Bill Gates Warns 50% Of Business Travel Will Never Come Back
Microsoft co-founder Bill Gates predicted Tuesday at the New York Times’ Dealbook conference that coronavirus will fundamentally reshape business travel and the office experience forever.
Gates told Dealbook editor and CNBC host Andrew Ross Sorkin that “my prediction would be that over 50% of business travel and over 30% of days in the office will go away.”
The billionaire philanthropist said there will be a decline in business trips now that remote working from home has become more feasible.
“We will go to the office somewhat, we’ll do some business travel, but dramatically less,” he said.
Gates’ outlook on how corporate America travels is terrible news for the airline recovery. It also comes as a second coronavirus wave ravages parts of Europe and the US.
A new Moody’s report writes that a resurgence in virus cases and more restrictions and lockdowns in western countries will translate into lower passenger demand in the coming months, and well into 2021.
Moody’s projects 2021 revenue passenger kilometers will only reach about 40% of the 2019’s level of 8.7 trillion – a far cry from the “V-shaped” recovery global capital markets are currently pricing in because of several vaccine headlines in recent weeks.
The report also mentioned that corporate travel would remain depressed through 2021. A recovery for corporate travel might not occur until late 2023.
It almost seems that the virus pandemic has ushered in a new order in how the global economy functions. As hinted by Gates, business travel might never recover back to 2019 levels, and the days at the office are over for some as remote working dominates corporate America.
To summarize, lagging corporate travel is bad news for airlines that will experience continued pressure on operating margins and cash flows – likely an airline bust or some consolidation wave is ahead. Not too long ago, we mentioned which airlines are most at risk of failing within 24 months.