Business travel picks up, bolstering outlook for US airlines
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[April 19, 2024] By
Rajesh Kumar Singh
CHICAGO (Reuters) - U.S. airlines have enjoyed a travel boom for the
past three years, but until this past quarter, big-spending corporate
travelers had been largely missing.
Those customers are now back in full force, boosting profits for
carriers in what is normally a weak quarter for results. The U.S.
airlines that have so far released results - including Delta, United and
Alaska Air - all reported a sharp rebound in flying for business
purposes.
On Thursday, Alaska Air said increased spending by technology companies
like Amazon.com and Microsoft in the March quarter increased revenue
from corporate travel to pre-pandemic levels. For most of the last year,
the carrier's business bookings were stuck around 75% of the 2019
levels.
The corporate travel increase helped the Seattle-based carrier post a
strong performance in the March quarter, traditionally its weakest
period of the year.
In an interview, Alaska's chief financial officer, Shane Tackett, said
demand would keep growing, as spending by technology companies has not
fully recovered.
"Technology companies on the West Coast are the most valuable companies
in the world," he said. "They are going to travel to see their customers
and to sell software."
Similarly, United said it recorded some of the biggest corporate
bookings in its history this year, thanks to demand from professional
services, tech and industrial companies.
Business trips generated as much as half of passenger revenue at U.S.
airlines before the global health crisis, according to industry group
Airlines for America.
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![](../images/041924PIX/busine85.jpg)
American Airlines planes are seen at gates at LaGuardia Airport
ahead of the Thanksgiving holiday, in New York City, U.S., November
21, 2023. REUTERS/Shannon Stapleton/File photo
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But the sluggish recovery forced carriers dependent on business
traffic to rework their network and chase vacationers. Pricing power
fell due to excess industry capacity in key leisure markets.
United shifted more seats to markets like Florida and Las Vegas in
the first quarter following losses in the same quarter last year,
while American Airlines reset the terms of its contract with big
corporate customers.
While the pickup in business travel is largely linked to people
returning to offices, airline executives say corporate clients are
loosening their purse strings due to the improved economic outlook.
Delta last week said 90% of its corporate customers are planning to
either maintain or increase travel volumes in the current quarter.
The Atlanta-based airline, which saw a double-digit year-on-year
increase in corporate sales in the first quarter, expects to deliver
record corporate revenue in the second half of this year.
Alaska raised its 2024 earnings forecast as it expects profit from
business travelers to offset higher fuel costs.
United's chief financial officer, Michael Leskinen, on Wednesday
said the recovery in business traffic was "wind in our sails,"
saying that while current trends were strong, "the future is even
brighter."
(Reporting by Rajesh Kumar Singh; Editing by Leslie Adler)
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