As the pandemic has changed the way people think about business travel, major U.S. airlines have been considering new types of travel that could replace it. Delta talked about premium leisure travelers, or people willing to pay for a better in-flight experience and upgraded hotel and ground packages. Other major U.S. airlines have talked about “mixed passengers,” or “business leisure” passengers. This so-called growth category includes people who travel including some for business and some for leisure.
It’s understandable why the big U.S. airlines would be looking for this kind of traffic. Faced with a situation where business traffic levels remain at around 75% of 2019 traffic, the three major U.S. operators will lose considerable revenue. Historically, business travelers paid three to four times as much as discretionary, price-sensitive travelers. Even a 10% reduction in business traffic would mean airlines don’t have enough seats to make up revenue from leisure travelers alone. So it’s tempting to focus on the types of trips that might not pay four times the rate but can pay twice the discretionary rate. Unfortunately for them, there are five big problems with this approach:
Business and leisure have always been integrated
Combining business and leisure in one trip is a new and innovative idea that defies reality. Who went to Las Vegas for a conference and didn’t make time for the evening, or stayed an extra day, to see Cirque du Soleil, another good show, or just gamble? Orlando is another big convention city. Many people go to the Orlando Convention Center for business while their families enjoy a day at Disney or Universal Studios. In 2000, I spoke at an event in Amman, Jordan. My wife and I went on that trip and had fun during the day while I was working. We would not leave the country without visiting Petra, one of the most fascinating historical and archaeological sites in the world. Twelve years ago, no one talked about blending or business travel, but it happens quite often.
Naming it doesn’t make it new, but it brings awareness to it. By recognizing that people often mix business and leisure in one trip, airlines may find ways to capitalize on this fact with specific offerings. But it doesn’t make sense to suggest that this is a new growth category that can replace the otherwise lost business traveler.
The company will have a lot to say
The biggest difference that separates corporate business travel from leisure travel is who pays for the airfare. When purchasing tickets on their own, passengers are often highly price sensitive and will choose the flight and cabin option that offers the lowest fare. But when a company buys a ticket, suddenly a direct flight at the right time and in a premium seat is more important than price. That’s why business travelers pay three to four times as much as leisure travelers.
Most companies have policies about traveling with family or staying a few extra days to take advantage of local opportunities. The existence of these policies is further proof that such hybrid travel is nothing new. However, mixed travel does not occur unless the company paying for the trip allows it. Flexibility in the field may be increasing as companies look for ways to attract and retain the best talent. Alternatively, the company may require employees to pay for additional family members or additional travel days. This will put employees into a “pay it yourself” model, and they may be looking for a lower-cost option than what they’re asking for from the company when they travel. The point is, if at least the company doesn’t accept the time and/or expense for the leisure portion, employees themselves can’t choose to go on a hybrid trip.
Not every destination is created equal
Business trips to common leisure destinations like Orlando or New Orleans will encourage more integration of leisure time into business travel. But a lot of business travel happens in potentially less exciting places. Alternatively, if it is an international destination, the destination may be more complex and require a visa or other paperwork to enter.
You can enjoy a pleasant leisure experience anywhere. Just visiting new places, eating at new restaurants, or learning about some local history can add to the joy of traveling even in the most tourist-unfriendly places. But not every business trip encourages the creation of a leisure trip. Also, there may or may not be a time of year when it’s best to bring your family, and wherever you have to go, the number of days available for an extra day of adventure may or may not make sense. So while combining leisure activities with some business travel may encourage more business travel, it will be focused on certain places and times of the year.
Liability and Litigation Risk
Let’s say you have a business meeting in Denver, so you plan to be at the desired office on Thursday and Friday, and they stay for the weekend to ski. Your company may fully support this and agree to buy your flight home on Sunday and pay for an additional two nights hotel. Great, but what if you break your leg skiing on a Saturday and it affects your ability to get the job done in a few weeks? Have you been injured on a business trip, is the company responsible?
Or let’s say you’re traveling with your family and your grumpy daughter accidentally floods your room while you’re at work. The company is paying for the hotel. Who is responsible for the damage?
Naming a new way to travel is great for raising awareness and attention to ensure product aligns with sales. However, it also introduces new litigation risks that companies will consider and help inform how they develop travel policies. If all goes well, what could be better than playing for a few more days or giving the family a ride together? Things did go wrong, and the focus on hybrid travel would have made some lawyers very happy.
better accept reality
Rather than looking for unicorns that can replace lost business travelers and pay dearly, the big U.S. airlines are better off accepting the new reality and making changes to adapt to it. These changes can be in many areas: seating configurations, flight schedules, loyalty programs, organizational structures, and more. These changes require the acceptance that a world that accounted for 80% of business travelers in 2019 is not a bad world, just a different one. It also needs to recognize that the airline was built for travel because it existed before the pandemic. Many meaningful decisions are made less meaningful today, so airlines that adapt quickly to this new reality will gain a competitive advantage.