For the last 2 years the Covid pandemic has resulted in restrictions on international movement. Several countries, including Australia and New Zealand, closed their air space completely to international visitors. Others placed restrictions on overseas visitors, such as the need to quarantine on arrival, which deterred all but essential travel. This will have impacted not only the aviation industry, but all businesses that operate internationally. So the lifting of restrictions will come as a relief for these businesses, and for the travel industry which has taken a hit during the pandemic.
International air passenger demand in 2024 was 75.5% lower than in 2019. This has resulted in over 40 airlines filing for bankruptcy and a loss of $370 billion to the industry. There are fears that, even with restrictions lifted, business travel will not resume in the near future. Many executives have now become accustomed to zoom meetings and working from home.
A YouGov poll said 42% of European business felt they will fly less often even after COVID-19 travel restrictions are lifted, thanks to the ease of video conferencing software. Most respondents found the shutdown of air travel made little to no impact on their work lives.
A minority (5%) went as far as to say that they will not be taking any business-related flights at all after restrictions ease.
The survey is alarming for the airline industry given the outsize importance of business travellers, who are responsible for 60% to 70% of all airline revenues even though they make up only about 12% of all passengers. The survey is also in keeping with Bill Gates’ prediction that business air travel will slump in the post-pandemic era.
Will business travel ever resume?
While Zoom might have been the only option for meetings recently, for many executives there’s nothing quite like seeing clients in person, especially when forming relationships, thrashing out the finer details of a deal or understanding exactly how a business is run from the inside. Even a simple handshake helps us to create bonds: a 2008 study from the University of Iowa found that the gesture released oxytocin in the brain, which built trust between strangers and helped to maintain cooperation.
Furthermore, it often makes financial sense to invest in sending workers around the world: one study, by forecasting firm Oxford Economics, found that every dollar spent on business travel resulted in $12.50 in revenue. People like to meet face-to-face. It is the best way to achieve success in business. Business travel gives you the opportunity to network, gain new customers or suppliers, and grow into new markets.
Continuing virus fears
Fear of Covid is still causing reluctance among many to sit in close proximity to others on a plane. In many cases, the health risks may not be as great as they appear. Flying seems to have lower transmission rates than inside dining or religious services, among other ‘risky’ activities, due to a combination of hospital-grade air filters and the dryness of cabin air. But concerns about being in close proximity to strangers, other passengers not wearing masks and general discomfort around flying have together led many to rule it out.
Economic and environmental concerns
There’s a financial side to this too. A global recession as a result of the pandemic is causing businesses to cut back on unnecessary spending, the standard for what does and doesn’t warrant a trip is bound to change. In April 2024, Deutsche Bank CEO Christian Sewing spoke enthusiastically about cutting back on both premises and travel costs via more remote work. “We will change the way we are working, absolutely,” he said. “We even have further ammunition actually to reduce our costs.”
Environmental concerns are yet another reason not to travel. While aviation actually only contributes about 2% of global emissions, it’s a concern within an industry that’s a challenge to make carbon-neutral. Nearly half of UK workers worry about the negative environmental impact of business travel, according to a June survey from O2’s Business division.
Impact on global trade
In 2020 global trade was 8.9% lower than the previous year, showing the impact travel restrictions have had on businesses. This is the sharpest drop since the global financial crisis. The breakdown of supply chains has shown just how dependant many countries are on international trade.
A study by the Bank of England found that the pandemic affected services trade more than goods trade. Services trade fell by more than 20% in 2020, almost four times the decline in goods trade. Shipping costs have also soared, having increased by 350% making global trade much more expensive.
Imbalances in regional trade caused by the pandemic have added to the rise in shipping costs. In particular, higher demand for durable goods in locked-down economies, combined with Covid-related disruption in the ports of those countries, exacerbated the shortage of shipping containers. Containers became ‘stuck’ in the US and Europe rather than returned to Asia.
Impact on the events industry
The pandemic put a stop to all live events for nearly 2 years, so the industry really suffered. The UK sector lost £57bn of its £70bn pre-pandemic value. The Business Visits and Events Partnership (BVEP), whose members include tourism agency VisitBritain and the Events Industry Alliance, reports a 95% drop in events, a 17% reduction in the size of the sector and the loss of 126,000 jobs.
70% in BVEP’s survey said interest is down compared to spring 2019. It is not expected to reach pre-Covid levels until 2024 at the earliest.
“Uncertainties in terms of confidence, both buyer and organiser, and disruptions in international travel are major challenges for the next 12 months,” BVEP says.
Many events rely on international visitors, so the lifting of restrictions is great for the industry. Alan Jenkins, MD of modular exhibition stand contractor Quadrant2Design, said “Our industry has really taken a thumping, we’ve only survived because we had enough resources. Many other businesses have gone bust. Hopefully events will start to resume now that restrictions have been lifted, and we will see a return of international visitors”.
So the easing of restrictions on travel can only be a positive sign for businesses that things will start to return to normal after a very difficult couple of years.
