Aviation sector is up for a boom as all the factors are in favor of this space. A global corporate travel survey for 1H22 in Europe done by CLSA indicates recovery picking up. 2022 appears to be starting strong, with budgets at 75% of 2019 levels in Q1 and 85% in Q2. Airfares, meanwhile, are clearly on the rise, with 73% of respondents now expecting fares to exceed 2019 levels in 2022, and 79% expecting the same for 2023.
A survey was conducted of up to 88 corporate travel managers who had aggregate pre-Covid travel spend of $6bn and operations across Europe, the US and Asia. The outcome of the survey was as follows:
1) Travel budget expectations for 2022 improve vs prior surveys: Travel managers budget has improved from 2H21 to 1H22. By 2023, the average expectation from managers is for budgets to be back to 94% of 2019.
2) Smaller enterprises are clearly leading the way: smaller enterprises are recovering from the pandemic quickly and leading corporate travel demand. 24% of companies with revenue below $1bn have returned to pre-Covid travel levels.
3) Virtual disruption should reduce but not go away: In 2023, virtual meetings are expected to be 19% of travel volumes, falling to 16% in 2024. Over time the share lost to virtual might fall, but it also seems that virtual is expected to permanently replace a material amount of traffic.
Conclusions for European Airlines: Despite the improvement there is still a long way to go before travel returns to 2019 levels. The best thing is pricing appears to be very strong.
Conclusions for US Airlines: US corporate travel, after 18 months has surged in recent months. The Airlines expect the corporate travel to be back to 2019 levels by the end of this year.
The survey clearly indicates Airlines optimism back in place and rolling positively.
