As business travel rebounds in the United States, airlines are reaping the benefits of renewed spending from corporate clients.
Consider that 62% of CEOs expect their companies to increase travel budgets this year, according to a TravelPerk-commissioned report.
This resurgence is fueled by the recognition of the value of face-to-face interactions in driving revenue and creating employee morale. Other contributing factors to increased business travel include higher attendance at conferences and an increase in workforce size, the report found.
U.S. firms are particularly optimistic, with 61% planning to ramp up travel spending, compared to less than half of their European counterparts, per the report.
Airline Initiatives
Airlines have responded to this renewed demand with initiatives aimed at enhancing customer experience and capitalizing on the business travel boom. Delta Air Lines, for instance, reported a 7% increase in corporate travel sales during its third-quarter earnings call Oct. 10. Delta CEO Ed Bastian said during the call the airline continues to demonstrate resilience in the business travel sector, building on strong performance from previous quarters.
“Corporate travel continues to improve, and Delta continues as the business carrier of choice,” he said.
United Airlines is also making strides in business travel as it reported earnings results Oct. 15 that showed corporate revenue rose 13% during the third quarter, driven by its focus on enhancing the overall customer experience. The airline has invested in technology and service improvements, including enhanced Wi-Fi and a revamped mobile app. United’s Net Promoter Score, which measures customer satisfaction, increased by 5.4 points in the quarter.
“We’ve worked hard to improve the customer experience,” United Airlines CEO said during the company’s third-quarter earnings call Oct. 16. “It’s been a multi-year process with significant product investments, now including the fastest Wi-Fi in the industry. And one of the most common comments I get is how much better the United app is than others.”
Linda Jojo, executive vice president and chief customer officer for United, said she is “very proud of our app,” which is used by “90% of our customers on day of travel. Our pace of innovation continues. [Wi-Fi] has been a years-long challenge we think will transform the onboard experience.”
Wyndham Hotels Focuses on Business Travel
Wyndham Hotels & Resorts, meanwhile, is also focused on enhancing customer value through its financial offerings.
“One of the key drivers of our ancillary fee growth strategy is the expansion of our suite of co-branded credit card products,” Wyndham Hotels President and CEO Geoffrey A. Ballotti said during the company’s third-quarter earnings call Thursday (Oct. 24). “Earlier this year, we launched Wyndham Business aimed at streamlining the direct booking process for all types of business travel. This initiative has gained significant traction, driving a double-digit year-to-date increase in our corporate contracted business from infrastructure-related accounts. In addition, our Wyndham Rewards Earner Business Card has seen a 32% year-over-year increase in new accounts and a 70% lift in purchase volumes contributing to our ancillary fee growth this quarter.”
Despite the overall positive trends in the airline industry, American Airlines is grappling with challenges stemming from a failed sales and distribution strategy, which was further magnified by the departure of Vasu Raja, the former chief commercial officer.
To address feedback from corporate partners and travel agencies, the airline has undertaken revisions to its sales and distribution approach. Throughout the process, struggles to effectively engage corporate clients and adapt to evolving market demands have negatively impacted the airline’s revenue.
“The American Airlines team continues to focus on running a reliable operation and managing costs across the airline,” American Airlines CEO Robert Isom said in a Thursday press release. “We have taken aggressive action to reset our sales and distribution strategy and reengage the business travel community, which we’re confident will improve our revenue performance over time. We have heard great feedback from travel agencies and corporate customers as we work to rebuild the foundation of our commercial strategy and make it easy for customers to do business with American.”
During the third quarter, American Airlines renegotiated contracts with many of its largest clients and reintroduced Corporate Experience benefits designed to better serve business travelers, per the release. The airline reported a net loss of $149 million for the quarter.
