How Do Travel Managers View Corporate Booking Technology?

Findings From GBTA Research Study Powered by DEEM

Alexandria, Virginia – The Global Business Travel Association (GBTA) – the world’s largest business travel association, today launches the findings from a study into how travel managers view online booking tools (OBTs). The study, made possible by Deem, examines how U.S. and Canada-based travel managers view corporate booking technology and how the pandemic has impacted business travel, including the changes to travel policies and booking channels.

The study asked travel managers about their key priorities when selecting an OBT, how travel managers feel about booking-related innovations such as artificial intelligence (AI), automated chat, and IATA’s New Distribution Capability (NDC), and whether their travel programs offer a satisfactory mobile booking experience either through their OBT’s app or a travel management company’s (TMC) app.

Key Findings Include:

• The coronavirus has made some companies revisit booking-related policies; some changes are here to stay. Of the travel programs that have adopted a stricter requirement to book through an OBT/TMC as a result of the pandemic, three-quarters (75%) expect this change will remain in effect permanently.
• Travel Managers identify strengths and pain points with the primary OBT their company uses.
  Seven in 10 (69%) rank configuration as one of the three greatest strengths of their company’s OBT. Other top strengths include integration and end-user/ traveler experience.
• Almost half of travel managers (48%) say innovation is one of the three greatest pain points with their primary OBT. Richness of data and a consistent experience across multiple devices are also viewed as pain points.
• Mobile bookings still not available for all. Approximately one in five do not offer mobile corporate booking solutions for flights (20%) or hotels (17%). One-quarter (27%) do not offer mobile booking of rental cars.
  Even when travel programs offer mobile booking, satisfaction is mixed. While almost two-thirds of travel managers (64%) are satisfied with their mobile booking solution when it comes to an end-user/traveler experience, only about half (54%) are satisfied when it comes to consistency with other formats (e.g. desktop or travel agent.)
• “The pandemic has given many travel managers the opportunity to review their company travel policies and identify how evolving technology can help to solve any shortcomings in their travel program. With business travel solutions, like Deem, becoming more powerful and enjoyable experiences, travelers are going to stay on platform, and travel managers will become even more empowered to add value to their companies,” said David Grace, President Deem.

OVERVIEW: Grow with Google OnAir is an online content series hosting digital skills webinars designed for small to medium businesses in the travel and tourism industry.

Join Google for the Grow with Google OnAir Australia ( g.co/GrowOnAirAU )

A three part online event series designed to help small to medium businesses show up and stand out online. Focused on the travel industry, the series will discuss industry trends, insights and examples of how travel businesses can grow using digital marketing.  We will cover how to create and manage a Business Profile on Google, how to grow brand awareness using Google Ads; and how to turn data into actionable insights with Google Analytics.

Register at g.co/growonairau

Sessions will stream at 2:00pm AEDT on Thursday 11th, 18th and 25th March 2021.

Business Travel Sees Steady Recovery in Europe.

It is ‘not the end of business travel as some doomsayers believe’ and corporate travel ‘will return’ but with consumers demanding richer and more pertinent content.

While leisure travel will lead the initial recovery, business travel will follow and travel technology specialist Amadeus warns that when it does, the need for access to richer and more importantly pertinent content will be pronounced. The very genesis of NDC was to bring new levels of flexibility and creativity and Amadeus sees the platform emerging as the recovery takes place.

To remind us all, NDC  stands for New Distribution Capability, a technology standard launched by the International Air Transport Association (IATA) that allows data, such as passenger booking information, to be transferred in a common way over the internet.

The NDC standard enables the travel industry to transform the way air products are retailed to corporations, leisure and business travellers. Initial tests proved successful and IATA promised the programme would hit critical mass this year even though there had been lot of uncertainty into its evolution, which has been a little slower than originally envisaged.

As we entered into 2020, NDC had been a topic that dominated distribution discussions all around the world. It may have slipped down the priority list as the global coronavirus pandemic spread across the globe, but it remains a key capability for a realigning commercial air transport industry. While NDC held its ground amidst all the challenges of 2020, some continue to think it will provide a limited platform, create opportunities only for airlines, at best. “This couldn’t be farther from the truth,” says Mark Ridley, head of airline distribution solutions and NDC [X] program at Amadeus.

As the travel industry continues to navigate towards recovery in 2021 and beyond, Mr Ridley attempt to break the truth from the myths and misconceptions that have risen on the subject during the COVID-19 pandemic. Firstly, that travel companies are not actually slowing down their NDC deployments.

The pandemic in fact has “reinforced the argument in favour of building a strong retail proposition for the travel industry,” he says, noting a need for enhanced, efficient new systems to manage refunds or vouchers to passengers after flight cancellations.

The NDC standard has already been adapted to meet the need for voucher-based refunds as well as updated to offer extra features, such as information and reassurance about the safety and hygiene measures being taken throughout the journey. This, says Mr Ridley, deflates another myth that NDC is incapable of adapting to the new normal.

The travel environment will be different, but Mr Ridley says that it is “not the end of business travel as some doomsayers believe”. When it returns, he says the need for access to richer and more importantly pertinent content “will be pronounced” with travel decision makers need to “get easy access to the complete offers and consumer friendly policies of an increasing number of airlines via NDC”.

But is this all about making airlines better retailers? They certainly have a lot to gain through NDC but Mr Ridley acknowledges that NDC will actually help in the recovery of the travel industry. NDC helps airlines build targeted offers when a request comes through from aggregators or agents. This opens new revenue opportunities for airlines as they begin to customise offers for travellers around requests for additional baggage, food options, Wi-Fi, or any other on-board service. There are myriad benefits for travel retailers too.

“For travel sellers, a whole new world of opportunities is opening up as they have access to new, richer and more innovative tailored content. This means more images, videos, ancillary services, reviews and targeted bundled offers that they can select from and propose to their customers, all while having continual access to the latest promotions, fares and updates,” explains Mr Ridley.

The success of NDC will eventually be measured by the level of sustainable adoption not merely by airlines but by all players in the travel ecosystem. “As global air travel recovers, travellers will be more concerned than ever for a smooth end-to-end experience, especially when it comes to last-minute changes to travel plans or flight cancellations,” says Mr Ridley.

In this sense, the disruption caused by the pandemic has reinforced the need for standardisation and collaboration across the travel industry to ensure customers can be helped and assisted effectively through all channels in real time.

“Travelers needs are rapidly changing due to COVID-19, and NDC is an enabler for these faster changes,” says Mr Ridley. Despite this unprecedented crisis, this may suggest that NDC is even more crucial today. “It is one of the paths to recovery and to leapfrog into better retailing for the travel industry,” according to the Amadeus executive.

GBTA’s annual Business Travel Index has pegged 2025 as the year global business travel volume would surpass its $1.4 trillion peak from 2019, after being felled by the Covid-19 pandemic in 2020, which the study estimates reduced global business volume by 51.5 percent versus the prior year. That’s 10 times worse than business travel losses that followed 9/11 or the Great Recession in 2008. GBTA partnered with Rockport Analytics to produce the report.

GBTA research director Chris Ely said 2021 will continue to be “a year of survival” for the business travel industry, but recovery toward the back half of the year should deliver a significant boost. The study projected 21 percent growth in global business travel volumes in 2021, followed by roughly 38 percent growth in 2022, which would catapult global business travel spend back to $1.2 trillion, but still shy of full recovery.

“That’s huge growth again,” said Ely about the 2022 projection. “Business travel is a key component of the economy, so as businesses are looking to dig themselves out and pursue new clients, that’s when business travel kicks in.”

The study predicted businesses would prioritize sales travel during the early recovery period in 2021, followed by service and repair travel to existing customers. Internal meetings, according to the research, would be prioritized over external conferences, events and trade shows, while travel for employee training and supplier meetings would be less important, especially given virtual alternatives.

Ely underscored that “busines travel is a key component of the economy,” but it won’t be the first mover in recovery. “Governments are pumping money into their economies,” he said. That type of stimulus combined with effective vaccine distribution and inoculation programs must happen first, according to the study, and the markets that master those elements will recover business travel volumes faster. The report pointed to China and other Asia-Pacific markets as models.

Despite the challenges, GBTA interim executive director Dave Hilfman said he was optimistic about a full industry recovery. “We’ve seen domestic travel in China recover almost completely. We can have similar results as we make our way through this year,” he said.

International travel, Hilfman acknowledged, would take longer. “We need vaccines and standard covid testing to help open borders. I like to be action oriented, but right now we have to have patience as vaccines roll out and we start to get control of the virus.”

Regional Analysis

The GBTA report analyzed global markets by eight factors to guide projections through 2024: the size of the economy; land mass, population and business dispersion; industry mix; technology and productivity of business travel; export dominance; physical location; infrastructure; environmental, tax, security and health regulatory policy. Per global region, the study projected the following:

Asia-Pacific

Comparatively, Asia-Pacific saw less business travel decline in 2020 than most other regions, dropping 44 percent versus 60 percent declines in North America and 58 percent declines in Western Europe. Researchers also noted the region will see quicker recovery. China’s early infections, followed by strong lockdowns, precipitated a comparatively speedy recovery from Covid infection rates in the second quarter. The study estimated 2020 business travel in China to decline by 38 percent, buoyed by the country’s historically strong domestic demand, which was largely recovered by the fourth quarter. “The hardest hit markets in the region will include those that are dependent on international business travel like Singapore which is set to decline by 82 percent in 2020,” researchers wrote. “Business travel in Hong Kong, likewise, will plummet by 84 percent in 2020.”

Europe

Western Europe: Researchers projected busines travel for Western Europe to fall 58 percent from 2019 level of $335 billion. The region was hard hit by the pandemic and continues to struggle with new virus variants as well as disputes regarding vaccine distribution, which have emerged in the past week. Another factor weighing on business travel spending in Western Europe is “the dependence of many companies and countries on intra-regional travel and economic activity. The dizzying array of country restrictions and policies from the outset of the pandemic made it very difficult for travelers to follow,” wrote the researchers. Though not cited in the report, Brexit has introduced more complexities for business travel to and from the United Kingdom, including documentation requirements that may stymie business travel that would otherwise have recovered quickly.

Emerging Europe: Research authors separated Europe into two segments. ‘Emerging Europe,’ which includes countries like Romania, Russia, Poland, Turkey and Ukraine, saw business travel decline by 48 percent in 2020 to $29.7 billion, recovering back to its 2019 peak of $57.2 billion by 2024.

Latin America

Business travel volumes in Latin America were already struggling going into the pandemic, declining to $50 billion in 2019. Political crisis in Venezuela and ongoing recessions in Argentina and Ecuador compounded with early emergence of Covid-19 in Brazil in February 2020 to weaken business travel performance in the region. However, strong domestic business travel as well fewer travel restrictions in the region, overall, saved some business trips. Volume fell 45 percent compared to 51.5 percent globally. Researchers predicted similar drivers would help the region recover business travel volume at an average 1.4 percent growth rate annually through 2024, slightly faster than the forecasted -0.4 percent global pace.

Middle East & Africa

The Middle East & Africa had strong business travel growth numbers going into 2020. The region experienced 7 percent growth in 2018. An additional 2.6 percent growth in 2019 put total business travel spend for the region at $27 million. According to the GBTA report, 2020 business travel declines in the region were less severe than other markets, driven largely by lower Covid-19 case rates compared to North America and Europe. Researchers also cited less discretionary business travel—i.e. the business travel that was taking place was directly tied to business operations. Given those factors, researchers expected the MEA region to recover at an average annual 4.3 percent between 2019 to 2024, outperforming all other regions. Recent reports of highly contagious Covid-19 variants in South Africa, a major business travel market for the region, could hinder that recovery pace.

North America

According to the GBTA report, business travel spending in North America hit nearly $347 billion in 2019, with the United States accounting for more than 90 percent of that spend. The U.S., however, was hard hit by the pandemic and cases and hospitalizations continued to rise going into 2021. Tense international trade relations, especially with China, had already hindered business travel growth in that market. Researchers predicted North American business travel would experience the steepest declines in the world in 2020, and particularly the U.S., where the report estimated a 61 percent drop for 2020. Canada, researchers said, would see business travel fall 51 percent and Mexico a comparatively modest 44 percent decline. The report called out the roll of government and the administration change in the U.S. as a catalyst for business travel recovery there, citing the likelihood of the Biden administration “to lead much more liberal trade and immigration policies” and hopes for a cohesive public safety strategy that would include a “coordinated vaccine campaign across the U.S. and North America.”

Researchers had a tough hill to climb to assess the damage of 2020 and project volumes for 2021 and beyond. The association delayed the study’s release given the volatility in the travel environment, and the report utilized data from many additional sources to validate trends and projections, GBTA’s Ely told BTN.

“The ‘rules’ of travel—if you want to call them that—are changing on a daily basis. If you look at X as it relates to Covid, a week later it’s different,” Ely said. “Governments are scrambling to [understand economic recovery] and plot a course, and because it’s changing so fast, you have to ask how good is the info you are getting. The good news is that we had more data sources this year than ever before. We got additional inputs on corporate travel and bookings on a global scale.

The 2019 BTI, which was released in July prior to the GBTA convention in Chicago, projected slowing growth for the segment, but estimated total global travel spend to hit $1.51 trillion in 2020. The Covid-19 pandemic reversed fortunes for the entire travel industry. The current report pegged 2020 global business travel spending at $694 billion.

Who Has Your Money? How to Rebuild Travel Payments With Trust and Transparency.

Over the past few years, with travelers becoming more diverse and smartphone usage upending the way people pay for goods and services, the need for seamless and secure payments has increased. Now, with the travel industry slowly getting back on its feet amidst a global pandemic, where do we go from here?

In order to shore up their payments ecosystem, travel brands need to break down silos, maintain agility, and develop global capabilities through partnerships. SkiftX spoke with Laurie Gablehouse, global head of travel solutions at Ingenico, about the importance of transparency and centralization in rebuilding trust, and how travel companies can adapt and thrive in a world with constantly shifting protocols and restrictions. Ingenico was recently acquired by Worldline, becoming the largest European player in payment services and the fourth largest player worldwide.

SkiftX: With many travel companies in recovery mode, what should customer experience professionals be thinking about right now in terms of moving forward with a payments ecosystem?

Laurie Gablehouse: Recovery isn’t just about monetary recovery. It’s as much about customer experience, both externally and internally. I think this is a really good moment for travel companies to ask ‘What have we been doing well or not well in terms of customer experience, and which partners are supporting us through this time?’
Unfortunately, as we all know, many people are losing their jobs, and every single vertical in the industry has taken a huge hit across the board – but in anything there is opportunity, and it’s a great time to pause and think, ‘Who do I trust?’

If you’re a customer experience professional, you need to be thinking about ring-fencing the people within your company who actually understand your payments and expanding beyond the finance department. As a company, you should be balancing what the marketing people are trying to do in terms of driving sales revenue with what the finance department is doing to try to manage costs.

All of the stakeholders need to be around the table for this subject. And hopefully, if you’re losing some folks within your company for various reasons, I would hope you find a way to draw a ring fence around those who are left, who know, or need to learn, how to manage your payments. Because, if you are not focused on how to collect money for your services, then what are you doing? That always should have been at the top of the list, but it got shoved into a corner in many cases because I think it’s expected to be easy.

With credit cards, everybody thinks, “Oh, I just put in sixteen digits and it’s all good.” Nobody thinks about the cost involved in safeguarding against fraud and managing the contracts and suppliers. We’ve made the user experience look very simple, but moving payments behind the scenes is very complicated. And it’s not just about collecting the money now. It’s also about hanging on to it instead of refunding it. The focus has completely gone in the other direction. You need a team of people across multiple divisions that understand this, from sales and marketing and finance to operations, because the operational team has to deliver what the marketing people are doing to drive revenue.

SkiftX: We’ve talked about optimizing the human side of things, and the importance of creating a fail-safe institutional team, but has anything changed on the technology side in response to the pandemic? 

Gablehouse: We’ve built a new risk model. Honestly, there was a huge gap in credit and risk understanding that didn’t matter until now. We’ve worked closely with our merchants to understand the real-time state of payments that were collected without the service being delivered, because the flight or trip was canceled, for example. That trust and transparency helps us provide better credit terms. We can be a true partner to these travel companies to say, “Look, we’re not trying to make this harder on you. We’re just trying to understand your position. Whatever data you share with us, we’ll share back, and we’ll figure out your cash position together so you can move forward and make decisions with your eyes wide open.”

On the hospitality side of the business, we’ve been looking to provide a framework for how legacy technology systems can come together. To the degree that you can understand the supply chain and centralize where the money ends up, you can help your cash position because you know the money is sitting in your bank account. If the dates need to be rebooked or the customer needs a refund, you’ve got a position of strength to work from. In many cases, hotels were not collecting money until guest arrival or checkout, whereas airlines always collected the money up front and were probably within a week or so of their cash being in their bank, depending on credit terms and many other things. When travel stopped, those hotels had no cash flow, and that really hurt.

