Round-trip New York~Sydney approximately 28 million KRW... US Business Airfare Doubles, Dark Clouds Over the Business Travel Industry

COVID-19 Restrictions Eased, Demand Surges... Business Class Prices Double
Fuel Price Increases Also Impacting

Business class airfare prices in the United States have surged compared to the period before the spread of COVID-19, increasing the burden on companies. The photo is not related to the specific content of the article. [Image source=Pixabay]

[Asia Economy Reporter Yoon Seul-gi] In the United States, business class airfare prices have nearly doubled compared to before the spread of COVID-19, increasing the burden on companies. As companies tend to restrain business trips due to cost concerns, the recovery of the corporate travel market is expected to be slow.

According to Bloomberg on the 19th, the round-trip business fare for the longest route with business seats in the U.S., New York to Sydney, exceeds $20,000 (approximately 27.86 million KRW). This is about twice as high as the level before the COVID-19 pandemic.

As travel-related restrictions limited by COVID-19 have eased, airlines are moving quickly to reactivate aircraft and bring back staff in anticipation of a surge in travel demand. However, the surge in demand is causing supply disruptions. Additionally, recent increases in fuel prices have influenced airfare hikes.

Nick Bonakis, Vice President of CWT, a corporate travel specialist agency, said, "Demand is definitely exceeding supply," but added, "At some point, companies will say 'We can't bear it anymore.'"

CWT and the Global Business Travel Association (GBTA) forecast that business class fares will rise 45% this year and increase another 6.2% next year. According to TripActions, a corporate travel management company, business class fares for flights departing from the U.S. between January and August surged 52%, outpacing increases in economy and premium economy fares.

As companies face growing cost burdens, dark clouds have gathered over the corporate travel market. Although business travel accounts for only 12% of airline passengers, it represents 75% of profits.

The replacement of business trips by video conferencing is also a problem. Microsoft (MS) founder Bill Gates predicted at the end of 2020 that corporate travel would decrease by more than 50% due to COVID-19, and Qantas CEO Alan Joyce forecasted a decline of about 15%. During the COVID-19 period, video conferencing platforms like Zoom replaced business trips, and as some results were achieved, companies tended to restrain business travel.

GBTA projects that the corporate travel industry, worth $1.4 trillion (approximately 1,950 trillion KRW), will not recover to pre-COVID-19 levels until 2026. This is about two years later than the association's initial forecast.

This content was produced with the assistance of AI translation services.