Better business travel recovery in developing regions
KUALA LUMPUR: Prospects for the recovery of business travel by air are highly uncertain, but it is expected to grow more quickly in developing regions than in advanced economies, said Moody’s Investors Service.
“This will continue the trends seen since the global financial crisis, when growth in business travel in advanced economies lagged the overall market, with demand for leisure flying leading.
“An increased focus on nearshoring of supply chains after the pandemic is likely to increase intra-regional or short-haul international business travel at the expense of long-haul trips,” the rating agency said in a note yesterday.
Moody’s said the recovery in business travel would 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 before vaccinations becoming widespread would partially restrict business travel.
“We forecast that global revenue passenger kilometres will gradually recover, although they will not reach 2019 levels until at least 2023 and possibly later.”
Some forms of less-critical travel might never fully recover, with improving technology, company cost reductions, and environmental concerns might put pressure
on business travel, it added.
Moody’s expects large full-service carriers, mostly in advanced economies, would face greater pressure from a slow recovery in business travel.
It said business travel was likely to be more profitable than leisure, but airlines would adapt to support profitability.