It’s about getting closer to your suppliers. Maybe you need to pick a short list of suppliers and make sure you understand how you’re getting your money from them contractually, so it’s not as anonymous. In all honesty, credit cards and electronic payments have allowed for that anonymity. I didn’t need to have a contract with you to process your credit card and get my money. It’s very valuable to work towards a centralization model that allows you to understand where you are in that process and to strengthen the parts that make more sense to your business.

SkiftX: Any other best practices for customer experience professionals adapting to this shifting landscape?

Gablehouse: You have to embrace change at this point in time, right? Let’s all get over it. It’s been very frustrating and overwhelming because our instant reaction was to react, but we need to move on and embrace the fact that things will continue to change. You may need to add some flexibility into your processes, whether it’s a policy for refunding, or an underlying backend system for monitoring or managing fraud and chargebacks.

Again, if you centralize things you can find them, and you can start putting systems and rules around them, whether it’s a fraud system or an accounting system. That may require strengthening relationships with your suppliers, it may require improvements to your internal policies, or it may mean investing in new technology solutions.

For example, one of our clients, Viva Air, wanted just one payment provider, so from a data, reporting, and monitoring perspective, anything they did moving forward became less complicated. They realized they had no internal payment stakeholders, so they built that team of expertise in partnership with Ingenico. We have some of the best expertise in the business, but it’s their decision how they use the tools we give them and the information we provide.

You need a partner that has in-depth payments expertise within the travel industry, you need to establish face-to-face relationships, and you need to have the right people on your team in the room who can ask the right questions. It’s not just about payments. It’s also about the customer experience and interaction.

SkiftX: In summary, how should travel companies be preparing for 2021 and beyond? 

Gablehouse: Domestic leisure travel is reemerging first, but cross-border international will be back. You need to think how you’re going to scale back into that. Now is a good time to make those kinds of changes, or at least plan for them. Your payments strategy needs to balance your revenue needs, your cost needs, and your customer experience needs. This is your moment in time to improve the efficiency of your payment ecosystem so your teams can focus on delivering a best-in-class experience.

Why Bill Gates is wrong and business travel won’t die in 2021.

The COVID‐19 pandemic will no doubt drastically change the way business gets done moving forward, especially when it comes to travel. Microsoft co‐founder Bill Gates has even predicted that over 50% of business travel will go away permanently now that remote work and virtual meetings have become the norm.

While I’m sure he would offer Microsoft’s Teams as a worthy substitute for face‐to‐face business deals, Gates’ dire travel prediction substantially underestimates three key factors:

• Human connection is how work gets done. We are fundamentally relationship‐driven creatures and even with the most advanced technology, when push comes to shove, business still gets done in person. By his own admission, Gates himself hasn’t made a single new friend or business connection this year, and most of us can relate. We’re talking with people we already knew through happy hours and team collaboration, but with conferences, trade shows and other networking events cancelled, new connections are much harder to come by.
• There will be an arms race in sales. Your CFO may be thrilled about the lower travel and entertainment expenses this year but ask them how they feel about sales numbers. Most won’t be so thrilled because you can’t have one without the other. Your sales team might say they’re perfectly happy to sell virtually—it’s much more convenient—but as soon as your competitor gets in the same room with a prospect, you’ve essentially lost the deal. Not to mention, there’s a tremendous amount of upsell, expansion and retention that hinges on personal relationships. It’s often over lunches, coffee or drinks that consultants and vendors learn about other challenges their client is facing and can offer support. That’s how a one‐off project turns into a long‐term engagement. The reality is the weaker the relationship, the more likely you are to get unseated by your competitors, and if you’re not physically there, your risk is much higher.
• “Never travelers” will become travelers. When everyone was in the office, we could easily meet up to brainstorm, either formally around a conference table or informally in the breakroom. With the loss of connection and the challenges of remote collaboration inherent in distributed work, innovation has slowed. At the same time, remote recruiting makes it tougher to onboard new employees and bring them into the fold. Companies need to get their teams together to push the organization forward. As a result, we can expect to see more in‐person team building, project kickoffs and collaboration sessions with people who never traveled now hitting the road to meet up twice a year or once a quarter. Where you once had 20% of staff always on the road and 80% who never traveled, now you might have half or more who travel once or twice a year. Road warriors may travel less, but the volume will be heavily offset by large populations that may be travelling for work for the first time ever.

While it’s true that the threshold for justifying travel may increase—companies will need to focus on the ROI—business travel will still be essential for growing sales, building teams and maintaining culture.

A good CFO isn’t just thinking about the bottom line and cost savings but also how the talent experience and overall company growth comes into play. Getting people together is critical for rapidly building trust and relationships, rallying around a cause and re‐energizing and motivating the team—all of which are critical for innovation.

So, how can companies prepare for this shift in business travel? By establishing smart policies, compliance standards and iron‐clad record keeping.

• Map out a strategy. While the stakes are higher and companies need to control costs, a hard “no” on all travel puts you at risk of losing ground to your competitors. Instead, establish a protocol for determining the business case for travel and how you’ll justify the expense, not only for new business but also teambuilding and onboarding. New hires will want to know the rules of engagement up front—if they’re fully remote, how often will they get face time with their colleagues to build relationships?
• Build inclusivity into the travel policy. You may have many employees chomping at the bit to hop on the next plane. But for others who are high‐risk or have challenging family/personal situations, like child or elder care, homeschooling, etc., it may be unsafe or impossible for them to travel anytime soon. You’ll need to be thoughtful about how you manage opportunities so that you don’t disadvantage that portion of your employees who can’t leave home.
• Maintain records and compliance. At the risk of adding insult to injury after a long year, 2021 will very likely be the Year of the Audit. With travel on lockdown over the last year or so, governments have been extremely lenient about tax and legal issues related to where employees are working. With most of them now facing massive budget shortfalls, don’t expect that to continue—they’re going to come calling and holding companies accountable. Companies need to stay on top of who is/has been where for both compliance and health/safety. Tracking employee location automatically, in real time, provides the most reliable, auditable solution to ensure and validate tax and legal compliance, as well as keep your employees safe.

The reasons for business travel have not changed—we still depend on personal connections to get work done—and for that reason, we can expect to see a rebound in travel as soon as it’s safe and people feel comfortable.

But as travel returns, which it no doubt will, it will bring with it a whole host of new complexities around keeping costs and risks low. Companies will need to be prepared with a sound strategy and technology to support it in order to stay on top of the competition.

Post-COVID Priorities.

For instance, traveler experience has new meaning. Travelers have strong feelings about hitting the road again. Their questions need answering:
•How can I be safe?
•What information will I be provided?
•When and how will that information be provided?
•What can I expect throughout the trip?

Leonardo da Vinci said “I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.” This is the time to know, apply and do. Here’s one way to go about it.

1. Know your traveler sentiment
Given the likely phase-in of travel early next year, the time is now to pursue traveler sentiment. Buyers need to understand how travelers are perceiving the current travel environment. The road ahead depends on two key areas: Asking the right questions and getting the answers to pave the way forward.

Enough underlying detail is needed to provide a 360-degree feedback loop. It will take a few obvious levels of questioning along with some subtext to achieve this understanding. Questions to ask may include the following:
•When will you be comfortable with domestic travel?
•When will you be comfortable international travel?
•How long does flight or rail travel need to be for you to want to drive instead?
•When will you be comfortable renting a car?
•When will you be comfortable sitting next to someone on a plane?
•When will you be comfortable attending in-person meetings larger than x-number?
•What cleaning protocols are most important to you?
•What type of safety information do you feel is most needed from your airline, hotel, etc.?

Surveys do not have to be complicated or intricate to be fit for purpose. A well-written survey has three success points: It measures concise, actionable data points, it’s easy to read and comprehend, and it’s easy to take. This can be accomplished (with everything critical included) in a survey that takes no more than three minutes to complete.

Setting up a survey with an eye toward benchmarking results over time or benchmarking against different audiences can lend additional valuable insight. This is especially true when measuring moving targets like traveler sentiment in the COVID world.

Standardization enables such benchmarking. Buyers can then assess progression over time and gaps in sentiment between, for instance, their own travelers and/or general industry sentiment. Theses insights will drive ideas and timelines for program adjustments and changes. Standardization also creates industry measures of all companies to gauge the wider implications so buyers and sellers can reset together.

2. Apply the supply side
Success will be achieved by understanding both sides of the issue: What travelers want and need, and how travel teams and suppliers are prepared to meet them. Once we know traveler sentiment, we can understand how the traveler/supplier relationship may need to change. We will have more insight on issues which may impact our ask of suppliers. For instance:
•Mix of domestic vs. international travel
•Whether driving replaces rail or flying for some portions of travel
•Whether travelers use a rental, company or personal car
•What hotel experiences and amenities may need to change
•Meeting size comfort levels and limitations
•What protocols need to be monitored and communicated – airline, hotel, market specific, etc.
•Other parameters both broad and specific

From these insights, travel buyers will work with key suppliers to obtain current and evolving safety information, rework agreements to fit the new demand patterns and align suppliers to the travel reset. Further, they will tailor messaging content and timing to best meet these new realities.

Here are some how-to details:
•Assess the changes in spend patterns now versus 2019, looking for mismatches
•Model current discount structures against both patterns to see the gain/loss
•Project return-to-travel rates for the next two years. Use a “ramp up” approach (leveraging traveler sentiment) to estimate the multi-year impacts
•Have the substantive discussions with key suppliers where needed
•Once the contracts are adjusted, new messaging content and cadence can be deployed

3. Do the new managed travel
Supplier responses will be slowed by workforce reductions, communication strategies need lead time and technologies will need programming adjustments to balance the new travel realities. This means it’s paramount to start now.

Application of traveler sentiment will become part of the new travel management model. Again, capturing traveler sentiment on an ongoing basis and benchmarking it with industry-wide sentiment will mold a successful program. To “do” the new managed travel, buyers will not only want a pulse on sentiment but also levers in place to quickly shift policy, adjust supplier relationships as needed and communicate to travelers in a timely manner.

Travel contracting will be different post-COVID. Inclusions of safety content, journey advice and realigned demand patterns will upend current targets and discounts. Be ready.

While buyers are certainly grateful for suppliers who are graceful with underperformance, two inevitable problems arise. First, buyers may not realize maximum value with a misaligned discount/savings contract, thereby achieving less value than possible. Second, suppliers will reach a turning point where grace cannot be further extended. A direct, soon-to-happen result is an urgency for revised agreements, resulting in a flurry of RFP activity.

Astute buyers will be ahead of these issues to maximize their programs and get it done before the bulk of the managed travel community realizes they are caught in the tidal wave of sourcing.

Uncertainty and lack of trust are uncomfortable and often lead to inaction. Successful future programs depend heavily on the merging of certainty and trust into a new single thoroughfare. Know your traveler sentiment, apply the supply side and do the move to the new managed travel model sooner rather than later.

We can agree Da Vinci was ahead of his time. Before the inevitable oncoming onslaught of RFPs, one has to ask: Will you also be ahead of time by proactively managing change now?

BUSINESS TRAVEL WILL COME BACK MORE SOPHISTICATED WITH BIGGER ROLE FOR TMCS, SAYS AMADEUS.

BUSINESS travel, when it returns, will likely be initiated for different reasons, have different requirements for planning, and travellers and corporates will place value on different considerations.

Amadeus’ recent report “Reboot. Recharge. Rethink Business Travel”, based on interviews conducted with some 100 executives from business travel agencies across the world, explored factors and trends that will influence the timeline for global business travel recovery.

“The new needs of [business] travellers will be driven by safety, trust, confidence, access to right information at the right time and less on price,” said Renaud Nicolle (pictured left), Amadeus’ vice president of business travel, APAC.

He said this brings to focus the increased value of travel management companies and planners. “Booking will be but a small value to travellers. Advice will be more important,” he said.

He urged travel management companies to add value by bringing back a sense of confidence to travellers to get back on the road.

Technology will play a key part, he added. Creating a frictionless experience, even with all the new regulations and potential disruptions, will be key.

Amadeus is already honing its several years old duty of care solution called Mobile Messenger – an application for corporations to track and communicate with their travellers – so that it will meet the needs of the traveller in the new environment.

“We have brought this solution to the front end and partnered with Riskline to provide us real time information about restrictions and travel requirements from the various countries such as what medical tests may be needed before travel” explained Nicolle.

Nicolle also stressed the importance of collaboration in restarting travel. Collaboration, he said, is important between industry players and governments to define the right protocols and standards. He said Amadeus is engaged with many tourism organisations, IATA, airlines and airports to collaborate and advance the concept of a digital health passport.

Once the protocols and standards are put in place, Amadeus will be looking to integrate that into their departure control solutions so that information flows seamlessly and the check-in staff can use that to enable check-in and boarding.

“This is how we will connect the dots and play our part in the ecosystem,” he said.

Nicolle said business travel has been resilient in the marine and energy industries – both considered essential services even during the pandemic. The seamen industry in Philippines have already up to 50% of pre-Covid levels. Other professional services industries like education and healthcare have actually adapted well to digital solutions for meetings and will thus likely see slower recovery for business travel.

Behaviours around travel will also change. He said travellers will want to be more organised and think better and be more focused about each trip they make. They may group meetings together when in the past, they might have taken several trips to achieve the same load.

While sustaining current business relationships may be possible using virtual meeting tools, Nicolle surmises that developing new prospects are better done face to face. As to internal company meetings, he said reviewing budgets could be done online, but meetings to reenergize teams, for purposes of planning and strategizing are still better done in person. As such, Nicolle sees corporations taking a hybrid view to meetings.

“Some meetings like internal reviews and training might go away – those are working well remotely,” said Nicolle.

But there will be new opportunities for travel, he said. With the work-from-home culture becoming more entrenched, the concept of work-from-anywhere will take hold. In other words, some people will decide to move or work from remote locations and the workforce will become more disseminated. There will therefore be a new need for employees to travel to the main office for occasional meetings.

Inevitably, travel policies will become more stringent and even complex. “There will be increasing levels of approvals for travel. Travel management companies will see their workload increase as they will now need to provide a lot of new information,” said Nicolle.

“Business travel will come back more sophisticated.”

The BTA issues new guidance on TMC pricing models.

The Business Travel Association has issued guidance on how TMCs should be remunerated and to act as a reference for the day-to-day management of the relationship between TMCs and their corporate clients.

The publication follows an eight-week consultation which ended in December.

The BTA CEO Clive Wratten said, “We consulted extensively with representatives from a number of leading TMCs and corporates to develop this industry guidance on standards. The positive contributions received throughout are an encouraging sign that this guidance will be well adopted.”

The guidance covers three different pricing models – transaction fees, subscription fees and management fees – and compares these to how pricing models in the mobile phone industry work.

Corporate clients should also “be transparent as possible about the services required, providing their best estimates of spend, travel patterns, preferred agreements and transaction numbers,” it said.

It also calls on corporates to “be as open as they can be when defining what value represents for them in their travel programme”.

Announcing the launch of the consultation in October, Wratten told BTN Europe that there was a need for more transparency in the business travel sector.

Some buyers will be disappointed that the new guidance does not offer greater transparency over TMC incomes.

For transaction fee and subscription fee models, the guidance states that the TMC is not expected to declare earnings. For management fees, the guidance states that the TMC is expected to provide full disclosure of the profit and loss related to managing the customer business.

However, it goes on to say that “the ‘open book’ aspect of this [management fee] model is viewed by the TMC as only applying to the management of the client business and not that of their overall business and profitability. Therefore, it should not be assumed that certain aspects of the TMC business will be disclosed or shared as a standard. These include business development funds, GDS fees and override agreements.”

Announcing the launch of the guidance, Wratten said: “This year, more than ever, TMCs and corporates need to work closely together to define and redefine their relationships.

“These should be strategic partnerships which recognise the value a TMC offers, and go beyond everyday transactions to encompass the knowledge and expertise that enables their corporate customers to deliver a duty of care to their travelling employees.

“These standards are designed to be a benchmark that can be adopted across the business travel eco-system, and provide consistency and best practice for all stakeholders.”

The BTA said Clive Wratten would represent the organisation “in leading talks with Cortas, NBTA, Capa and NATM as they look to adopt similar practices”.

Commenting on the launch of the new guidelines, Scott Davies, CEO of the Institute of Travel Management, said: “The creation of this high level overview of TMC pricing models by the BTA is a welcome initiative and provides corporates with a clear and easy-to-use resource. It’s particularly relevant and useful at this time as many corporates and TMCs will be re-evaluating their commercial agreements and alternative pricing models as the business travel sector emerges from the pandemic.

