Aviation has changed forever…and how

United Airlines CEO Scott Kirby recently attributed his airline's strong September quarter results to a new normal post pandemic: the flexibility the hybrid working model was offering employees the world over. He said that people are untethered from office and as a result every weekend could be a holiday weekend, unlike the past when vacations were far rarer. People took more structured breaks in the past.

What Mr Kirby doesn't elaborate on is the changed outlook of business travelers post the pandemic. The jet set corporate chiefs, consultants, top managers - all of whom were always ready with a packed overnighter - to attend one client meeting or a conference in another city at the drop of a hat have disappeared in a flash. Duolingo chief Luis Von Ahn in 2020 told this writer on a Zoom chat that nothing will induce him to rush around for a single meet and waste half a day reaching New York or some other city post the pandemic for a business meeting. The pandemic and the new ways of connecting online had rendered this segment superfluous for many.

In India too business traffic which vanished in a flash even when flights resumed in 2020 post pandemic has remained tepid with companies still coming to terms with all the changes the pandemic willy-nilly induced. Post the Ukraine war, matters worsened with costs spinning out of control for many businesses. High inflation made matters worse.

2022, however, is signalling both a revival and some structural changes in the way the future may pan out. In India, both a revival and a kind of merging of traffic is being witnessed, according to both airline and tourism industry insiders. One, work from home has redefined the leisure travel space as people have stopped distinguishing between weekdays and weekends and traffic is practically evenly spread. Airlines are finding that many people travel purely for leisure and this is no longer restricted to long weekends, school summer and winter holidays or around the festivals like Diwali. With WFH picking up and companies offering far more flexibility in terms of how, where and when they need their employees to deliver, there is a blurring of holiday traffic with regular traffic.

But unlike what many believe in India and unlike 2021 when this segment was still quite shaky, business traffic is now witnessing a fairly strong recovery led primarily by the small and medium enterprises (SMEs) and MICE (meetings, incentives, conferences and exhibitions) and a massive surge in "workation" traffic where a family member travels to attend a conference or some work related engagement but brings the family along for a vacation. For instance Goa state government officials say that this last segment has seen a huge uptick post pandemic and it is one they will be focussing on in the coming months by providing options for entertainment for the family during the conference or the work engagements and then targeting the full family once the work part of it is over.

IndiGo and Vistara, the two airlines that tend to corner most of the domestic business traffic, say that since March 2022, they have seen a sharp return of the MICE traffic which had all but vanished since 2020. The pent-up demand of the last two years is now showing up in large corporate bookings. Both the airlines have over 500 corporates signed up and offer them corporate fares so they are able to measure and track the trends.

"A lot of companies have been holding offsites and team building getaways as they try and bring employees together post the forced hiatus," says a senior IndiGo executive. He adds that while for specific industries like consulting and the IT sector travel remains somewhat subdued at 75-80 percent of pre pandemic numbers, SME business traffic has begun to pick up and is in fact leading the surge in business traffic with a sharp growth of 120-150 percent. Many traditional sectors like FMCG, construction, housing, retail, pharma, cement have also started travelling again. This is reflected in the data the airline maintains internally. "The days of flying for a single client meeting may indeed be over but we see many new segments coming on board," says a source. He maintains that the sentiment remains strong and that the airlines were not losing sleep over this aspect. It was burgeoning costs - including oil prices and the dollar-rupee parity - that was much more their worry.

Airlines also argue they have a new type of flier on board thanks to the pandemic. This is the well-to-do small businessmen and their families in non-metro cities who might have used trains earlier, who started flying soon after the pandemic for work and might never return to trains as they see and fully absorb the benefits of air over rail. "It is a bit like tasting blood and we think this segment will stay with us since affordability for them was never an issue. It was just that trains were their way of doing things but the pandemic has changed that," adds an industry source.

Vistara sources too confirmed that business traffic is slowly but surely coming back and echoed IndiGo's views that the nature of this segment is changing with SMEs leading the recovery. "In the last two years, trains were not available and even when they started plying, many did not want to take a chance and risk infections during COVID. We think we can both retain and grow this segment," says a senior Vistara official who did not want to be named.

At a macro level, however, total air traffic remained below pre-pandemic levels although October 2022 was higher than September 2022 but still 8% lower than pre pandemic level and capacity on offer remained at 93% of pre-pandemic levels as this article went to press. This and a bunch of other factors explain why fares have hardened, especially on routes where supply is low and erratic and why rating agencies like ICRA continue to maintain a negative outlook on the sector overall.