Airlines, RDU airport anxious for return of business travel

Cecilia Nysing

Before the coronavirus pandemic, Rob Herman’s work as an executive at Lenovo in Research Triangle Park took him all over the world, flying from Raleigh-Durham International Airport en route to the West Coast, Asia or Europe.

But Herman hasn’t boarded a plane for business since the COVID-19 pandemic began in early 2020. RDU and the airlines that fly there miss Herman and tens of thousands of other business travelers like him who were absent during the pandemic and may not fly in the future as often as they once did.

Before COVID-19, roughly half of the people flying in and out of RDU were on business, while the other half were considered “leisure” travelers. So far, those seeking leisure have returned in large numbers, filling the terminals on long-delayed vacations or to visit family they haven’t seen in a while.

But business travel is lagging. Based on national surveys, RDU president Michael Landguth estimates that people flying for work account for about 35% of passengers at the airport this month, and that decline is the main reason RDU’s business is still off by a third from 2019.

Airlines and airports like RDU are anxious to see more business travelers. They’re more likely to be frequent flyers, paying top dollar for tickets and meals and memberships to airline lounges. These big spenders make up about 30% of airline passengers, but account for 70% of airline revenue, says Scott McCartney, who covers the airline business for The Wall Street Journal.

“Business travel is what matters most in the airline industry,” McCartney told a gathering of Triangle business people in Cary earlier this month. “It’s what the industry is built for. The whole structure of the airline industry is built around business travel.”

But McCartney is among those who thinks that a portion of business travel is not coming back, mostly because of technology that lets people meet over computers.

Zoom and other virtual meeting programs existed before COVID-19, but the pandemic forced companies to use them much more and in new ways. McCartney says many have seen that a virtual visit can be just as productive — and a lot cheaper and less time-consuming — as an in-person one.

McCartney says he and three associates from the industry examined the different reasons people fly for business, then estimated what portion of that flying will be done in the future. They concluded, for example, that people will still travel to meet with customers or drum up new clients, but will be less likely to get on a plane for a meeting with fellow employees in other cities.

Overall, they estimate that technology will replace anywhere from 19% to 36% of business travel.

“We think this is profound, for the airline industry to lose 20% of its business travel,” he said. “It’s going to have a huge impact.”

Airlines are trying to be more optimistic. Delta Air Lines, RDU’s busiest carrier by passenger traffic, is planning to resume nonstop flights to nine more cities in September, all of them traditional business destinations such as Chicago, Philadelphia, Washington, Newark and Cincinnati.

During the company’s most recent earnings report , Delta president Glen Hauenstein said that based on a survey of its corporate customers, the airline expects business travel to grow from 40% of pre-pandemic levels at the end of June to 60% by the end of September.

“Our close engagement with customers gives us increased confidence of the acceleration of business travel, especially as we move toward the post-Labor Day period as schools and offices continue to reopen,” Hauenstein said.

Herman says some of his colleagues at Lenovo have begun to travel by air again and that he looks forward to flying, too. Pre-pandemic, he flew somewhere for business every six weeks or so, and he misses it. At the same time, Herman says he’s adjusted pretty well to communicating with people virtually and doesn’t think he’s less effective at his job.

“Could I be more effective, could we seize more opportunities, if I were able to travel again? Probably yes,” he said. “So I do long for the day when we can travel again and be able to meet with customers face to face.”

How much will Zoom replace air travel?

But Herman also thinks he and others at Lenovo will travel less than before, particularly for internal company meetings. Some gatherings with colleagues that used to entail flying to New York or California will take place virtually.

Others say technology will surely alter their future travel as well. Natalie Birdwell, chief operating officer of the Raleigh software company ndustrial, said virtual meetings can make in-person visits more focused and strategic, potentially allowing the company to send fewer people on a particular trip, for example, or to spend less time visiting a customer.

But air travel will still be important to ndustrial, a company with 30 employees that expects to hire several times that many in coming years. The company is already hearing from customers who want to meet and collaborate in-person, Birdwell said.

“There’s just something about the energy of being in the same room and people being able to feed off of those conversations,” she said. “The level of engagement is a touch deeper when you’re in person.”

Pendo is another Raleigh software company that values bringing people together, said chief financial officer Jennifer Kaelin. Before the pandemic, it flew new hires at its offices in New York, San Francisco, Israel and the United Kingdom to its Raleigh headquarters for several days, and that will happen again as travel restrictions are relaxed, Kaelin said.

“Being able to bring new employees and new hires to our HQ and really indoctrinate them on what it means to be a Pendozer and the company history and hearing from different executives live and in person, there’s just no replacement for that,” she said.

Pendo also puts on special events that generate trips for its employees and customers, including an annual conference for users of its products. Last year, the conference was all virtual, but Kaelin said this year’s Pendomonium will have a mix of virtual and in-person activities at the Raleigh Convention Center and Red Hat Amphitheater in October. It’s a beautiful time to be in Raleigh, she said, and the company hopes to attract about 800 people for the two-day event.

“We’re hoping that by then people will be really engaged and looking forward to getting out of their house and their city and coming to Raleigh,” she said.

Campaign urges Triangle travelers to ‘Carry On’

Last month, RDU and a coalition of Triangle companies unveiled a broadcast and print advertising campaign to encourage people to fly again. The idea behind the “Carry On” campaign is that demand for air travel will encourage airlines to continue restoring and expanding nonstop service from the Triangle, which in turn will help attract more businesses and boost the economy.

Landguth, the airport president, says while it may take time, he’s confident business travel will pick up significantly as corporations ease restrictions on visitors and realize the advantages of being in-person.

“You can’t do everything by Zoom,” he said. “At some point, you have to have a face-to-face conversation and a relationship with someone. We’re human beings.”

Landguth says the industry expects 2022 will be a banner year for European travel, as countries open up to U.S. visitors for business and pleasure. It will be similar to the boost airlines got this summer from leisure travelers, who filled planes bound for Mexico and Florida after a year of lockdown.

“They think that could be replicated, and Florida will go soft next summer and Europe will light up,” Landguth said. “Lot of pent-up demand.”

RDU will also benefit from new and expanding businesses in the Triangle, among them Google and Apple. Both companies have announced plans to create thousands of jobs in the region, which will increase demand for flights to and from their headquarters on the West Coast.

And universities will again bring people in and out of RDU, including students, visitors and faculty. N.C. State University faculty, staff and students are involved in half a billion dollars in research each year, said Charlie Maimone, vice chancellor for finance and administration, and much of that involves travel.

“Many of our faculty work collaboratively with faculty members at other universities,” Maimone said. “Sometimes the laboratory work is done here, and sometimes the laboratory work is done there. So they’re still going to move.”

Related stories from Raleigh News & Observer

Richard Stradling covers transportation for The News & Observer. Planes, trains and automobiles, plus ferries, bicycles, scooters and just plain walking. Also, hospitals during the coronavirus outbreak. He’s been a reporter or editor for 33 years, including the last 21 at The N&O. 919-829-4739, [email protected]

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