“There will be a 15% decrease in business travel after the plague” – Global Markets

The aviation world has suffered a severe shock in the past year, which has brought down all the shares in the sector, both of the manufacturers, of the airlines themselves and of the service providers to the industry, and not in vain. The sector has had to deal most acutely with the global outbreak of the plague. This wave is not over yet, with most companies expecting to return to normal operating profits only in 2023, if not in 2024.

Against this background, Bank of America (BAC) Securities conducted a travel survey over the last two weeks of December 2020 among 25,000 respondents from across the US, China, Japan, UK, Germany and France on the world of corporate travel expectations, both in business and leisure travel.

The survey shows that 49% of business travelers believe that business travel patterns will not change even when there is widespread distribution of the vaccine. This is while 16% of the respondents said that the amount of business travel will decrease to 50%, 10% of the respondents answered that it will be reduced to 25-50% and 11% thought that the travel would be reduced to less than 25%. Only 14% of respondents reported that they intend to participate more in business travel.

“Survey suggests 15% drop in demand for business travel”
The bank writes that “assuming that 10% of the respondents in the survey will indeed participate more in business travel – the results suggest a 15% decrease in business travel in the world after the epidemic has passed.” Although this is the expectations of business travelers and not the decisions of corporate companies, but according to experts at the Bank of America, “this decline is in line with the expectations of many investors.”

Half of the public expects a reduction of up to 50% in the number of trips
The survey also shows that while about 66% of respondents in the US answered that they travel mainly for leisure purposes, 53% of respondents answered that they do not expect change or an increase in business travel, 36% do not expect change – less than the world average of 49%, when 17 % Actually expect an increase in the number of business trips.

In addition, 47% of respondents expect a decrease in the number of trips that were before the outbreak of the epidemic, most of them in the range of 25-50%. Meanwhile, 66% responded that the purpose of their next trip would be leisure or visiting friends or family.

Data from Asia show that the corona vaccine “will change the rules of the game” in 2021, especially in Japan – where 39% of respondents (the highest percentage in the world) are not willing to travel until vaccinated. China, too, fears and “should get a boost,” as 20 percent of respondents there are waiting for the vaccine before boarding the plane again. The survey shows that Asian travelers are more reluctant to participate in transatlantic flights before 2022 compared to the rest of the respondents, and that there is a risk of a permanent disruption in business travel to China and Japan.

In Europe, the emphasis will be on leisure rather than business travel. “Recovery in the leisure world remains a major issue for EU airlines, as 74% of survey participants in Europe (France, UK, and Germany) responded that they plan to travel further on holiday or to visit friends or family,” the bank wrote.

Optimistic? Europeans hope to travel before next September
“In Europe, 65% said they expect to go on their next leisure trip before September 2021, while only 24% expect to do so from 2022 onwards. In business travel, 52% of respondents said they do not expect a change in their travel patterns, while “35% expect to travel less. As of December 2020, only 15% of respondents in Europe were on a plane during the plague,” they wrote.

And which stocks should you hold?
To summarize the survey, the Bank of America recommends shares of Air Alaska (AKL), Southwest (LUV), JetBlue (JBLU) and Air Canada (AC CN), due to their positive balance sheet. Airlines rated by Bank of America include American Airlines (AAL) and United Airlines (UAL).