“However, in order to see real progress in defining commercial standards, corporates will need to move away from allowing different pricing structures from TMCs as part of the bid process. The TMC sector has always been very competitive and this has tended to be reflected in pricing scheduled on an iterative basis. To maximise transparency, facilitate recovery and support a movement towards more robust pricing models both sides of the negotiating table may need to adopt new approaches and start to push back on bidding that results in a race to the bottom.”

The BTA guidance and the consultation that preceded it were developed in partnership with consultancy Nina & Pinta.

Will business travel ever recover from the pandemic?

18 January 2020

Although many in the travel industry are predicting a robust recovery in leisure travel once borders can properly reopen as cooped-up workers make a break for overseas trips, business travel faces a severe crisis.

Airlines Want All International Travelers Tested Before Flying to the U.S.

Travelers to the U.S. may soon need a negative Covid-19 test if the country adopts a the recommendations of public health officials.

Airline trade group Airlines for America (A4A) backed a Centers for Disease Control and Prevention recommendation that the U.S. ditch blanket travel restrictions in favor of a mandatory testing regime for all arrivals, in a letter to Vice President Mike Pence on Monday. All of the large global U.S. carriers, including American Airlines, Delta Air Lines and United Airlines, are members of A4A.

If the U.S. adopts the CDC recommendation, it would be the largest country so far to implement mandatory testing on international passengers.

Testing rules would apply to all international arriving passengers, as well as replace blanket restrictions on travelers from Brazil, Europe and the UK, wrote A4A President and CEO Nicholas Calio in the letter. He called such a regime a “more effective way” of controlling the spread of the coronavirus. In addition, the industry recommended a 14-day implementation timeline in order to notify flyers and train staff on the new requirements.

The premise of testing-based arrival rules is simple. A traveler must present proof of a negative Covid test taken in a set time window, say 24- or 72-hours, in order to board a flight to the country in question. Some countries also require a negative Covid test in a set period after arrival as well.

Hawaii implemented a testing-based regime to generally successful results in October. The state requires all inbound travelers to present proof of a negative Covid test taken 72-hours before their flight, or agree to quarantine for 10 days after arrival.

A testing-based approach to international travel is seen by many as key to reopening borders. The trade group the International Air Transport Association (IATA) has called for this since at least October when director general Alexandre de Juniac said testing would “allow governments to open borders without quarantine.” Such a move is seen as critical for global carriers that rely primarily on international travel to restart flights and begin recovering from the crisis.

For example, after Hawaii replaced a mandatory quarantine with its new testing rules, the number of flights from the mainland U.S. to the islands doubled overnight to roughly 50 a day, data from Cirium schedules shows.

A nascent universe of digital health passports has even emerged to support testing-based rules. The World Economic Forum and The Commons Project have developed the CommonPass app, which has backing from the country of Aruba as well as airlines like JetBlue Airways and United Airlines. IATA has developed its own Travel Pass app that Singapore Airlines is trialling on routes between its namesake country and Malaysia.

Whether the U.S. adopts the CDC’s recommendations for testing-based entry requirements remains to be seen. Pence, the letter’s recipient, is set to leave office in just over two weeks on January 20. The new administration of president-elect Joe Biden is expected to take a more public health-oriented approach to combating the coronavirus than the current administration.

“We need governments to think in terms of achievable risk management, currently many are aiming for risk elimination,” de Juniac said in December. “The social, economic and health costs of this approach are enormous and it’s becoming clear that the goal itself is practically unachievable.”

Many companies will require business travellers to be vaccinated.

Predicting the path of business travel in 2021.

Twelve months ago the outlook for the new decade and for 2020 held so much promise. Now, after a year that seems to have lasted forever, how optimistic dare we be for 2021?

When gazing into the future we usually consider macro-economic factors, geopolitical issues and current trends, be they tech-driven or otherwise. But looking to 2021 requires us to really focus on the customer. How will companies and organisations change their behaviour as a result of Covid, and how will their staff feel about travelling on business? We are all in a very different place.

Economically, 2021 will be challenging in the UK with post-Brexit changes to work through and a rise in unemployment to a forecast 7.5 per cent by the end of Q2, meaning some 2.6 million could be out of work, almost double that recorded in June 2020.

How then will companies and organisations behave?

There will be much greater scrutiny of spending on travel based on the economic value to be gained. Travel will also be assessed against alternative means of digitally enabled communication. And it will increasingly be viewed through the lens of sustainability, as companies collectively take greater responsibility for our environment.

The way many used to work has changed and changed forever. For those who can, time will be split between the work-office and the home-office. Office footprints will shrink along with their costs of operation. New digitally enabled behaviours are here to stay. Finance directors will be pleased.

Employees are concerned about safe travel and the risk of being stranded in the wrong country at the wrong time. They do not want to have to quarantine. They do not want to put their families at risk. Some will have enjoyed their new work-life balance. Personal wellbeing is now top of the agenda.

Companies appreciate this. Directors have a legal duty of care to their employees. They also know the value of doing business in person, whether to win new prospects, retain their customers, negotiate new supplier deals and partnerships, and a host of other activities. Business travel is positively correlated with economic growth, and so is vital to the UK’s wellbeing too.

Will vaccines be the universal panacea? The probable answer is that they are all we’ve got and so will have to be. However, it will take time for their roll-out, with the vulnerable and front-line staff first in line in the coming months.

An estimated 70 per cent of the population needs to be vaccinated in order to effectively manage the virus. This is a huge logistical ask that will take time. We do not know yet when follow-up jabs will be needed, and what the bumps in the road will look like. There will be international variations and issues to contend with too.

Therefore, the numbers likely to travel on business internationally in H1 2021 will remain low. There may also be a further surge in cases through January, after the Christmas and New Year period, leading to restrictions on movement in the UK and elsewhere.

There will be continuing reluctance to risk more cases with travel to/from places with relatively high rates of infection. The option for a series of tests pre- and post-travel allied to stringent safety measures taken by airlines, hotels and others, may yet enable some business flying, which would suggest a slow increase through Q2 to around 20 per cent of where the industry was in 2019.

Whilst there is an expectation that we might be able to travel abroad for a summer holiday, the volume of summertime business travel is likely to be similar to end of Q2 levels until we reach September, based on seasonality. It may be possible that we see an increase to 50 per cent of Q4 2019 international travel in the final quarter of 2021, although this feels optimistic if we are only at around 20 per cent in August.

Overall, my current view is that we should expect domestic business demand to be running up to 50 per cent of 2019 levels on average in 2021, with international business travel closer to 25 per cent on average, with Q1 remaining below 10 per cent and Q4 rising to around 40 per cent.

2022 will then be brighter, with levels around 75 per cent or more for domestic travel and meetings, and 60 per cent and above for international travel, compared to 2019.

IATA’s latest forecast expects air travel to not equal 2019 volumes until 2024, with leisure doing better than business travel in terms of the recovery.

Whilst this is arguably a pessimistic scenario, it is surely better to plan for the worst and hope for the best. It is easier to add back cost as activity levels rise – it is so much tougher to manage a business with too much cost.

Cash and access to funding has already been a huge challenge, eased by the furlough and Coronavirus Business Interruption Loan schemes. Of course, the former ceases at the end of Q1.

TMCs are under enormous pressure to rapidly change, embracing technology to deliver efficient and safe services. Understanding what their customers now think and want is key.

Some will adapt and thrive. Some will not. Decisions have to be made quickly. We will see more M&A activity to achieve economies of scale, and the scale required to access travel content that underpins their customer value proposition.

Companies must grasp the nettle now. TMCs that smartly reset and closely collaborate with their customers will cope with a weak 2021 and benefit from the momentum as business travel slowly recovers.

ATMC 2020 Chairman’s Report and Election.

Chair report for 2020:

We don’t need reminding of the horrendous year we have had in 2020. Let’s hope that with the early opening of state borders this month that we are starting to see a return to domestic travel for the first quarter of the year.

I must say I was somewhat buoyed by the straw poll conducted by Channel 7 Sunrise TV show on the first day of flights into Brisbane a couple of weeks ago when about 70% of travellers when asked, said they were there for work. I hope that this trend continues over the traditional holiday season and that we TMC’s get some welcome revenue flowing again.

27 years ago the ATMC was founded to provide a mechanism for TMC’s to meet and interact and to provide commentary on matters relating to our sector. My particular favourite is the meeting bit, but we have been very challenged doing this for obvious reasons. We have continued to use our website and Linked in pages to inform members and followers in matters relevant to us while we seek to identify really impactful guest speakers and plan for the return to F2F meetings. Ollie and I have forged a good relationship with Darren Rudd from AFTA and it is good to see the stimulus package emerge from many months of activity.

Beyond the obvious, TMC’s are also facing unprecedented times as far as revenue is concerned. Albert Einstein said, ‘in the midst of a crisis, lies a great opportunity’ and clearly this is what our airline partners in particular, have carved into the walls of their boardrooms!

The dramatic falls in supplier revenue are going to be felt during the immediate future, as travel starts to return. Just as we experienced 10 or more years ago with the withdrawal of POS commissions we have to re-state our value proposition to customers, only this time we need to use 2020 as the catalyst, by reflecting on the non-revenue generating activities we have been forced to perform, and the fact that we have stood by our customers and continued to inform them on the myriad of things that are occurring to help them to navigate the post Covid future.

No question about the fact that the customer will be paying more for our services to close the revenue gap. This is reality, and the future success of our industry is at stake. We too can carve Einstein’s words into our virtual boardrooms, and act to protect our businesses by having frank and open discussions with our customers about the role we play, the changing supplier landscape and the need for a new fair financial model whatever that might be. The time is now.

‘Covid’ and ‘Pivot’ have been the most frequently used words for nearly a year, and I know we are all totally sick of hearing them! I have hoped we would not hear ‘NDC’ for a while however in the light of the other things airlines are doing, it is back in favour with even VA saying that it is being fast tracked, no doubt by their new leader. There are still massive challenges for many TMC’s in embracing NDC and to say that the time is not right for investment in systems to embrace NDC would be the understatement of the century! And the GDS’ would agree with us!

We are also facing another challenge: who will lead our businesses into the future? The events of 2020 have led to thousands of our employees being stood down or terminated permanently which has in many cases has impacted the people we have been grooming to be the future leaders of our businesses. Understandably these talented people have pursued roles in other industries where Covid impact is limited or non-existent, and we will likely never get them back. So how do we move ahead and re-ignite the fire to attract talent and provide them with the confidence that we are a viable industry to be in?

These and other topics will be the focus of ATMC meetings in the coming months.

On behalf of the committee, I would like to thank you for your support of the ATMC in 2020 and into the future and we very much look forward to a more normal year ahead as well as of course, a return to trading conditions that we can live with!

GBTA survey: Half of buyers say employees are willing to travel.

Half of travel buyers indicated their organisations’ employees now are very or somewhat willing to travel, according to a new Global Business Travel Association survey. The survey, conducted between 9 and 16 November, coincides with news of the apparent efficacy of several potential Covid-19 vaccines.

GBTA surveyed 822 industry professionals, 40 per cent of whom were travel managers or procurement professionals.

Some 60 per cent of European travel buyers surveyed indicated they expect their organisations to reach half of their 2019 domestic business travel levels within four to nine months. Half of buyers expect regional business travel to take the same amount of time to recover.

Long-haul business travel is expected to take longer to recover, with 63 per cent of European buyers expecting it to take between 10-24 months until it is at least half of 2019’s level.

The survey also revealed that 66 per cent of European travel buyers and procurement professionals felt there should be an exception to mandated quarantine requirements for international business travellers.

Buyers also were asked how willing their companies would be to encourage employees to download an app that would track and trace travellers to assist in contact-tracing efforts. About half said their companies would be very or somewhat willing to implement such a policy, with 15 per cent unwilling, with the rest either unsure or “neither willing nor unwilling.”

USA spotlight – a dire outlook, particularly for business travel, as total spending is expected to decline by 45% and not return to 2019 levels until 2024 or 2025 as losses could hit USD1 trillion during 2023.

The US Travel Association (USTA) has revealed that domestic leisure travel is expected to decline by -24%, domestic business by -60% and international inbound travel by a staggering -76% this year in an autumn update to its 2020 Travel Forecast. The results of this report are dire, particularly for business travel, though projections for domestic leisure have marginally improved since its spring update.

Even then, the numbers do not make positive reading. Travel spending is expected to decline by –45% and not return to 2019 levels until 2024 or 2025. Total losses will reach USD510 billion by the end of the year and hit USD1 trillion by the end of 2023 and the industry is on pace to lose 4.5 million direct travel jobs—that’s 50% of all travel jobs—by the end of 2020. More details of the scope of the recovery on a year-by-year basis is available here: US Travel Association 2020 Travel Forecast – autumn update

The latest week-by-week travel spending analysis from Tourism Economics for USTA shows spending rose +4% in the last week – recovering about one-third of the prior week’s -11% decline. For the week ending 14-Nov-2020, travel spending tallied USD11.9 billion, reflecting a -44% drop below last year’s levels and equating to a USD9.5 billion loss. While an improvement from the -46% year-on-year decline of the previous week, it remains worse than the -42% level two weeks earlier.

Tourism Economics observes that the year-on-year decline in travel spending has remained in the -41% to -46% range for 14 of the last 15 weeks, the lone exception being the first week of September due to a boost from Labor Day holiday travel. The question is will Thanksgiving provide a similar boost?

The weekly performance is generally positive, albeit the Midwest was the only region not to improve from the prior week, likely a result of the rapid rise of COVID-19 cases in the region. The research shows that seven of the 17 states that experienced worsening conditions in the week ending 14-Nov-2020 were in the Midwest, with Minnesota, Iowa and Indiana experiencing some of the largest declines.

On the other hand, the severe declines in West Virginia, South Carolina, Nevada and Puerto Rico in the week ending 07-Nov-2020 proved to be a one-week phenomenon, as these states were among the best performers, according to this latest weekly data.

The rising travel spending coincides with a noticeable improvement in air travel with Transportation Security Administration (TSA) screenings tied at their best year-on-year performance since the start of the pandemic. The latest seven-day average of daily screenings through 17-Nov-2020 was +1.8% higher than the previous seven-day period, down -63% lower than in the same period last year.

Road travel has remained relatively flat in recent weeks and there is no change to that trend. While there have not been any significant weekly improvements since the end of the summer, road travel has generally maintained a relatively good performance over these last few weeks, with lower year-on-year declines on a consistent basis than any other time since the start of the pandemic, according to Arrivalist’s Daily Travel Index, which measures consumer road trips of 50 miles or more in all 50 US states.

ADARA’s Traveler Trends Tracker, which taps into real-time travel data on travel-related consumer behaviour, including hotel volume and flight bookings for both business and leisure travel, indicates that domestic air and hotel bookings for future travel are slowing, down -60% year-on-year and slightly lower than in the previous week.

National and state-level booking data provided to USTA highlight strong regional differences in demand. Domestic bookings to Montana (-22%), Wyoming (-26%) and, for the first time, Delaware (-34%) experienced the lowest year-on-year declines, while domestic bookings to New York (-81%), Massachusetts (-75%) and Connecticut (-75%) experienced the highest year-on-year declines.

On a positive though, international bookings for future travel to the US at down-58% year-on-year marks the first time international bookings performed better than domestic bookings since Apr-2020 and represents a significantly improvement from earlier weeks.

While the numbers for 2020 do not make positive reading, there are positive developments. USTA has also released a new report focused specifically on the impact the coronavirus pandemic has had on business travel and the meetings and events sector. Though many businesses were able to pivot quickly and figure out how to connect and work effectively in a remote setting through an increased reliance on conference calls, webinars and virtual platforms, most agreed: there is no replacing face-to-face interactions, the report, ‘Getting Back to Business: Navigating the Safe Return of Meetings and Their Role in Economic Recovery’, observes.

“The fact is, the importance of face-to-face meetings is invaluable,” the report says, and the coronavirus pandemic complete with social distancing and endless Zoom calls and webinars has “accentuated the need and desire for human connection in person”. From growing new business, retaining and building existing relationships, gaining experience or training, or continuing to be informed and educated on the latest trends, technologies or products, “being together, in person is much more effective, efficient and genuine than a virtual setting can capture,” it adds.

More than three quarters of travellers feel technology adoption would increase their confidence to travel in the next 12 months with many happy to use contactless and mobile payment solutions.

23 November 2020

We are now approaching the final month of a year that many people will be eager to forget. It is certainly a time to look forward rather than back as we start to prepare for a time when we can safely go about our lives without such heavy concerns over COVID-19. While we will remain in the shadow of the pandemic for some time still, we are now starting to emerge from the gloom with obvious bright lights ahead.

