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Skift Take
Optimism is in the air among United, British Airways, and other airline executives. Rightfully so.
“By far the biggest and most impactful question being debated is the question about business travel returning,” said United CEO Scott Kirby. “Put me firmly in the camp it is going to return in full.”
Kirby made the comments as part of a panel of executives that included bosses at British Airways and Easyjet on a CarTrawler webinar Wednesday. They echoed comments Kirby has made on recent investor calls.
The optimism impacts United’s thinking about how to run its network and operations.
“For a number of our competitors in the U.S. and internationally, as the pandemic deepened in the second wave, they decided to retire a bunch of their airplanes,” Kirby said. “We didn’t. We viewed it as an opportunity to actually double down and turn right when everyone else was turning left.”
The carrier didn’t retire aircraft and it even made a historic order for more.
“I think it’s the right call,” Kirby said. “Demand is going to be robust, and we’re going to be able to grow. If we can do it at the same time everyone else is constrained and unable to grow, it just creates a unique opportunity for United Airlines. So we’re really quite bullish.”
The new CEO of British Airways, Sean Doyle, echoed Kirby’s optimism. Doyle said the airline saw a bump once the UK reopened its borders recently.
“It was quicker than we expected,” Doyle said. “We saw a massive recovery, and week by week, the corporate segment grew by about eight [percentage] points. Small-to-medium enterprises were quicker out of the traps, and they were pacing ahead of what we would call the corporates.”
Sophie Dekkers, the chief commercial officer of Easyjet, also echoed the optimism. She said the low-cost carrier is seeing business travelers accounting for 21 percent of the carrier’s short-haul segments, compared with a 19 percent share pre-pandemic.
Willie Walsh, who is director-general of the International Air Transport Association (IATA) and, until 2020, was CEO of International Airlines Group, echoed Kirby’s optimism.
“We look at it not from a business and leisure perspective but from a premium and non-premium one,” Walsh said. “When we look at premium and non-premium, the pace of recovery has been exactly the same in international markets through 2021, which has surprised me.”
Toward the end of the year, IATA saw premium travel purchases recovering at a slightly faster pace. That result coincidentally echoed with the reporting in Skift’s 2022 Travel Megatrend, “The Rise of Premium Leisure Air Travel.”
The executives were commenting on a research report published Wednesday by CarTrawler, a Dublin-based tech vendor specializing in car rental cross-selling.
United and other airlines have recently signed deals with CarTrawler to use its technology to help upsell passengers on car rentals and other mobility ancillaries.
For example, under a partnership with United announced in November, the airline will integrate CarTrawler’s technology across its site and app, letting passengers book cars through United’s partner Avis Budget.
The technology analyzes customer and flight data in a promise to provide more relevant offers than what a carrier’s in-house tech might come up with.
Ancillaries have growth potential, the executives said.
“Pre-pandemic, about a third of our bookings for airlines, hotels, and car rentals would have had consumers paying for extra for a flexibility product,” said Frederic Lalonde, CEO of online travel agency Hopper. “Now we’re at 43 percent to 45 percent.”
Most of Hopper’s consumers are Gen Z or Millennials who are less exposed to the risks of the pandemic and who are more budget-conscious leisure travelers.
Yet despite those caveats, the company is seeing that customers who buy trip-protection and price-protection products repeat doing so on future trips about 90 percent of the time. Lalonde said consumers are adding about $40 worth of ancillaries for flexibility on trips averaging about $340 in cost via Hopper.
Lalonde also said Hopper has been seeing domestic airfares in the U.S. rise about 6 percent a month on average without the inflation deterring demand.
“There’s so much pent-up savings among consumers that we’re entering into a super-cycle for travel demand in the next year or two,” Lalonde said.
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