Airline travel to rebound in 2022, but not back to normal: Morgan Stanley survey

Corporate travel will accelerate in 2022, but travel budgets in 2021 are expected to decrease by 50 per cent compared to 2019, rising to 78 per cent in 2022, says Morgan Stanley's Global Corporate Travel Survey 2021.

"Passenger expectations are up, providing some support to airlines while the longer-term threat of virtual meetings remains a concern," said the report. 

Despite the increase, the 2022 budget expectations show a downward trend. The average fall in budgets expected compared to 2019 increased from -15.5 per cent in March 2021 to -17.5 per cent in July 2021 and -22 per cent in October 2021. About 77 per cent of respondents expect budgets to be down, while only 15 per cent expected an increased budget in 2022.

Morgan Stanley conducted the Global Corporate Travel Survey 2021 between October 6-27 with 170 travel managers at companies with international operations in Europe, the US and Asia. 

About 43 per cent of respondents expect a full recovery by the end of 2022, while 27 per cent do not expect travel ever to go back to the pre-COVID-19 level.

Despite the bearish outlook on budgets, passenger number expectations have increased, suggesting a recovery in domestic and short-haul trips. The survey found that about 27 per cent of respondents expected airline bookings to increase from 2019, compared to 14 per cent in July and 16 per cent in March. Airline bookings are expected to be down by 5.2 per cent against pre-COVID-19 levels.

Besides, the report found that small enterprises appear to recover more quickly on travel, while larger enterprises are more likely to cut their travel budgets. Among companies with annual revenues of less than US$1 billion, 21 per cent expected a fall in travel budget of greater than 40 per cent. 29 per cent of companies with revenues under US$1 billion reported that they expected budgets to either increase or stay the same. Budget trends appear bearish from an airline perspective, but passenger volume in 2022 shows an upward trend. 

Virtual meetings will continue to impact corporate travel, the survey found. There is an average 29 per cent anticipated shift of 2022 travel volumes to virtual. "Virus concerns were the primary reason cited for using virtual meeting, but that will likely fade with time. However, cost reduction, use of employee time and environmental concerns may continue to keep virtual meetings competitive," said the report. 

Further, private jet use has increased during the pandemic. It is likely to continue, with 11 per cent of respondents saying their companies were becoming more liberal with personal aircraft use in 2022, suggesting an expected increase in private jet use next year, the survey found.