A recently published global traveller study by global insight-driven research firm Censuswide to explore traveller sentiment in light of COVID-19, how expectations and demands have changed and what can be put in place to strengthen traveller trust and confidence, gives some insight into the future outlook.

The Sep-2020 research for travel technology specialist Amadeus, based on more than 6,000 respondents residing in France, Germany, India, Singapore, UK and US who have travelled abroad in the last 18 months may be dated a little by sentiment trends. However, it still illustrates some key differences across countries and demographics that could help the travel industry and governments address top concerns about travelling in the next 12 months.

The study found a clear role for technology to play in supporting recovery with over four in five (84%) travellers saying technology would increase their confidence to travel in the next 12 months by addressing concerns around mixing with crowds, social distancing and physical touchpoints.

When asked about technologies or technology experiences that would increase confidence to travel in the next year or make them more likely to travel, survey results showed that two in five (42%) believe mobile applications that provide on-trip notifications to inform about localised outbreaks and changes to government guidance would help boost their confidence to travel. The same number (42%) cited contactless and mobile payment options such as Google Pay, PayPal and Venmo as key to reducing incidences of physical contact throughout the journey.

More than a third (34%)of travellers who have concerns about travelling in light of COVID, identified biometrics (i.e. facial or voice recognition) that enable check-in, pass-through security and boarding without the need for physical checks would make them more likely to travel. Similarly, a third (33%) agreed they would like one universal digital traveller identification on their phone that includes all necessary documentation and immunity status, that meant they only had to prove it once.

Notably, and perhaps an indication of contrasting sentiment across different countries at the time of the survey as much as regional and age differentiation, it was found that technology receptiveness and preferences differ by country and demographic, underscoring the importance of personalisation in gaining traveller trust.

The findings showed that almost half (47%) of Baby Boomers said they would need to be able to socially or physically distance throughout the journey in order to feel comfortable travelling, compared to less than 3 in 10 (27%) of Generation Z.

Amadeus also identified that over half (52%) of travellers in Singapore who have concerns about travelling in light of COVID selected contactless experiences at hotels as a technology that would make them more likely to travel, while almost half of Indian travellers who have concerns about travelling in light of COVID (47%) selected mobile applications that inform them of the destination city’s safety measures.

Additionally, for French travellers, automated cleaning processes (36%) and contactless and mobile payments (34%) were the most popular of the suggested technology options. A quarter (25%) of UK travellers and just over a quarter (26%) of US travellers said they’d most like technology to reduce the need for them to have physical documents. Meanwhile, three in ten German and UK travellers (30% each) said they’d most like technology to minimise their physical contact with others. You can access and download all the individual country reports via the Amadeus website.

At an global level the top five things travellers would most like technology to do when thinking about travel was found to be to reduce queues and congestion in public spaces (38%); minimize face-to-face or physical contact with others (31%); protect financial data and personal information (31%); notify in advance when there is a delay (29%); and ensure the accuracy and effectiveness of national test, track and trace programmes (28%).

Ultimately, as stakeholders work to rethink travel, the survey results suggest that the top five ways to build traveller confidence under current conditions comprise provide access to flexible change, cancellations policies and payment terms to avoid losing money (39%); limiting the number of passengers on a plane (38%); an ability for travellers to socially or physically distance themselves throughout the journey (36%); having visibility to and assurance of sanitisation, hygiene and safety measures in hotels and accommodations (36%); and effective test, track and trace programmes being in place (34%).

The travel industry had already been on a journey of technological change ahead of COVID-19, but this was patch at best. With the industry being hurt hard by coronavirus this latest research provides a source of optimism for the industry that many travel concerns can be addressed by technology adoption across all stages of the journey. The positive news is that much of this technology such as new mobile applications, biometrics and contactless solutions is available right now, there is simply a need to accelerate adoption and deployment.

Amex M&E forecasts lower 2021 budgets as virtual grows.

The American Express Meetings & Events 2021 Global Meetings and Events Forecast, released on Monday, confirmed what many meeting planners and managers know: hybrid meetings will be a path to in-person gatherings; small, local and regional events will be more popular than large meetings in 2021; and hygiene as well as safety and security assurances – not just stated protocols – are paramount for events to move forward.

The report is based on a survey of more than 560 meeting and event professionals who represent corporations, associations, buyers and suppliers from 37 countries, as well as interviews with 16 industry experts. The survey and interviews took place in August and September 2020.

New to the survey is the addition of small and simple meetings as its own category of meeting. Respondents said these meetings would be the most common type of meeting held in 2021 in all formats – in-person, hybrid and virtual – at 21 per cent of all events, followed by internal meetings at 18 per cent.

Respondents cited two main factors when considering whether to hold an in-person event: 68 per cent cited confidence in attendee health and safety components, and 59 per cent said flexible cancellation and attrition terms.

The capacity to accommodate social distancing, noted by 77 per cent of respondents, was the overwhelming factor in meeting location choice, followed by disinfection protocols at 52 per cent.

Travel Vitals, a platform launched in July by Amex M&E parent company American Express Global Business Travel, “is one way meeting professionals can get information about health and hygiene guidelines and government restrictions around the world,” Amex M&E SVP and general manager Gerardo Tejado told BTN. “It is a combination of leveraging third-party sources for what is needed to make sure people feel comfortable.”

Virtual challenges
Interviewees acknowledged that virtual meeting components would be here to stay, not just because they have proven to be effective for certain types of meeting needs, but they also increased the number of potential audience members, allowing more inclusivity for those who might not have been able to attend in-person events.

The top challenges with virtual meetings, however, according to survey respondents, are a lack of knowledge or experience in using them (40 per cent), technical issues (32 per cent) and lack of engagement (18 per cent). For European respondents, the top responses were lack of knowledge or experience (39 per cent), technical issues (28 per cent) and security concerns (16 per cent).

One way to help with engagement is to align virtual meetings to attendee personas, Tejado said, referencing Amex M&E’s identification of seven types of virtual attendees. “We identified who attends and how you need to understand who they are and what they are looking for to tailor content to them,” he added.

Furthermore, industry professionals cited in the report cautioned that planning a virtual or hybrid event involved more than setting up a conference call or live-streaming a face-to-face meeting.

For hybrid meetings in particular, it could be the “equivalent to the work of planning two separate meetings – one in-person and one virtual,” according to the report.

Survey respondents said that 35 per cent of virtual and hybrid events would require the services of a full-service agency. Additional costs could also include any pre-event needs, such as recording devices, or items for participatory events, like a wine tasting.

The findings show that “more is needed out of the meeting planner,” Tejado said, explaining that planners must focus on procurement, engagement and now even more on safety and security. “They need to make sure they have the right tools to give recommendations.”

Spend trends
Average projected 2021 per-attendee per-day meeting spend varied based on the type of event, from a low of $426 for small and simple meetings to a high of $906 for incentives and special events.

Overall, respondents estimated that 2021 meeting budgets would decrease year over year by 3.7 per cent globally.

By region, Europe is expected to be down 8.1 per cent, North American respondents expect those budgets to decrease 5.7 per cent, Central and South America down by just 0.6 per cent, and Asia-Pacific lower by 1.3 per cent.

The cost per attendee, excluding air, is also expected to fall for 2021, across all regions and all meeting type categories, with conferences and trade shows showing the steepest declines in Europe (5.5 per cent) and North America (4.6 per cent).

When asked what meeting aspect would be cut first with a budget decrease, 27 per cent of respondents selected off-site optional activities, and 18 per cent each first would reduce either the number of nights of the meeting or off-site evening events.

Should budgets increase, 33 per cent said they would use the extra funds to improve the on-site experience, and 31 per cent said they would increase the use of technology.

Predicted average 2021 group rates for hotels varied by region. Globally, 42 per cent of respondents expect to see rate declines. North American respondents predict a drop of 2.2 per cent over 2020 rates, followed by Europe at a 2.1 per cent decline.

Group air costs in 2021 were anybody’s guess: 32 per cent predicted a year-over-year increase, 32 per cent predicted a decrease, and 22 per cent said they didn’t know what to expect.

Crisis management and favourable cancellation policies polled higher than in previous years for what is most valued in a group air provider. Respondents also said that aircraft cleaning protocols and the ability to socially distance passengers were equally important factors.

Location and space concerns
Respondents said 36.9 per cent of their 2021 events would take place in mid-range hotel properties, a drop from 45 per cent in the last survey. Non-traditional facilities, however, fared extremely well compared to last year, going from 10 per cent to a projected 16.2 per cent for 2021 events.

Part of the reason for the wider embrace in non-traditional sites could be the increase in small and simple meetings.

“Two things have happened,” Tejado said. “In some of these non-traditional venues, content has been more easily available on their platforms. What we are also seeing is, there was an uptick in use for them because they have more space for social distancing requirements.”

Meeting professionals expect space to be readily available in 2021 but more difficult to book in 2022 due to increased competition and the potential contraction of supply due to bankruptcies and closures.

Further, spaces contracted will need to be larger to accommodate for social distancing requirements, which also could squeeze available supply. Hoteliers, however, countered that they expect closed hotels to reopen under new ownership, thereby increasing availability in 2022.

Silver linings
One positive to come out of the pandemic, according to the report, is that companies are taking a closer look at their meetings management policies. In North America, 72 per cent of respondents said they have a formal policy for meetings, with 74 per cent having an approval process. Those figures were surpassed only by Europe with 77 per cent and 76 per cent, respectively.

Tejado said he was a bit surprised that Europe led the category of having managed programmes, because “in previous years, North America was leading in regard to meeting management policies,” he said. “There was always an uptick, but I would say this year the European counterparts saw that as a tremendous jump.”

Globally, 67 per cent of respondents said their meetings and events policy contained explicit language around safety and security. That was the most popular policy component in Europe (76 per cent) and North America (68 per cent of respondents).

Furthermore, meetings are on the rebound in the Asia-Pacific region, with 16 per cent of survey respondents there indicating they had already resumed in-person meetings, while 47 per cent expected to resume some in-person events before the end of 2020.

In addition, sustainability has remained a priority, with 79 per cent of respondents indicating their organisation emphasises the concept in meetings and events.

Depending on the region, anywhere from 58 per cent to 67 per cent of respondents said they are very likely or completely likely to address sustainability in their meeting plans for 2021; 67 per cent of European respondents said they would do so.

The top three ways respondents said their organisations address sustainability are by avoiding disposable items (64 per cent), recycling (58 per cent) and choosing organic, local food-and-beverage options (49 per cent).

Less travel and more scrutiny on who will be able to attend events also will lower an organisation’s carbon footprint for meetings, at least for the near-term.

How many of the world’s air routes have vanished since the pandemic hit?

Before the coronavirus, a decadeslong aviation boom spawned a network of nearly 50,000 air routes that traversed the world. In less than a year, the pandemic has wiped almost a third of them off the map.

Border closures, nationwide lockdowns and the fear of catching COVID-19 from fellow passengers have crippled commercial travel. As thousands of domestic and international connections disappear completely from airline timetables, the world has suddenly stopped shrinking.

The crisis is unwinding a vast social and industrial overhaul that took place during half a century of air-travel proliferation. In years to come, overseas business trips and holidays will likely mean more airport stopovers, longer journey times, and perhaps an additional mode of transport. Even when an effective vaccine is found, the economic reality of the recovery may mean some nonstop flights are gone for good.

With borders effectively shut from Europe to New Zealand, the bulk of the world’s dropped routes are inevitably cross-border. But thousands of domestic legs have also been axed, reflecting the pressure airlines face at home as they cut jobs and retire aircraft to find a cost base that reflects their shrunken situation.

In late January, 47,756 operational routes crisscrossed the world, more than half of them in the US, Western Europe and Northeast Asia, according to OAG Aviation Worldwide. By November 2, there were just 33,416 routes on global schedules, the data show.

In Hervey Bay, a small tourist town on Australia’s east coast, residents are mourning their last direct air connection with Sydney. The flight was one of eight regional routes scrapped by Virgin after it collapsed in April under $A6.8 billion in debt.

“We’re living in hope that they come back,” said Darren Everard, the regional council’s deputy mayor who’s responsible for economic development in the area. Among those hardest hit is a local manufacturer of truck body parts who relied on the flight to reach buyers in Sydney, he said.

Hervey Bay, more than three hours’ drive north from Queensland’s state capital Brisbane, is best known as a jumping-off point for whale-watching tours and trips to nearby Fraser Island. The town’s Sydney flight is one of more than 14,000 connections that have been abandoned globally since the pandemic broke out, according to OAG.

Australia’s capital, Canberra, has been scrubbed from international maps too. The city has no more direct flights overseas after Singapore Airlines ceased services from Singapore in September.

“It will take a good four or five years for connectivity to return to the same level we saw at the end of 2019,” said Subhas Menon, director general of the Association of Asia Pacific Airlines, which represents regional carriers including Singapore Air, China Airlines and Cathay Pacific. “Some of these routes may never be put back,” Menon said.

All this erodes aviation’s financial clout. But it’s the blow to airlines’ contribution to global mobility and social opportunity that’s harder to measure.

Before the coronavirus, the industry supported 65.5 million jobs – more than half of them indirectly through tourism – and had a global economic impact of $2.7 trillion, according to the 2019 Aviation Benefits Report, a study by industry groups including the International Civil Aviation Organisation, a UN agency.

To be sure, many airlines are adding routes at home to tap pent-up demand in what’s effectively their only functioning market. Commercial airline traffic in the US was back to more than half of pre-virus levels at the end of last month, FlightAware data show; in China, it’s almost returned to regular levels.

And Singapore Air earlier this week restarted its nonstop service between Singapore and New York, the world’s longest flight, as the tiny island nation struggles to retain its relevance as a global aviation hub.

In Asia alone, 790 new routes are running this month that didn’t exist a year ago, according to aviation analytics firm Cirium. The eastern Chinese city of Yiwu in Zhejiang province, for instance, is scheduled to get 90 new direct flights from Beijing in November.

But far outnumbering these new connections are the 2,279 routes in Asia that aren’t operating any more at all. In November last year, there were more than 1,000 scheduled flights between Almaty and Nur-Sultan in Kazakhstan, the data show. This month, there are none.

In the US, American Airlines Chief Executive Officer Doug Parker warned last month that parts of the country risk being cut off unless there’s more support from the government.

“There will absolutely be discontinuation of service to small communities, and there will be much less service to larger communities,” Parker said in an October 8 interview on CNBC. He said the airline has stopped flying to 13 US cities and extended those cuts through November.

Routes with the most fragile profit margins will be the first to go, while airlines will try to keep the connections that feed passengers into larger travel hubs, said Dirk-Maarten Molenaar, Amsterdam-based head of Boston Consulting Group’s travel and tourism practice for Europe, the Middle East and North Africa.

“For the next couple of years, there will be a number of super-thin routes you can’t justify flying,” Molenaar said.

In Australia’s Hervey Bay, Everard is putting on a brave face after the town of 52,000’s forced isolation from Sydney.

“There are a lot of families who are missing that connectivity,” he said. “It’s a shame we haven’t got it, but we’re a pretty resilient mob.”

Federal Government in talks to expand coronavirus travel bubble beyond New Zealand to some parts of Asia.

Prime Minister Scott Morrison says Australia is still holding discussions with several Asian countries — including Japan, South Korea, Singapore and Taiwan —about expanding Australia’s travel bubble and opening up quarantine-free travel.

But both diplomatic and government sources have emphasised that negotiations are still exploratory, and cautioned that travellers should not expect radical changes for months.

Australia has now taken the first tentative steps towards opening its international borders, with New Zealand residents permitted to travel to several states without quarantine.

However New Zealand is still not welcoming travellers from across the ditch, with Prime Minister Jacinda Ardern saying she wants to wait until all Australian states have “full clear periods” without community transmission.

Mr Morrison said the Government was looking at how it might expand that travel bubble beyond New Zealand to include other countries which have effectively controlled COVID-19.

“The situation in Europe and the United States is awful, and obviously that presents great risks for people coming in from those parts of the world to Australia,” he said.

Australian officials and leaders have also held discussions with their Japanese and South Korean counterparts about potentially relaxing travel rules.

Mr Morrison will discuss the issue with state and territory leaders at national cabinet this Friday.

But the Prime Minister said no decisions were imminent, and stressed the Government would move “with caution” before opening up further.

Discussions with some Asian countries have been going on for several months, but the pace has not been urgent.

One government official said it would be difficult to open international borders while some Australian states remain closed, and with tens of thousands of Australians still stranded overseas.

There is also concern about the risk of a COVID-19 resurgence across the region.

And while the Federal Government is still open to expanding the New Zealand travel bubble to include some Pacific Island nations, it is still moving cautiously — largely because it wants to ensure that Australians don’t introduce coronavirus to small island nations which have remained free of COVID-19.

Personal judgement outweighs government advice when deciding to travel, but almost half of business travellers expect to travel less in the future.

