Moody’s estimated between 10 per cent and 30 per cent of business travel may not return because there is a high risk of a reduction in less-critical business trips, such as attending an internal meeting. — AFP photo
KUCHING: Prospects for the recovery of business travel by air are highly uncertain, and some forms of less-critical travel may never fully recover, Moody’s Investors Service opines.
According to Moody’s, business air travel will be slow to recover from the coronavirus pandemic.
“Initially, its recovery will be driven by the gradual reopening of workplaces and a latent demand to make business trips, although companies’ duty of care to employees to safeguard against Covid-19 infections before vaccinations becoming widespread will partially restrict business travel,” the research firm said.
“An increased focus on costs and the efficiency of business travel will drive companies to reassess the need to make business trips. After previous downturns, business travel was slow to return, taking around three to five years for spending to exceed pre-crisis levels.”
Moody’s highlighted that the extent to which travel will be replaced by virtual meetings is very uncertain.
That said, the research firm noted the risk of some degree of substitution is high and likely to be accelerated by the increased use of technology during the pandemic. Moody’s estimated between 10 per cent and 30 per cent of business travel may not return because there is a high risk of a reduction in less-critical business trips, such as attending an internal meeting.
“This compares with industry surveys and estimates of between seven per cent and 36 per cent.”
The research firm expected that the business travel market will eventually recover to 2019 levels, as the potential substitution of business trips by virtual meetings is gradually offset by growth in the remaining business travel market, although this is unlikely before 2024 at the earliest. Moody’s gathered that companies conduct travel because it enhances their business through generating sales, supporting customers, managing operations or bringing employees together.
“These key reasons for travel will still be compelling after the pandemic and will provide a fundamental mitigant against the more pessimistic estimates for the decline in business travel.
“Companies will also face pressure to maintain face-to-face contact with their customers, particularly where their competitors are engaging directly. Several studies highlight the value of business travel, including a May 2020 survey by travel firm Corporate Travel Management Ltd which showed 78 per cent of businesses said that lower travel had reduced their growth.
“Nevertheless, the pandemic is likely to drive a wide reassessment of the costs and benefits of business travel.
“Ultimately, this will improve productivity and the effectiveness of business trips.
“These trends are not new but we expect an acceleration after the pandemic.”