondents cited the use of biofuels as a priority when sourcing airlines for business travel, up from 63 per cent before the pandemic.
It is a sign that the pandemic may have triggered bigger changes in business travel decisions. Travel managers know that a return to business-as-usual after the coronavirus pandemic will jar with consumers and employees. Pre-pandemic, the air travel industry was on course to contribute to 9 per cent of total emissions by 2050. Climate action movements such as UK-born Extinction Rebellion have blockaded airports around Europe, reminding the airline industry that it has got away with failing to tackle emissions growth for too long.
“Sustainability is no longer an add on, it’s risen up the league table of priorities substantially,” says Ferguson. “I don’t foresee any set of circumstances where a majority of companies reduce their focus on sustainability… we’re beyond that. It’s so fundamental to business culture now.”
“They are not trying to reduce their carbon footprint just because it’s the right thing to do: they are doing it because it’s sustainable and responsible,” he says.