Despite COVID-19 cases increasing around the world, nearly one fifth of global consumers think it is OK to travel now, with just over (21%) putting less weight on government restrictions and more on personal risk assessments, according to a new survey from Oliver Wyman. Despite cases being on the upswing in many parts of the world, some 30% of respondents in France and Italy and 25% in the United States think it’s okay to travel now.

The report, ‘Anticipating the Travel Recovery’, found several other changes in traveller behaviour since the first edition was originally conducted in late Apr-2020 and early May-2020. This latest edition was from a global survey of travellers in Sep-2020 and Oct-2020, including representation from nine countries (Australia, Canada, China, France, Germany, Italy, Spain, United Kingdom and the United States).

“Personal judgment is now the leading factor for deciding to travel, ahead of government restrictions, advice from the World Health Organization or even having a vaccine,” explains Bruce Spear, a partner with Oliver Wyman. “This means the travel industry must focus on measures that increase individual customer safety such as mandatory masks, cleaning and rapid testing and not wait for governments to issue directives.”

But news this week on successful vaccine trails may influence the findings significantly even if there is still a long way to go before this translates into the delivery of the vaccine to the wider population. You then have the concerns over a new strain of the virus that may have recently jumped from minks to humans and may be resilient to the current wave of vaccines that could ultimately push us back again.

Even if it could be many months until we can talk properly of recovery the market reaction to the news from Pfizer and BioNTech that its vaccine can prevent more than 90% of people from getting COVID-19 highlights that it could represent a landmark moment in this crisis.

International Airlines Group (IAG), owner of British Airways, Iberia and other European airlines, rose +40%, engine maker Rolls Royce was up a third (+33%), the US majors of American Airlines, Delta Air Lines and United Airlines rose around +15% on opening, but those that had gained the most from our alternate way of life have seen their stock lose some of their gains – home food delivery expert Just Eat were both down around -10%, while Zoom, one of the biggest climbers through the pandemic, was down -14% as the US stock market opened.

While Zoom’s wings may be clipped by the effective delivery of a vaccine it has already become a key part of business life and that will not necessarily change even when travel again takes-off. The Oliver Wyman survey indicates that more than half travellers (53%) believe they can develop new relationships via teleconferencing. This drops a little to for business travellers under 30, but 47% remains a significant level.

The big worry from the survey is that two in five respondents (43%) who travel for business plan to travel less in the future. That shows a significant shift in sentiment and a 16 percentage point rise on the 27% that said the same back in the earlier edition. Similarly, this edition highlights that three in ten business travellers expect to shorten their future trips when possible, which will impact hotel stays.

It is a different story for leisure travel, which has already shown greater strength. Interest in leisure travel remains strong and has grown since the first edition, with almost two-thirds (63%) of respondents expecting to travel the same amount or more post-pandemic.

The research shows that most travellers in the US, Spain, Italy, China, and Australia are planning domestic trips, while travellers in Canada, UK, France, and Germany are planning international locations mostly in their home region for their next leisure trip post-COVID. The number one driver for these leisure trips globally is to visit friends and family.

The findings also illustrate that travellers are more comfortable with various transportation options than they were when data for the previous edition was collected. Half are now comfortable taking a flight and almost 60% are comfortable staying at a hotel. However, less than a third are comfortable using public transportation or ride sharing. In the US, over 40% of respondents are still uncomfortable using public transportation or rideshare.

There is even more confidence in cruises, a sector that was hit hard earlier in the pandemic by news stories of passengers being quarantined at sea as COVID-19 spread through the ship. Oliver Wyman’s research shows that since then, the gap between cruises and other experiences involving significant interaction with others has closed. Respondents now feel as comfortable taking a cruise as attending a convention or going to a concert or sporting event. Past cruisers are more comfortable than first timers, it says.

Interestingly, the research suggests that price still remains the number one factor for consumer choice, followed by cleaning policies and treatment of travellers. The exception is in China, where aircraft cleaning policies and treatment by the airline outrank price. Travelers view cleaning and mask mandates as the most important health and safety measures, but two in five would still like to see an empty seat next to them on planes and trains.

As we continue to adjust to our new COVID reality, travel providers will see a shift in their core customer base due to reduced business demand,” according to Jessica Stansbury, a partner with Oliver Wyman.  “Leisure travel will continue to drive the recovery and addressing new customer expectations will be critical. There is no wiggle room for travel companies when it comes to defining, communicating and enforcing policies for cleanliness and ensuring safety,” she says.

Visa, Mastercard and Amex profits hit by lack of international travel during pandemic.

Global travel screeched to a halt during the pandemic, and it’s hurting credit card companies’ bottom line.

American Express, Mastercard and Visa all reported double-digit drops in profit for the recent quarter, compared to a year ago. The companies pointed to a plunge in international travel as borders remain closed during the pandemic.

The companies earn a fee off of every transaction that runs on their network, while American Express also makes a significant portion of revenue from annual fees. A lack of cross-border payments is especially painful as those card swipes have higher margins, and end up being more lucrative.

Visa was the latest major card company to report results on Wednesday. Cross-border transactions fell 29%, while Visa’s revenue in the quarter was down 17% from a year ago. The company did not give guidance based on uncertainty around the virus, but said the cross-border weakness remains a “significant and continued drag on revenue growth.” That will likely continue into 2021, according to Visa’s CFO Vasant Prabhu.

“The cross-border recovery has been sluggish since borders remain closed, and there are significant impediments of crossing borders like quarantines and other such restrictions,” Prabhu said on a call with analysts Wednesday.

Prabhu cited “significant uncertainties” including the impact of spikes in Covid infections happening in the U.S. and Europe, the timing of reopening of borders, the impact of therapeutics and a vaccine, additional stimulus programs and the economic impact once stimulus programs end. Covid cases in Europe spurred leaders of Germany and France to announce new economic restrictions for the next month, while new cases in the U.S. have hit record highs in recent weeks.

Visa rival Mastercard reported earnings Wednesday, with many of the same themes. Mastercard’s net income fell 28% year over year, and net revenue fell 14%, missing analysts’ expectations. The company reported a 36% drop in cross-border volumes, and did not forecast a rebound in travel spending anytime soon.

“While we believe that cross-border will ultimately recover, it will take time for people to build their confidence in the safety of travel,” Mastercard’s chief financial officer, Sachin Mehra, said on a call with analysts Wednesday. “We believe that is tied to the broad availability of vaccines and therapeutics, likely towards the latter part of next year.”

Shares of Mastercard have fared the worst in the past week, and are down 11% this week. Visa and American Express are down 8% and 10% this week, respectively.

Amex kicked off the card earnings on Friday with a 40% drop in profit from a year earlier. Travel and entertainment spending was down 69% year over year. While the company is “highly confident” that travel demand will return, “it will take a while,” American Express CFO Jeffrey Campbell told CNBC in a phone interview.

“The human urge to travel is insatiable, but it will take some time to come back, just like it did after September 11th,” said Campbell, who is also a former American Airlines chief financial officer. “For our company to be back at its pre-pandemic levels of earnings, we do need consumer travel to come back — we’re highly confident and in the meantime we’re trying to take the right steps to rebuild growth and momentum.”

Business travel, Campbell said, could take “years to come back.”

Despite the travel-related slump, there were a few bright spots for the companies. Mastercard CEO Ajay Banga pointed to improvement in domestic travel in the quarter, including spending on lodging and sports. The card companies pointed to a rebound in domestic spending and an uptick in e-commerce that helped offset losses elsewhere. Payment volume for Visa rose 4%, while gross dollar volume, the dollar value of transactions processed, rose 1% at Mastercard.

CAPA LIVE – ‘This is a big downturn, beyond comprehension’.

4 November 2020

The Covid-19 pandemic has caught us all off guard. While the industry has faced numerous previous crises, the fact that subsequent recoveries occurred at different rates had led to complacency and ill-preparedness for an event of such magnitude.

“Initially when we started on this horrible expedition, there was an assumption it would be over in six months. Governments thought so as well but it’s obvious now that won’t be the case,” Peter Harbison, chairman emeritus highlighted on 14-Oct-2020 at the inaugural CAPA Live – a new monthly virtual summit offering insights, information, data and live interviews across a next-gen virtual event platform.

“These priorities – which involved government subsidy of one form or another and airlines raising debt and equity – have now been overtaken, as the cash bleed will continue well into 2021. This is a big downturn, beyond comprehension, and a vaccine won’t have a widespread impact at least before the middle of 2021,” he warned. “Consumer confidence will be a key part of recovery; if consumers don’t come back then obviously there is no industry … finding a uniform formula is key but still remains elusive.”

It is clear that travel and transport will remain subdued through 2021 and into subsequent years and the industry needs now to come to terms with the new landscape. But within this space there are pockets of demand that can support those that are adaptable and accept the world for what it is right now. That is a changed world where leisure demand dominates and business travel remains near-dormant.

The new CAPA Live series of online events is highlighting the key issues confronting the airline and travel industries. Held monthly, the series includes interviews with major players, as well as analysis from experts within the CAPA and Aviation Week Group.

The second edition of CAPA Live will run on 11-Nov-2020 with the topic of ‘Back to the future … winners and losers of the pandemic – looking forward ten years’. It will feature 13 hours of global content spread over a 15 hour window with sessions timed for their relevant audience time zone, but all available on-demand after. Key industry insights will be delivered from a wide-ranging set of guests, including airline CEOs including Pieter Elbers, president & CEO, KLM; Eddie Wilson, CEO, Ryanair; Anko van der Werff, CEO, Avianca; Adel Ali, Group Chief Executive Officer, Air Arabia; and Shai Weiss, CEO, Virgin Atlantic.

We have highlighted that the continued threat of COVID-19 and spikes in infections across parts of the world mean there is a significant variance in the recovery rates of air travel capacity and demand across the globe. Ahead of the November edition we bring together a round-up of regional reports from the first edition of CAPA Live delivered by experts within CAPA and the wider Aviation Week Group.

NORTH AMERICA

The big story in North America is that US airline operators are bracing for a long road back. It is hard to fathom that North America and the rest of the world have been battling the COVID-19 pandemic for nearly eight months. And for the majority of operators worldwide the reality is setting in that the recovery is likely to be wildly unpredictable and slower than expected.

In the US, capacity in the domestic market is projected to reach approximately 50% of 2019 levels by YE2020, but the road to revenue recovery will be long, as business demand remains essentially stalled and international travel is severely constrained. Even as airlines accept the reality that a long road lies ahead in recovering from the COVID-19 crisis, they are pointing to sequential improvements in revenues losses and decreasing their daily cash burn, which are relative achievements in the new reality that US operators and airlines worldwide find themselves in.

TO READ ON, VISIT: North America

EUROPE

For Europe, the challenge is how to reverse the slide in momentum since Aug-2020. RPK growth in Europe ‘recovered’ to -73.0% year-on-year in Aug-2020, from -81.3% in Jul-2020 (and worse before that). However, Aug-2020 represented ‘peak recovery’ for seat capacity and traffic. Moreover, the number of aircraft back in service in Europe has reached a plateau since mid Aug-2020. LCCs have returned a higher percentage of aircraft to service (74% versus 66% for all of Europe’s airlines), but this is no longer climbing.

There are currently few signs in any data that Europe’s aviation recovery will regain positive momentum as COVID-19 case numbers continue to increase and governments continue with fragmented quarantine requirements. For Europe’s biggest aviation market, the UK, CAPA projects seats at 35%-40% of 2019 levels through the coming winter – no higher than in early Oct-2020.

The stalling of Europe’s aviation recovery since mid Aug-2020 is clearly visible in data on seat capacity, passenger numbers and numbers of aircraft in service. This can be explained by a steady increase in the number of COVID-19 cases in Europe since early Jul-2020 and quarantine regimes across the continent that are unpredictable, fragmented and inconsistent. There is currently little sign that positive momentum will return to Europe’s aviation recovery in the near term. Nevertheless, some encouragement can be found in Norway currently, where two developments indicate some optimism for the future.

TO READ ON, VISIT: Europe

SOUTHEAST ASIA

In this region there has been significant recent developments with the airlines. Two of the region’s major players – Singapore Airlines and Cathay Pacific – have been reviewing their operations to realign themselves with the new industry environment. Both have been relatively hard-hit thanks to their reliance on international connecting traffic, although they have also both benefited from extensive state support.

Other carriers in Southeast Asia are also undertaking restructuring processes to varying degrees, including Thai Airways, Garuda, and Malaysia Airlines. As government owned – or majority government owned – airlines, they will likely receive further bailouts to survive. In the case of Thai Airways, the government sent the carrier to bankruptcy court to restructure its debt.

Things are a bit more difficult for the independent LCCs in Southeast Asia. They generally do not receive the same level of government support as the major flag carriers, so they have more challenges in obtaining funding. However, the short haul LCCs do have the benefit of fleets and networks that could be well suited to the post-COVID-19 world.

AirAsia is looking to a range of measures to raise the liquidity it needs to survive the COVID-19 crisis. It also appears to be focusing more on its core Southeast Asian operations. AirAsia’s Japanese franchise shut down on 5-Oct-2020, and the group has also reportedly held discussions regarding the sale of its stake in the AirAsia India joint venture.

TO READ ON, VISIT: Southeast Asia

LATIN AMERICA

The talking point in Latin America is if Brazil can offer clues to the pace of recovery as Latin America opens? Much of the world has some sort of recovery scenario from COVID-19, but Latin America is different. A significant portion of the region has remained closed off to air travel, starting in Mar-2020, and the restart process has been occurring during the past couple of months. The next few weeks will be crucial to gauge Latin America’s path to recovery.

One country that has remained open during the pandemic is Brazil. Its passenger levels, while low, are starting to climb, and two of its largest operators have been adding capacity back at a solid rate. However, traffic still remains solidly depressed, and Brazilian airlines and other operators in Latin America may have to join their counterparts worldwide in engaging in testing schemes as a means to accelerate a recovery in demand.

Most markets in Latin America have restarted their commercial aviation operations and Colombia and Peru are in the midst of restarting international flights.  Those mass closures of airspace resulted in traffic in Latin America hitting bottom in Apr-2020 and May-2020, before starting to gain traction slowly in Jun-2020. But in Aug-2020 traffic was still down significantly – more than 75% – and it will be interesting to see if the increases accelerate now that markets are reopened and some international services are resuming.

TO READ ON, VISIT: Latin America

AUSTRALASIA

There have also been some key developments for airlines that will shift competitive dynamics in the Australasian market

First of all, Virgin Australia’s sale to Bain Capital means that it will remain a force in the domestic market, although it will be smaller. It won’t be a player on long haul routes for the immediate future, as it has dropped its current widebody fleet. However, it does intend to operate short haul international routes using its narrowbodies. An eventual return to long haul is also on the cards. A major question yet to be resolved is what happens with Virgin Australia’s Boeing 737 MAX orders, and whether these will be reduced, or some switched to 787 orders. Virgin is still in talks with Boeing about the MAX orders, and more news on this is expected by the end of the year.

Another development is the emergence of a new player on domestic trunk routes, as Rex (Regional Express) plans to introduce a fleet of Boeing 737s for this purpose. The airline has plans to lease six 737s to serve the Sydney-Melbourne-Brisbane triangle, and intends to build up to 10 aircraft. Rex plans to begin on 1-Mar-2021 with the Sydney-Melbourne route, which was one of the world’s busiest domestic routes before COVID-19. This is a pretty big move for Rex, as until now it has operated turboprops on regional routes. However, it has recognised an opportunity with the two major players in the domestic market in a weakened condition.

TO READ ON, VISIT: Australasia

AFRICA

Africa’s prospects were looking promising, supported by improvements in infrastructure, better air transport connectivity and easing visa regulations, but despite managing COVID-19 better than expected, the continent has reached a tipping point that could see some of the barriers raised to reduce infection spread remain in place and weaken plans to finally open up the market to its full travel potential.

The return to some form of normal is the dream for most of the world, but in the case of Africa a return to normal could actually represent a step back. This year’s unprecedented events could now provide the ideal platform for Africa to catch up with the rest of the world when it comes to air connectivity.

Africa had been slowly breaking down barriers between countries as it seeks to final deliver a long promised liberalisation. This year, it has been following the rest of the world in putting them back in place, closing ports of entry and imposing travel bans. Hopefully, these will be just a short-term measure in the fight against a virus that still has the potential to ravage the continent.

Safely re-establishing the continent’s air connectivity is essential to re-building battered economies and the choice is revert to normal or use the current situation to finally reinvent Africa’s air transport strategy and look to the future.

TO READ ON, VISIT: Africa

Confusion and concern over international travel.

The new travel restrictions that look set to come into effect in England from Thursday contain confusing messages about the legality of business travel.

