US Airlines: 2020 Global Corporate Travel Survey: A Modest Deceleration

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November 6, 2019–Through AlphaWise, we conducted a global survey of 200+ corporate travel managers responsible for airline negotiations. Overall, 2020 budget and demand growth are expected to step-up moderately.

We highlight the following key takeaways:

  1. Global Corporate Volumes and Pricing are Decelerating for Air Travel. Respondents in our survey anticipate ~3.4% global passenger volume growth (response-weighted), which is below last year’s ~5.1%. And on the airline pricing side of the equation, it is seeing a similar step-down with growth of ~1.3% versus the previous year at ~1.8% (both response-weighted).
  2. Travel Budgets Should Grow Slower Into 2020. Over the past year, corporate travel revenues have remained steady despite the volatile backdrop. That said, growth in budget expectations for air and hotel are set to be lower with respondents expecting ~4.0% growth into 2020 compared to last year’s forecast of ~5.7%.
  3. North America Domestic Remains the Leading Region. Global volume and pricing expectations vary quite a bit across the relevant regional exposures for US airlines. Specifically, North America Domestic is the strongest region again this year given its volume and pricing expectations at ~2.3% and ~1.9%, respectively, followed by LatAm, Transatlantic, then Asia Pacific.
  4. Premium Policies are Becoming More Stringent, But with Discounts Steady. Along with lower budget expectations, premium travel policies are becoming more conservative with a ~2x increase in managers pointing to more stringent policies in 2020. And on discounts, they remain steady and within the historical range of 10-15%.
  5. Delta is Still Best-in-Class. DAL has consistently screened as the preferred airline amongst corporate travel managers and again held this position based on performance across all polled categories. As such, we expect the airline to hold off any material share shift in the near-term, though note that UAL has made some gains in its relative positioning.
  6. Declining LCC Corporate Share Reversed. This year found corporate travel managers reversing the trend of decreasing LCC use with an up-tick YoY. Specifically, the travel budget allocated for low cost carriers increased to ~12% from the prior year’s ~9%. Overall, we view this trend as a potential disrupter for the Legacies over the long-term.

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