State of the industry

The coronavirus pandemic has hit few industries more dramatically than travel, writes Gary Noakes, who assesses its impact so far

We believe that there will be effectively no international travel until late summer, from when it will gradually return”

In the last 30 years, corporate travel has experienced two Gulf wars, 9/11, the 2008 financial crash and the 2010 Icelandic ash cloud, but nothing like the coronavirus pandemic.

After a scramble to repatriate clients,

TMCS found themselves dealing with cancellations and postponements to travel plans, with normal life a distant horizon.

“We believe there will be effectively no international business travel until late summer, from when it will begin gradually to return,” predicts Scott Pawley, Global Travel Management's Managing Director.

Global’s work to repatriate clients showed the value of TMCS in extraordinary circumstances – the last-minute return of 15 Indian nationals from the UK just as India’s border closed being just one example.

Pawley remains optimistic despite the crisis: “Business has stopped but will not go away. I think we can consider it as merely hibernating.” The TMC has “no plans” to cut staff numbers or hours in March or April.

Chris Crowley, partner at consultants Nina & Pinta, is similarly optimistic but sees a longer hiatus: “It’s one of those moments in time when you have to keep talking to people, keep working, keep sharing and assume it will come back. There are some very small green shoots – domestic travel in China is returning.”

He adds: “We think it will be Q1 next year before global travel returns in most markets. So much global travel is driven from the US. If it is the last one to feel the effects and gets into the difficult cycle in June and July, then I think we will be lucky if it is Q1 next year.”

Staff retention

In the interim, retaining staff appears to be the common approach among TMCS. Most Wayte Travel Management staff are working a three-day week and in a letter to clients, Managing Director Chris Morris said: “Our intention is reduce costs but to keep our team together ready for when normality returns, whenever that may be.”

Morris has been with the company for 32 years. “It’s by far the worst experience we have ever been through. The disruption to corporate travel is total. Winding down whole airline fleets is remarkable,” he says.

However, Morris sees glimmers of hope. “In response to the letter, we had an awful lot of emails saying clients were thinking of us and chomping at the bit to get back to normal. I’m in no doubt we will be busy

again once things return to some semblance of normality, but the question is, when will that be?”

Morris believes we will see “some improvement” by summer. He is convinced the corporate sector is robust and that the coronavirus hiatus will not see firms permanently cutting back on travel.

“We went through this with the advent of videoconferencing, then the Gulf wars and 9/11, yet the value of corporate travel continues to grow as the world economy grows,” he says.

“We do some Skype, but it’s simply not the same as sitting in a meeting – and people don’t travel just for meetings; there are conferences, physical work and recruitment as well. I think as soon as things return to normal, people will be back out there, because it’s the best way to do business.”

When they do, TMCS may rethink how they are rewarded by corporates in future so that they are paid for all the work they do – repatriation for example – and are not just reliant on sales.

The ITM has cautioned its members about the advent of this potential approach and warns of a possible move towards more of a subscription model.

Air overhaul

Another possible change in the postpandemic world is that buyers might also find their choice of airlines more limited. It sounded almost unthinkable, but in March, some analysts predicted most of the world’s airlines would be bankrupt by the end of May.

Lufthansa Group Chairman Carsten Spohr warned that “the longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid”.

Pawley’s blunt prediction is that “as many as 100 airlines will no longer be trading by the end of the outbreak”. However, he adds that a stronger industry will emerge: “Those who survive – some with the support of massively increased government funding – will be stronger, fitter and better placed to serve their customers. We will probably see more state-owned flag carriers backed with government funding and guarantees.”

High fixed costs and no customers – particularly from the corporate world – mean carriers are looking to governments for salvation, urging normal EU rules against state aid be ripped up.their pleas are credible given China’s heavily impacted carriers are government-supported, as are the Gulf airlines. In Europe, the situation is different, with EU regulations to contend with and only a handful of carriers in the region being state-owned.

All will want rules to be bent and governments to step in, as in Norway, where the non-eu member pledged Norwegian more than £200million to keep it going until June after the airline found commercial lenders willing to lend it the requisite 10% of this amount. If TMCS think things are tough, airlines have it worse.

“All we want to see is an airline industry that is still around,” says Business Travel Association Chief Executive Clive Wratten, who describes UK government support for the sector so far as “strong”.

TMCS may rethink how they are rewarded in future so they are paid for all the work they do – repatriation for example – and are not just reliant on sales”

Back in business

Wratten is another who believes a regionby-region return to travel is likely. “I think it will be a rolling start, because we will see countries opening up at different paces. The Far East opening up is positive; there is a lot of post-brexit trade deal business there.”

Meanwhile, he has a message for the corporate travel sector: “The message is to work together; it’s really a time for collaboration and to support each other. Keep talking, keep sharing, keep believing.”

Belief that this will end will be vital in the coming weeks. These are dark days, but TMCS at least can take heart that their worth is underlined in a crisis and many travellers and buyers will remember the lengths they went to repatriate, rebook and generally come to the rescue when the shutters came down.