On Saturday, UK prime minister Boris Johnson announced a second national lockdown in England in order to slow an alarming increase in the number of Covid cases which could lead to thousands of deaths a day.

The restrictions, which are due to enter into force on Thursday 5 November if approved by the UK parliament on Wednesday, state that people in England cannot travel, either domestically or internationally, except in a limited number of cases.

The exemptions include the case where travel is for work purposes. The government says that international and domestic travel as well as overnight stays are legally allowed in this case.

BTN Europe asked the Foreign, Commonwealth and Development Office for clarification of the “for work” exemptions but the department was unable to comment beyond what was in the government’s statement.

Clive Wratten, CEO of the Business Travel Association, said: “Public health is of fundamental importance, but the national lockdown announcement is another huge blow for business travel. The government has said some exemptions will apply for work-related travel, but with flights set to be reduced, a key mode of business travel will be difficult to achieve.

“The furlough scheme extension is welcome but is too little too late for many business travel firms – where redundancies are now running at up to 60 per cent. Ultimately, airport testing is the only way to get British business travelling again, and that is vital for UK plc.”

Martin Ferguson, American Express GBT’s vice president of public affairs, added: “That business travel – or travel for work – is exempt from the new ban is interesting inasmuch as it’s pointless while there is still a senseless quarantine in place. Business travellers will not go anywhere while there’s a risk of being stranded. Moreover, while it’s based entirely on self-policing the quarantine does little to mitigate risk. We need rapid pre-departure tests and the withdrawal of quarantine now. Only then will there be any point to an international business travel exemption.”

The government says that inbound international travel will still be governed using the travel corridors approach.

The shock ban on international travel has been criticised by the wider travel industry.

Tim Alderslade, chief executive, Airlines UK and Karen Dee, chief executive of the Airport Operators Association, said in a statement: “Aviation has been devastated by the pandemic and has essentially never had the opportunity to recover. A ban on international travel means airlines and airports, already hamstrung by quarantine, are closed businesses and will require financial support now – which other sectors like hospitality have received – alongside a comprehensive restart package.”

He added: “This needs to include immediate additional economic support for the winter and steps to support recovery, including urgent roll-out of a testing regime, business rates relief for airports, and an emergency waiver of Air Passenger Duty that will be essential for enabling and stimulating international travel – absolutely vital for the UK economy – for as long as we are living with this virus. Hundreds of thousands of jobs and our economic recovery are on the line.”

Charlie Cornish, CEO of Manchester Airports Group (MAG), said: “The fact this development was not deemed worthy of mention in the PM’s address is symbolic of the way government has neglected UK aviation…from day one of this pandemic.”

MAG owns and operates Manchester, Stansted and East Midlands airports.

He said: “Our sector was one of the first hit by this pandemic and one of the hardest hit. Promises of specific support in recognition of this predicament were publicly made by government but never materialised. Tens of thousands of jobs have already been lost across the industry as a result of the situation we find ourselves in. An urgent package of support must materialise. That must include relief from business rates and policing costs.”

Cornish also criticised the fact that the industry learned about the ban from social media.

He said: “Twitter is not the place where you want to find out that the government is effectively shutting down the business you run.”

Mark Tanzer, chief executive of ABTA, said: “Today’s announcement…will mean a complete shutdown for travel businesses which have already been severely damaged by the pandemic, but public health must come first. We’re pleased to see the government has recognised the significant impact the latest lockdown will have on businesses and has extended the furlough scheme until the start of December. The government must also make good progress with the global travel taskforce, ensuring a testing regime is ready to go as soon as lockdown is lifted.”

Airlines need to make deep labour cost cuts but even then they will not be able to achieve break-even, warns IATA, as it reiterates call for further support to stop continuing cash burn.

International Air Transport Association (IATA) has presented new analysis showing that the airline industry cannot slash costs sufficiently to neutralise severe cash burn to avoid bankruptcies and preserve jobs in 2021.

“The handwriting is on the wall. For each day that the crisis continues, the potential for job losses and economic devastation grows,” warns director general Alexandre de Juniac. “There is little good news on the cost front in 2021. Even if we maximize our cost cutting, we still won’t have a financially sustainable industry in 2021.”

As such, IATA has reiterated its call for government relief measures to sustain airlines financially and avoid massive employment terminations. IATA has also called for pre-flight COVID-19 testing to open borders and enable travel without quarantine.

The organisation’s research shows that total industry revenues in 2021 are expected to be down -46% compared to the 2019 figure of USD838 billion. Its previous analysis was for 2021 revenues to be down around 29% compared to 2019.

This had been based on expectations for a demand recovery commencing in the fourth quarter of 2020, but recovery has been delayed however, owing to new COVID-19 outbreaks, and government mandated travel restrictions including border closings and quarantine measures.

IATA also expects full year 2020 traffic to be down -66% compared to 2019, with Dec-2020 demand down -68%. “The fourth quarter of 2020 will be extremely difficult and there is little indication the first half of 2021 will be significantly better, so long as borders remain closed and/or arrival quarantines remain in place,” says Mr de Juniac.

According to the IATA DG without additional government financial relief, the median airline has just 8.5 months of cash remaining at current burn rates. “And we can’t cut costs fast enough to catch up with shrunken revenues,” he acknowledges.

IATA says that although airlines have taken drastic steps to reduce costs, around 50% of airlines’ costs are fixed or semi-fixed, at least in the short-term. The result is that costs have not fallen as fast as revenues. For example, the year-on-year decline in operating costs for the second quarter was -48% compared with a -73% decline in operating revenues, based on an IATA sample of 76 airlines.

Furthermore, as airlines have reduced capacity (available seat kilometres, or ASKs) in response to the collapse in travel demand, unit costs (cost per ASK, or CASK) have risen, since there are fewer seat kilometres to ‘spread’ costs over. Preliminary results for the third quarter show that unit costs rose around +40% compared to the year-ago period, according to IATA.

Looking forward to 2021, IATA estimates that to achieve a breakeven operating result and neutralise cash burn, unit costs will need to fall by 30% compared to average CASK for 2020. “Such a decline is without precedent,” it says.

While IATA is not advocating specific workforce reductions, maintaining last year’s level of labour productivity (ASKs/employee), would require employment to be cut 40%. Further jobs losses or pay cuts would be required to bring unit labour costs down to the lowest point of recent years, a reduction of 52% from 2020 Q3 levels. But, even if that unprecedented reduction in labour costs were to be achieved, total costs will still be higher than revenues in 2021, and airlines will continue to burn through cash.

“Unless governments act fast, some 1.3 million airline jobs are at risk. And that would have a domino effect putting 3.5 million additional jobs in the aviation sector in jeopardy along with a total of 46 million people in the broader economy whose jobs are supported by aviation,” says Mr de Juniac.

“Moreover, the loss of aviation connectivity will have a dramatic impact on global GDP, threatening $1.8 trillion in economic activity. Governments must take firm action to avert this impending economic and labour catastrophe. They must step forward with additional financial relief measures. And they must use systematic COVID-19 testing to safely re-open borders without quarantine,” he adds.

Experts Share Hotel Industry Projections for 2021 and Beyond.

29 October 2020

As part of this week’s Collaboratory 2020 webinar series, the Global Business Travel Association (GBTA) – the world’s largest business travel association – hosted two global hospitality experts to discuss key market trends and forecasts for the hotel industry. Jan Freitag, Senior Vice President for STRand National Director of Hospitality Market Analytics for the Costar Group, and Tobias Ragge, Chief Executive Officer of HRS, covered a broad range of relevant topics as properties and corporate hotel programs navigate the unprecedented realities of the coronavirus pandemic.

In the webinar “Hotel Outlook: 2021 and Beyond,” GBTA Interim Executive Director Dave Hilfman led an informative Q & A session with Freitag and Ragge that included global data benchmarking and analytics, as well as an update on the state of corporate hotel negotiations for 2021.

Noteworthy insights during the session included:

• Corporate demand will return faster than Average Daily Rates (ADR) rebound. Transient and group hotel demand will start to come back with the introduction of a COVID-19 vaccine and increased rapid testing, but similar to the periods after 9/11 and the 2008 recession, ADR will take much longer to recover, possibly until the end of 2025 or later.
• A slowdown in Upper Upscale and Luxury hotel construction now will create a supplier’s market in 5 years. Hotel construction is still occurring but it’s predominantly in the limited service hotel space (71 percent). With Upper Upscale and Luxury Class not adding many new properties, existing properties in these categories will be in a prime position once the industry recovers.
• While not all hotels will make it through this tough time, the industry as a whole will rebound. In the U.S., loyalty programs will be key to pulling corporate travelers back to brands, with independent hoteliers struggling more without that brand association. Outside the U.S., particularly in AIPAC and EMEA, where independent properties have always been the backbone of the industry, independent owners must focus on getting in front of corporate procurement leaders and business travelers via search engines in order to survive.
• “Duty of Care” is now of primary importance for corporate travel managers when negotiating their 2021 hotel contracts. The pandemic has shifted the landscape to a buyer’s market, and corporate buyers want to see that a hotel property/chain has enhanced hygiene protocols and virtual or touchless payment options. Hotel program leaders are also pushing for dynamic pricing thresholds, removal of Last Room Availability (LRA) clauses, reduced cancellation time windows and altered breakfast options.

According to Ragge, “The pandemic creates an opening for longer-term strategic approaches for both corporate buyers and hotels. There’s a tremendous opportunity to use data and technology to enhance transparency in everyday program management as well as the on-site guest experience.”  While technology has replaced in-person sales calls or client servicing during the pandemic, “not everything can be replicated in a virtual format, and this is what will drive meetings business back,” said Freitag. “The need to achieve business outcomes in person is what will enable the industry to survive in the long run.”

The “Hotel Outlook: 2021 and Beyond” webinar is one of many in a series being presented by GBTA. For the recording of this session and more information on future webinars, visit gbta.org.

Does the degree of safety we feel affect how much we enjoy a trip? What precautions are we prepared to take to have an enjoyable journey?

Booking a flight, jumping on a train and even taking to the road was never something we thought about much. If we needed to get somewhere we’d consider the best option for the journey – usually the fastest in these days when time is money – and set off.

But with COVID-19 and the potential for infection around us every day now, is that disrupting how we think about the way we travel? It’s clear that car travel has increased greatly as people feel more in control of their health while in the bubble of a car. Getting on a train or travelling through airports and on planes has some added risks associated to them.

Mattress company Eachnight has recently undertaken a survey of recent US travellers and whether the way they travelled actually affected how they felt about the trip they took. There are some surprising results.

Of the 1000 travellers, 75.4% had chosen car travel, 14.8% went by plane and 8.1% by train. Of those that flew, 35% were on business travel, 36% were on vacation and 29% were travelling for emergency or personal reasons.

When it comes to what precautions were taken by the travellers, 57.4% of those who flew were prepared to pay more for a direct flight. Just over 50% also avoided going to the bathroom while on the plane and 45.9% avoided touching amenities on the aircraft, such as tray table or pocket holder. A quarter (25.7%) were happy to pay more for a seat on a plane with less passengers, including buying another seat so there was no-one beside them.

Even though the sample surveyed only included 8.1% of train travellers, it is interesting to note that those people were the ones who claimed to enjoy their journey the most. However it is train travellers who also spent the most on pandemic-related safety supplies. On average train travellers spent USD54 on items such as cleaning disinfectant spray, face shields, hand sanitiser, face masks, nitrile gloves and wipes.

By comparison air travellers spent an average of USD40 on safety supplies and car travellers spent USD29. The amount spent on safety items by trip duration varied and it is interesting to note that those travellers who enjoyed their trip the most also took the most items with them.

Even though a face mask was the most popular item carried by travellers, over a third of travellers did not take one. Given that face masks have been demonstrated to protect us from the spread of the virus and many places, including airlines, insist on their use, it appears that a third of US travellers still don’t want to use them.

Nitrile gloves were the item that was the least often carried by travellers but were seen as the fourth most useful in terms of travellers feeling safe on their trip. This was particularly true for those who stayed in motels and in short term rentals with over 60% believing gloves made them feel safer. Obviously knowing a thing or two about these things, 20% of baby boomers carried gloves on their trips.

In addition, those that enjoyed their trips the most invested more money in their sleep arrangements, such as taking inflatable mattress, linens and pillows, compared to those that claim not to have enjoyed the trip who spent more money on disinfectant supplies.

When it comes to where the travellers stayed, over 50% had booked into a hotel, 28.7% stayed with friends or relatives, 10.3% went to a motel and 9.1% used short term rentals. Of the hotels booked, 75% of the guests considered the size of the hotel a major factor, with 47% believing a medium sized hotel (25-99) guests were the safest compared to small or major properties. Nearly a quarter of hotel guests skipped their housekeeping visits during their stay in order to limit contact with hotel staff.

So it appears that we need to spend a bit more on safety items when travelling by plane, but that travelling by train actually makes for a more enjoyable trip. Packing nitrile gloves may not be our first thought but the survey suggests in fact that it will end up making us feel safer for those periods when we need to interact with public surfaces.

Analysis: airline agreements are up in the air.

Nearly eight months on from companies across Europe switching off their business travel taps, many corporate airline agreements have expired or reached their review deadlines. But with little data for most of 2020, and no idea what 2021 looks like, where do you even start with a negotiation?

The answer, it would appear, is you don’t. Status quo is emerging by consensus as the best of a bad bunch of options. “Almost all airlines are accepting extending agreements negotiated before the crisis started for another 12 months,” says Jörg Martin, principal of CTC Corporate Travel Consulting in Germany. “Volumes from corporate clients have decreased but airlines can’t offer the service and flexibility that was part of their original offer.”

In any case, Martin points out, airlines have little bandwidth to renegotiate because their sales staff are furloughed, on short-time working or have been made redundant.

From the buyer’s perspective, says a European travel manager, speaking on condition of anonymity, “many organisations are taking the view this is not the time to take advantage of other companies’ misfortune. No one I know is saying ‘you need my business and I want a better deal’.”

More important than price at this point, the travel manager believes, is agreeing more flexibility with airlines about terms and conditions – allowing name changes on vouchers, for example.

A potential alternative buying strategy could be to avoid corporate fares from preferred suppliers for the time being and instead book best on the day from any airline. This tactic could be backed up by using an automated fare assurance tool that rebooks at a lower fare if one becomes available.

A travel manager for a global professional services firm, also speaking anonymously, rejects this approach, both in principle and practice. First, he says, “I believe in supporting your preferred airlines. You need each other.”

Second, he doesn’t consider this the ideal moment for air rebooking tools. “People travelling for business really care about their seat assignments right now, so they can be first off the plane, for example,” he says. “If that gets lost in the rebooking, it adds to their stress. With such low volumes as most companies have at the moment, price isn’t the major factor here.”

Even so, there are some price risks which merit attention by travel buyers. During a recent BTN Europe Week in Review podcast, EY global head of travel, meetings and events Karen Hutchings said domestic fares are down but international fares up owing to reduced capacity.

Consequently, “there has to be consideration of do you negotiate more fixed fares so you’ve got a ceiling with your airlines?” Hutchings said. “You need some protection around the increase in fares.”

Martin believes basic economics dictate buyers will have to accept higher fares as travel resumes “because volumes are lower. Airlines’ non-flexible costs have to be divided among fewer tickets.”

Another factor likely to drive fare inflation is reduced competition. “I expect bankruptcies,” Martin says. “I can’t imagine all airlines will survive the next 12-18 months and those still around will shrink their networks to focus on fewer routes. It will affect the purchasing power of corporate clients.”

Changes to internal demand could also drive up average ticket price paid. The many uncertainties around travel in the Covid age, such as whether a quarantine might be required, are reducing the number of days travellers book flights before departure. Tickets bought at short notice are generally dearer. “If your agreement is heavily focused on advance purchase fares, maybe you should look at short-notice fare classes too,” said the professional services firm’s travel manager.

Buyers need to consider other risk factors. One is medical: are preferred carriers taking adequate steps to protect passengers from infection? An issue troubling the travel manager is inconsistency in hygiene protocols between different partners in airline joint ventures. He cites it as a particular worry because reduced route networks mean travellers will be more likely in future to fly indirectly, using two or more joint venture partners to reach their destination.

Although the connection may not seem obvious at first, the same travel manager also points to duty of care challenges with some airlines removing fares from global distribution systems and making them available only through New Distribution Capablity channels.

His view is that keeping all bookings coordinated through GDSs is essential for keeping tabs on which employees are supposed to be where. “What I don’t want are NDC-only fares. Don’t do it right now please,” he says. “Stop undermining the corporate channel.”

While buyers certainly have to address employee health, they have to consider supplier health too. The International Air Transport Association projects airlines will burn $77 billion of cashin the second half of 2020 and possibly another $5 billion to $6 billion per month in 2021. How can buyers figure out which suppliers will survive this unprecedented ordeal? “Most industry followers know which airlines are under pressure,” says the professional services organisation’s travel manager. “If you’re not sure, talk to your TMC’s consulting business. Don’t get caught up in what the general media say.”

More than other suppliers, potential failure of airlines is a particularly onerous financial risk for buyers because many tickets are paid for at the time of booking, not when they are actually used. Jörg Martin considers this a practice which needs to end. “It’s old-fashioned and almost unique to the travel industry,” he says. “The risk of airlines failing between when you buy and fly is huge.”

Martin believes now is the ideal moment for a reset because few passengers are flying and many airlines are receiving state aid. Consequently, temporarily switching off cashflow from booked but unflown reservations would be insignificant.

He chairs the aviation committee of the German travel managers’ association VDR, which is lobbying the German government for change. “The government  is really keen on the idea and asking lots of questions,” he says. It’s a rare example of how the present crisis may generate some positive outcomes for travel managers.

Australia travel restrictions: Five big problems we’ll face with any travel bubble.

When Shakespeare penned the immortal line, “bubble, bubble, toil and trouble” in Macbeth he was thinking of a toxic witch’s brew but there’s another bubble that is laced with even more trouble and toxicity.

Travel bubbles represent one of the greatest, albeit as yet unrealised, hopes during the pandemic for a return to some semblance of normality for the chance to resuscitate economies.

But the trouble with bubbles is that they also represent one of the most profound challenges for political leaders and medical experts.

So far all travel bubble attempts have had all the flaccid buoyancy of a prematurely released child’s party balloon, with some tacked-together versions in Europe proving disastrously ineffective and leading to damaging setbacks in the containment of COVID-19.

Back in April, the concept of a trans-Tasman travel bridge excited much optimism and excitement, all dashed by our own series of setbacks, including the pandemic plight of Victoria.

A token, partial bubble, allowing New Zealanders to visit NSW, the ACT and the Northern Territory, has the significant catch of a compulsory 14-day quarantine period for Kiwis on their return and no ability for Australians to cross the ditch.

A sudden upsurge in community-acquired cases in NSW has probably pushed the launch date of the trans-Tasman bubble even further back. Alongside that, the prospect of the tourism and airline industries’ survival, devoid of government bailouts, has become even less certain.

Now Singapore and Hong Kong, two destinations which have performed well in containing COVID-19 and which are hugely reliant on tourism, have, in the conspicuous absence of a vaccine, announced their own quarantine-free, rapid testing-dependent travel bubble which may well pre-empt the trans-Tasman equivalent.

Singapore, South Korea and Japan, with their admirable COVID-19 records, have been identified by Australian Prime Minister Scott Morrison, noticeably short on any detail, as other likely travel bubble partners for Australia.

So, in reality, what will the witch’s brew-like ingredients need to be to not merely successfully launch a travel bubble but also to maintain one?

A TRAVEL BUBBLE WILL NEED MORE THAN A DASH OF INTEGRITY AND TRUST

For a bubble to have any chance of succeeding each participant nation must be absolutely assured that the other is not permitting tourists to enter from countries with anything other than an exemplary record in controlling the virus.

That rules out any large number of once-lucrative tourism markets such as the US and Europe, both struggling, or in the case of the former not really trying, to suppress the spread of the virus, for the foreseeable future.

With Australia looking to Asian nations, and vice versa, to erect travel bridges, it may eventuate that Australians and New Zealanders will be the only western tourists allowed to enter participant Asian countries during the pandemic.

As evidenced by the unwelcome entry of New Zealanders into Victoria and Western Australia – which had not agreed to be part of the initial trans-Tasman bubble – in recent days, bubble participants need to be provided with clear, easily-accessed guidelines on what they can and cannot do.

A TRAVEL BUBBLE WILL NEED LASHINGS OF POLITICAL WILL AND COURAGE

Here’s one the hardest ingredients to find and add. It could be argued that the better a nation has performed at containing COVID-19 the more difficult it is going to be to relaunch international travel.

There are simply too many hard-won gains over the past, momentous months, to protect and so much political capital to be shredded, threatening future electoral success.

As we’ve seen with states like Queensland and Western Australia, leaders are not shy of allowing political considerations to directly influence their decision-making in a pandemic.

International travel bubbles will be no less vulnerable to the vagaries of political decision-making;  bad news for an already ailing, some say near-death tourism industry.

A TRAVEL BUBBLE WILL NEED ENOUGH STRENGTH SO AS NOT TO BURST

There can be no certainty in such uncertain times but a modicum of it will be necessary to ensure that prospective tourists are confident in entering into it and that the level of risk – and in a pandemic there is no such thing as risk-free travel – is acceptable.

Singapore and Hong Kong have indicated that they will deflate their bubble should there be an outbreak of COVID-19 during it. But in doing so, they may make it much harder to relaunch a bubble as less confident and fearful travellers could be reluctant to participate.

Indeed, one overriding question for political leaders, without an effective vaccine, is how perfect do they want and expect their bubble to be? How many, or any, cases of COVID-19, should a prick, or worse, in the bubble reveal itself, will they be prepared to tolerate and manage from both sides?

A TRAVEL BUBBLE WILL NEED THE CRUCIAL INGREDIENT OF THE RIGHT TIMING

The longer a travel bubble is delayed, the less the benefit for damaged economies. Our nearest neighbours, New Zealand and the various Pacific island nations, including Fiji, are massively dependent on tourism.

In the case of the Pacific, diplomatic and geopolitical considerations may come into play, given  China’s growing influence in the region.

Tourism accounts for 20 per cent of New Zealand’s economy, with internal travel in a country of only 5 million not a sustainable method for propping up a tourism industry in the long-term (take note Western Australia, Queensland and Tasmania).

The situation is even more grave for Fiji where tourism represents 40 per cent of the nation’s gross domestic product.

There will come a time when leaders, for the sake of their fragile economies and tourism industries, will need to emerge from their “COVID-19 cul-de-sacs”, as they’ve been described, and commit to a travel bubble or face possible long-term financial ruin.

A TRAVEL BUBBLE WILL NEED TO ADDRESS PRESSING ISSUES FOR TRAVELLERS

One of the many unanswered questions surrounding travel bubbles is whether participants will be able to access travel insurance that will cover them in the event they contract COVID-19 while abroad or on return to their home nations.

Could it be that governments, even with the advent of an effective vaccine, will need to underwrite travel insurance and medical care for its citizens if a travel bubble is to succeed (Australia does maintain reciprocal medical agreements with certain countries and some more may need to be established).

If so, these measures will add to the cost of launching and maintaining a bubble and possibly the cost of travel itself.

They are already likely to prove costly, with mass rapid testing at airports becoming the new and essential international travel burden, akin to the extreme security measures that were introduced after September 11.

Authorities will need to make the process of travel as seamless as possible, lest travellers be deterred from holidaying overseas at all.

Finally, one other serious consideration for travel bubbles is the potential for security lapses as a result of the focus on complex health measures at major airports and elsewhere.

There’s no doubt that the world’s terrorists will be ready and willing to exploit any vulnerabilities in international travel that may emerge as a result of the pandemic. A witch’s brew indeed.

BTA calls for change on TMC pricing models.

16 October 2020

The Business Travel Association (BTA) has called for the business travel sector to develop a new approach to TMC pricing to replace a system that has been in place for more than a quarter of a century.

It said it had recognised the need for change had been evident for some time but has been brought into focus by “the devastating impact of Covid-19 on the business travel sector”.

With industry consultants Nina & Pinta, the BTA has produced a white paper that outlines the pros and cons of three industry pricing models: transaction fees, subscription fees and management fees. The paper has been developed with insights and feedback from representatives from leading UK-based corporations and TMCs, it said.

Clive Wratten, CEO of the BTA, says: “In recent years, there have been growing calls for evolution in the way TMCs price their services. The impact of Covid-19 on our industry has made that need more vital than ever, and the BTA is committed to leading the industry with this catalyst for positive change.”

The paper calls for clarity on pricing and transparency about what each model includes.

Transaction fees, the dominant model in the sector currently, are “little liked” by TMCs because of the huge amount of work that goes on behind the scenes around a booking. Corporates tend to favour them because they ensure costs are allocated directly to budget centres and largely avoids the need for central costs.

A subscription model would ensure TMCs get paid for the services they provide but many corporates do not have centralised budgets. Another approach might be to charge subscription fees per traveller, with different levels applicable to regular travellers than those who take occasional trips. The question for many corporates is will it cost the same as the current model or will it prove more complicated and costly.

Management fees, where corporates are charged for the services TMCs provide at cost with a fair profit built on top, is simple in concept but can be difficult to manage in practice. Done correctly, it can ensure that the TMC’s goals are aligned with their corporate client’s. Again, the lack of centralised budgets may prove to be a stumbling block.

As the corporate focus on technology grows, there will inevitably be questions around who pays for the necessary investment in that.

“This is certainly up for discussion,” says Wratten. “The supply chain – airlines, hotels, tech companies – needs to get involved in this discussion. Where does this tech stack get paid for? It may be that the corporate could pay for the licence fee directly to the tech company with transaction fees for the services on top.”

Wratten is not pre-empting the outcome of the consultation.

“The purpose of this is completely agnostic; it could be all of them or something completely different. It is not our role to choose, it is to have the debate,” he says.

The need to look at TMC pricing has been on Wratten’s to-do list since joining the organisation last year.

He says, “When I first came into the role, l was struggling with what the value of a TMC is and the ever-changing distribution models. It was time to revisit everything we did. Covid has only made it more pronounced.”

Wratten says the need for change has been driven, in part, by increasing downward pressure on transaction fees. The increasingly procurement-led focus of companies when buying business travel has only accelerated this.

“This race to the bottom doesn’t serve anyone,” says Wratten. “Those who have raced to the bottom will have to race back to the top.”

Transparency on remuneration will be at the top of corporates’ minds. The report reveals that on average the association’s TMC members receive a third of their income from corporates and two-thirds from the supply chain.

Wratten said: “Travel is not the only industry to get paid by the supply chain but because it has become so complicated there is a lack of transparency.”

He is pragmatic about the need for change. “It is not an easy change from one model to another,” he says. “On the face of it, it could look like you are paying more. When talking to corporate buyers, there is an appetite for the ability to choose what services they have and feel they might get better value for it.”

Wratten says there will be winners and losers in the supply chain as there is with any step-change.

“At times of disruption, there will be players that win and those that won’t – that is inevitable in any industry.”

He believes, however, that the pandemic has led to many corporates recognising the value of having a strategic partner.

Wratten says: “For our industry to evolve, especially in these challenging times, there needs to be an open, honest and constructive dialogue between all of the key stakeholders, and that is what the BTA will be seeking to achieve in the weeks ahead.”

The consultation will remain open for the next eight weeks.

Research Points to Low Risk for COVID-19 Transmission Inflight.

October 12 2020

Manufacturer studies provide insight into extremely few incidents of COVID-19 inflight infections.

Geneva – The International Air Transport Association (IATA) demonstrated the low incidence of inflight COVID-19 transmission with an updated tally of published cases. Since the start of 2020 there have been 44 cases of COVID-19 reported in which transmission is thought to have been associated with a flight journey (inclusive of confirmed, probable and potential cases). Over the same period some 1.2 billion passengers have traveled.

“The risk of a passenger contracting COVID-19 while onboard appears very low. With only 44 identified potential cases of flight-related transmission among 1.2 billion travelers, that’s one case for every 27 million travelers. We recognize that this may be an underestimate but even if 90% of the cases were un-reported, it would be one case for every 2.7 million travelers. We think these figures are extremely reassuring.  Furthermore, the vast majority of published cases occurred before the wearing of face coverings inflight became widespread,” said Dr. David Powell, IATA’s Medical Advisor.

New insight into why the numbers are so low has come from the joint publication by Airbus, Boeing and Embraer of separate computational fluid dynamics (CFD) research conducted by each manufacturer in their aircraft. While methodologies differed slightly, each detailed simulation confirmed that aircraft airflow systems do control the movement of particles in the cabin, limiting the spread of viruses. Data from the simulations yielded similar results:

• Aircraft airflow systems, High Efficiency Particulate Air (HEPA) filters, the natural barrier of the seatback, the downward flow of air, and high rates of air exchange efficiently reduce the risk of disease transmission on board in normal times.
• The addition of mask-wearing amid pandemic concerns adds a further and significant extra layer of protection, which makes being seated in close proximity in an aircraft cabin safer than most other indoor environments.

Data Collection

IATA’s data collection, and the results of the separate simulations, align with the low numbers reported in a recently published peer-reviewed study by Freedman and Wilder-Smith in the Journal of Travel Medicine. Although there is no way to establish an exact tally of possible flight-associated cases, IATA’s outreach to airlines and public health authorities combined with a thorough review of available literature has not yielded any indication that onboard transmission is in any way common or widespread. Further, the Freedman/Wilder-Smith study points to the efficacy of mask-wearing in further reducing risk.

Layered Approach of Preventive Measures

Mask-wearing on board was recommended by IATA in June and is a common requirement on most airlines since the subsequent publication and implementation of the Takeoff Guidance by the International Civil Aviation Organization (ICAO). This guidance adds multiple layers of protection on top of the airflow systems which already ensure a safe cabin environment with very low risks of inflight transmission of disease.

“ICAO’s comprehensive guidance for safe air travel amid the COVID-19 crisis relies on multiple layers of protection, which involve the airports as well as the aircraft. Mask-wearing is one of the most visible. But managed queuing, contactless processing, reduced movement in the cabin, and simplified onboard services are among the multiple measures the aviation industry is taking to keep flying safe. And this is on top of the fact that airflow systems are designed to avoid the spread of disease with high air flow rates and air exchange rates, and highly effective filtration of any recycled air,” said Powell.

Aircraft design characteristics add a further layer of protection contributing to the low incidence of inflight transmission. These include:

• Limited face-to-face interactions as passengers face forward and move about very little
• The effect of the seat-back acting as a physical barrier to air movement from one row to another
• The minimization of forward-aft flow of air, with a segmented flow design which is directed generally downward from ceiling to floor
• The high rate of fresh air coming into the cabin. Air is exchanged 20-30 times per hour on board most aircraft, which compares very favorably with the average office space (average 2-3 times per hour) or schools (average 10-15 times per hour).
• The use of HEPA filters which have more than 99.9% bacteria/virus removal efficiency rate ensuring that the air supply entering the cabin is not a pathway for introducing microbes.

Manufacturer Studies

The interaction of those design factors in creating a uniquely low-risk environment had been intuitively understood but not previously modeled prior to the CFD simulations by the three major manufacturers in each of their aircraft cabins.

The following are highlights from the manufacturers’ research:

Airbus

Airbus used CFD to create a highly accurate simulation of the air in an A320 cabin, to see how droplets resulting from a cough move within the cabin airflow. The simulation calculated parameters such as air speed, direction and temperature at 50 million points in the cabin, up to 1,000 times per second.

Airbus then used the same tools to model a non-aircraft environment, with several individuals keeping six feet (1.8 meters) distance between them. The result was that potential exposure was lower when seated side by side on a plane than when staying six feet apart in an environment such as an office, classroom or grocery store.

“After multiple, highly-detailed simulations using the most accurate scientific methods available, we have concrete data which reveals the aircraft cabin offers a much safer environment than indoor public spaces,” said Bruno Fargeon, Airbus Engineering and the leader of the Airbus Keep Trust in Air Travel Initiative. “The way that air circulates, is filtered and replaced on airplanes creates an absolutely unique environment in which you have just as much protection being seated side-by-side as you would standing six feet apart on the ground.”

Boeing

Using CFD, Boeing researchers tracked how particles from coughing and breathing move around the airplane cabin. Various scenarios were studied including the coughing passenger with and without a mask, the coughing passenger located in various seats including the middle seat, and different variations of passengers’ individual overhead air vents (known as gaspers) on and off.

“This modeling determined the number of cough particles that entered the breathing space of the other passengers”, said Dan Freeman, the chief engineer for Boeing’s Confident Travel Initiative.  “We then compared a similar scenario in other environments, such as an office conference room. Based on the airborne particle count, passengers sitting next to one another on an airplane is the same as standing more than seven feet (or two meters) apart in a typical building environment.”

Embraer

Using CFD, cabin air flow and droplet dispersion models validated in full-scale cabin environment testing, Embraer analyzed the cabin environment considering a coughing passenger in several different seats and air flow conditions in our different aircraft to measure these variables and their effect. The research Embraer completed shows that risk of onboard transmission is extremely low, and the actual data on in-flight transmissions that may have occurred, supports these findings.

Luis Carlos Affonso, Senior Vice-President of Engineering, Technology and Strategy, Embraer, said, “The human need to travel, to connect, and to see our loved ones has not disappeared. In fact, at times like this, we need our families and friends even more. Our message today is that because of the technology and procedures in place, you can fly safely – all the research demonstrates this.  In fact, the cabin of a commercial aircraft is one of the safer spaces available anywhere during this pandemic.”

Safety is Always the Top PriorityThis research effort demonstrates the cooperation and dedication to safety of all involved in air transport and provides evidence that cabin air is safe.

Aviation earns its reputation on safety with each and every flight. This is not different for flying in the time of COVID-19. A recent IATA study found that 86% of recent travelers felt that the industry’s COVID-19 measures were keeping them safe and were well-implemented.

“There is no single silver-bullet measure that will enable us to live and travel safely in the age of COVID-19. But the combination of measures that are being put in place is reassuring travelers the world over that COVID-19 has not defeated their freedom to fly. Nothing is completely risk-free. But with just 44 published cases of potential inflight COVID-19 transmission among 1.2 billion travelers, the risk of contracting the virus on board appears to be in the same category as being struck by lightning,” said Alexandre de Juniac, IATA’s Director General and CEO.“The detailed computational fluid dynamics research of the aircraft manufacturers demonstrates that combining the aircraft’s existing design features with mask-wearing creates a low-risk environment for COVID-19 transmission. As always, airlines, manufacturers and every entity involved in aviation will be guided by science and global best practices to keep flying safe for passengers and crew,” said de Juniac.

• View the IATA Presentation (pdf)
• View the Airbus Presentation (pdf)
• View the Boeing Presentation (pdf)
• View the Embraer Presentation (pdf)
• View the full Media Briefing (YouTube)

It has been six months since Australia instituted a historic travel ban that prevents most people from leaving the country.

For many, that means six months of personal upheaval and separation from loved ones; for others, the frustration of unfulfilled wanderlust.

While Australia’s outgoing travel restrictions are among the most strict anywhere, all nations are struggling with how to move past blanket bans and resume international travel while keeping the risk of COVID-19 transmission ideally non-existent.

And some nations think they have the answer.

Germany, Italy, the United Kingdom, the United States and Chile are among the countries that are looking into so-called immunity passports or COVID-free passports that could unlock global travel sooner than a vaccine arrives.

Working on the presumption recovery from COVID-19 infection equals immunity, the immunity passports — digital or physical documents that would be used in tandem with existing passports — would prove travellers have immunity and are therefore not carrying the virus when they cross borders.

This could mean people who have already been exposed to the virus and recovered would be safe to travel, potentially unlocking the movement of millions of people worldwide.

Immunity passports are seen as a potential key to unlocking international travel.Source:Supplied

Companies are working seriously to develop immunity passports. Among them is Israeli firm Pangea, which is working on a COVID-19 International Travel Card that would verify that travellers have immunity or are virus-free.

“The immunity ‘passport’ we developed would enable the creation of sterile areas where there is no danger of infection and where thousands of people would feel safe to conduct any activity without fear,” Pangea executive vice president Uzy Rozenthal told the Times of Israel.

“Our card and platform are one of the keys to the opening up of the skies and mass movement of millions of tourists and businesspeople from country to country.”

HUGE RISK WITH IMMUNITY PASSPORTS

The problem with immunity passports is they inherently rely on recovered COVID-19 patients developing immunity — but we don’t know enough about the virus to know if people do become immune, or how long it lasts.

In fact, last month researchers in Hong Kong said they “proved” the world’s first known documented case of a person catching coronavirus twice despite a successful recovery.

The World Health Organisation has warned against countries against issuing “immunity passports” for the simple fact it is not yet clear whether contracting the virus makes people immune, or at lesser risk of a second infection.

“There is currently no evidence that people who have recovered from COVID-19 and have antibodies are protected from a second infection,” WHO has said, adding false confidence carried the risk of another outbreak.

Scientists have not determined if immunity from COVID-19 is guaranteed. Picture: NCA NewsWire/Joel CarrettSource:News Corp Australia

IS THIS A BETTER IDEA?

Rather than focusing on who has immunity — which may or may not even exist — there is a push for pre-flight tests that simply determine whether a person is infected with COVID-19 at the time of their travel.

This week, global airlines called for pre-flight COVID-19 tests for all international passengers, which they said could eliminate the need for 14-day quarantine and revive international travel.

The International Air Transport Association (IATA) said rapid antigen tests could be available within weeks and should be adopted globally under agreed standards.

Antigen tests are cheap, deliver results in minutes, and can be administered by non-medical staff with swabs. However the current antigen tests are not considered to be as effective in detecting positive results as laboratory-based tests.

“The key to restoring the freedom of mobility across borders is systematic COVID-19 testing of all travellers before departure,” IATA Director General Alexandre de Juniac said.

“This will give governments the confidence to open their borders without complicated risk models that see constant changes in the rules imposed on travel.

“Testing all passengers will give people back their freedom to travel with confidence. And that will put millions of people back to work.”

A passenger is tested by a doctor at a COVID-19 screening station at Dusseldorf airport in Germany. Picture: Ina Fassbender / AFPSource:AFP

“We don’t see any alternative solution that would be less challenging or more effective,” he added.

Previously, the IATA had advocated for laboratory-based tests 48 hours before departure, but now believed last-minute airport antigen tests were more effective because they eliminated risk of forged certificates or new infections right before travel.

The last-minute tests will also “boost passenger confidence that everybody on the aircraft has been tested,” Mr de Juniac said.

Several airlines, including Etihad and Emirates, already demand negative test results before passengers can fly.

Some airports, such as Hong Kong International and Rome’s Leonardo Da Vinci, have also introduced testing on arrival.

Qantas chief executive Alan Joyce has also spoken of the potential for rapid pre-flight testing to restart international flights.

“There’s some great developments in testing that could resolve the issue of people needing to go into quarantine,” Mr Joyce said at this month’s CAPA Australia Pacific Aviation Summit.

He said rapid pre-flight tests, which could potentially deliver results in as little as 15 minutes, could determine “whether you’re exposed to COVID-19, which means if you pass there’s no need to be in quarantine at the other end.”

He said that could link countries with similar levels of infection, such as Australia, New Zealand and perhaps Japan and other Asian destinations.

“Then you could see ‘bubbles’ opening up one by one,” he said.

Emirates has made pre-flight testing mandatory.Source:Supplied

But rapid pre-flight tests — at least in their current form — may not be a silver bullet either.

CNN reported when airport testing was introduced in Iceland, the virus was still spreading despite negative results.

“I don’t think people have a clear concept of testing,” Missouri University of Science and Technology senior lecturer Rex Gerald told CNN.

“The moment you take the test you are negative but by the time you get home you could have interacted with people and contracted the disease.”

Still, there is expectation airport testing will be part of our travelling future.

Andrew Charlton, managing director of the consultancy Aviation Advocacy, told the UK’s The Times compulsory pre-flight health checks would become the norm.

“Even if it starts raining vaccines tonight, we are still looking at two years at least to get back to levels seen before the outbreak, and it is probably going to be more like five years,” he said.

“There will be fewer flights, fewer seats available, prices will go up and there will be very uncomfortable conditions because of the demands to wear personal protective equipment and maintain social distancing.

“Whereas we used to be able to turn up at the airport an hour or two before departure, we could see something as horrible as four hours as health checks are added to the usual palaver of check-in, security and immigration.”

Power to the policy. ‘Pop up’ travel policies have been essential for corporates navigating the Covid-19 crisis, but what are the key changes and could these ‘temporary’ trends outlast the pandemic?

23 September 2020

There’s limited intelligence ‘to support optimism,’ in fact, the data suggests ‘a long recovery process’ declares BA boss Alex Cruz as he warns Covid is ‘not something that is just going to go away’.

17 September 2020

The current global health pandemic “is by far the biggest impact this industry has gone through,”  said Alex Cruz in his evidence to the UK Parliament’s Transport Committee on the coronavirus implications for transport this week. The negative impact of Covid-19 is not something we haven’t heard before from airline bosses.

However, the comments from the British Airways chairman and CEO that the UK airline “cannot find much data or information to support optimism” and that in fact, there “is lots of information that shows this will be a very long recovery process” is not a positive outlook for the already embattled industry.

“The fact remains that people are still afraid of travelling,” acknowledged Mr Cruz who noted that British Airways is operating a flight schedule that is around a quarter to a third of its normal scale, and passenger levels are down to less than a fifth of those it had seen at the same time last year.

Mr Cruz noted in his evidence that in the immediate aftermath of the 2009 global financial crisis (GFC), British Airways lost GBP309 million. For comparison, in the second quarter of this year, the first full quarter of trading during the pandemic it lost GBP711 million and is currently bleeding an average of around GBP20 million every day.

The scale of losses is extreme and highlights how severe an impact Covid-19 is having on air transportation. Analysis by CAPA – Centre for Aviation, a provider of independent aviation market intelligence, analysis and data services, in its Airline Leader publication, highlighted earlier this month that the GFC was a mere shallow wave in comparison to the tsunami of turmoil cast by Covid-19.

Emphasising the scale of difference, in 2009 the century’s steepest global year-on-year drop in passenger numbers occurred post the global financial crisis, a fall of -0.4%. Estimates for the full year 2020 are that passenger traffic will be down by some -60%.

“There is no precedent for what is happening now. This is important to recognise, because it makes sound predictions from our new starting point impossible. Some things will never be the same again (even though many things that appear impossible today may look different in a year’s time),” said the CAPA article.

The British Airways boss shares a similar viewpoint. “All the data, all the information and the previous crises… point to the same conclusion: things have changed; the airline industry is fundamentally different,” explained Mr Cruz in his evidence. “The impact will be with us for many years,” he warned and “is not something that is just going to go away”.

After the global financial crisis, questions were asked if the business market would ever recover. It did, but it took some time. Had the coronavirus struck a decade ago, the commercial impact would have been vastly greater than even it has been today as at that time teleconferencing quality was poor and broadband WiFi was not widely available.

By the same token, the business travel recovery period would not be distracted by what is now an arguably viable online alternative. Mr Cruz said that in the case of British Airways the percentage of business travellers travelling in premium classes never recovered to previous levels after the global financial crisis, a stark warning for the current infinitely worse predicament.

Mr Cruz said that Covid has “devastated the business” and British Airways is “fighting for its survival” as he as he defended the airline’s decision to cut over 13,000 jobs, around a third of its workforce. Put simply, he said: “Fewer passengers means fewer flights, and fewer flights means fewer people required to actually service them… This is an impossible situation… We’re having to make incredibly difficult decisions as a consequence of this pandemic.”

The nature of this crisis means the “overall situation is quite challenging,” explained Mr Cruz, especially given the airlines does not see a short-term uplift in passengers. “All the feedback that we get, all the data that we get, all the companies we speak with, all the consumer groups that we speak with, are still pointing at a slow recovery process,” said Mr Cruz and he said he remains “worried on the evolution of the winter season”.

Travel sentiment, he said, was not being helped by “disruptive” weekly changes to the quarantine list and that “we don’t have a testing solution yet,” something many in the aviation industry are pushing governments hard to introduce. “And still our customers are paying APD (air passenger duty) even just to fly on domestic regional flights,” he added, which he describes as “disabling travel”.

Mr Cruz suggested the landscape could quickly improve from more decisive action by rulemakers. He said it is “incredibly important that we reach a testing regime of some sort as quickly as possible” to reduce quarantine periods. This, he said, could be introduced in the London – New York market, a city pair that is significantly important to the airline.

As The Blue Swan Daily has reported previously, the British Airways London Heathrow – New York JFK route was the world’s only billion dollar air service by annual revenue before Covid. In fact, the route is around a fifth  more valuable than any other single airline global route. While current demand levels will be much reduced, freedom to serve the key business and leisure market would provide a key boost to the airline.

“We are making a suggestion that we actually run a test between London and New York, so we can give authorities on both sides of the Atlantic an opportunity to test different ways in which a particular testing regime would actually work,” said Mr Cruz. “This is imperative, so that we can drive the confidence of travellers so we can get business going again… We’re sitting here, we’re ready to go.”

Until such time Mr Cruz said the airline would campaign for more consistency around the quarantine list, and perhaps with a regional filter. “We need more regional considerations,” he said. “We need more detail and we need it fast.”

For British Airways this is especially valid to the trans-Atlantic market, where such an option would allow the airline to resume flights into destinations where Covid-19 infection levels are under control. “We can’t wait for the last state in the US to fall below the infection level,” he said that would open the door to restarting flights to other states or cities.

Travel Industry Must Consider Offering Contactless Payment.

As part of the Collaboratory 2020 webinar series, GBTA Interim Executive Director Dave Hilfman hosted Jim McGowan, Marqeta’s Head of eCommerce, on Monday to discuss the growth of contactless payment systems and how the travel industry can benefit from this modern technology. Marqeta is a leader in contactless payments, having developed the world’s first open API modern card issuing platform.

“Contactless payment is a technology emerging at just the right time, as the pandemic has heightened consumers’ desires for safe and convenient ways to process transactions,” said Hilfman.

During the webinar, McGowan offered several key takeaways, including:

• Contactless payment could play a role in getting the public traveling again. COVID-19 has brought contactless payment to the forefront in the corporate world, with more businesses understanding that these advances will need to be adopted quickly to get people more comfortable with getting back on the road safely.
• The U.S. lags other countries in adopting contactless payment. U.S. credit card companies didn’t incorporate the contactless technology when they transitioned to EMV chip cards a few years ago, but they are realizing the huge market potential for contactless cards in the U.S. and are quickly trying to catch up.
• The travel industry is ready to adopt new technologies like contactless payment. Leisure and business travel have long been working with a virtual card process, like those used with GDSs. In some ways, contactless payment is the next evolution of this, with modern platforms already in existence to help travel management companies adopt and integrate with these innovative solutions.
• The pandemic is accelerating the adoption of new technologies. “Disruptors” are creating ways to break out from the status quo. We’ll continue to see innovators come up with new products to address challenges, including in contactless payment and virtual cards systems like Venmo and Cash App, which are used to transfer money from consumer to consumer.

“The travel industry will rebound, so now is the time for travel companies to get out in front of solutions for a post-pandemic world by researching and discovering what’s new and available,” said McGowan.

More countries ease travel restrictions.

15 September 2020

MADRID, 14 September 2020: Just over half of destinations worldwide (53%) have now started easing travel restrictions introduced in response to the Covid-19 pandemic, the United Nations World Tourism Organisation claims in its latest update.

While many destinations remain cautious, UNWTO in its seventh edition of the “Covid-19 Related Travel Restrictions: A Global Review for Tourism” identifies an ongoing trend towards the gradual restart of tourism.

Analysing restrictions up to 1 September, the research carried out by UNWTO found that a total of 115 destinations (53% of all destinations worldwide) have eased travel restrictions, an increase of 28 since 19 July. Of these, two have lifted all restrictions, while the remaining 113 continue to have certain restrictive measures in place.

UNWTO Secretary-General Zurab Pololikashvili said: “While we  must remain vigilant and cautious, we are concerned about those destinations with ongoing full travel restrictions, especially where tourism is a lifeline and economic and social development are under threat.”

Deepening tourism intelligence

For the first time, the Covid-19 Related Travel Restrictions report includes key data on the health and hygiene infrastructure in place at destinations.  There is also analysing rate for the notifications of new Coyid-19 cases. This allows UNWTO to determine the factors that are influencing destinations’ decisions to ease restrictions.

Report takeaways

Destinations which have eased travel restrictions have high or very high levels of health and hygiene infrastructure. They also tend to have comparatively low Covid-19 infection rates.

Within advanced economies, 79% of tourism destinations have already eased restrictions. In emerging economies, just 47% of destinations have done so.

64% of those destinations which have eased have a high or medium dependence on airlines to deliver international tourism arrivals.

At the same time, the report shows that many destinations around the world are extremely cautious about easing travel restrictions they introduced in response to the pandemic, and some have passed severe measures in an attempt to keep their citizens safe. Ninety-three destinations (43% of all worldwide destinations) continue to have their borders completely closed to tourism, of which 27 have had their borders completely closed for at least 30 weeks.

Furthermore, more than half of all destinations with borders completely closed to tourism are classified as being among the World’s Most Vulnerable Countries. They include 10 SIDS (Small Island Developing States), one Least Developed Country (LDC) and three Land-Locked Developing Countries (LLDCs). More than half of destinations with full restrictions still in place are also highly dependent on aviation, with at least 70% of their tourist arrivals coming by air, causing significant connectivity impacts for their citizens and economies.

UNWTO continues to monitor the impact of Covid-19 on tourism. It notes that the situation is fluid and that, even as tourism restarts in some regions, in others, restrictions may be tightened and borders re-closed.

Similarly, UNWTO has observed a rise in travel advisories being issued by governments for their own citizens, alongside more and varied restrictions and other measures directed at passengers arriving from specific countries or regions.