Rumors of a downturn in corporate travel have been greatly exaggerated according to Delta Air Lines. Delta executives, however, do admit that corporate yields have decreased.
When asked about reports of slowing business travel demand and weaker corporate pricing, incoming Delta Air Lines CEO Ed Bastian told financial analysts on the company’s first quarter earnings call yesterday that the airline’s data actually show increased demand from corporate flyers.
“The GBTA report… indicated that demand continues to grow, volume continues to grow and that’s what we’re seeing in our corporate space; our volumes were up in Q1 and our forecast through the summer and rest of the year for volumes still continue to grow,” said Bastian. “I think the numbers that they’ve revised down was more reflective of the current pricing environment in which fares are lower than were previously anticipated… we’re not seeing any trend lines to give as pause.”
Delta reported mild growth in the corporate space, but admitted to lower yields taking a toll on results. The company’s latest survey of travel managers, however, calls for increased travel spend over the course of 2016.
“Our corporate demand remains solid with volume growth of two percent this quarter, so our increases across most sectors including healthcare, financial services and technology, however the improvement in volumes is being more than offset by lower yields,” said Glen Hauenstein, president of Delta Air Lines. “The outlook for corporate demand remains favourable with 82 percent of respondents to our latest corporate travel manager survey rejecting their overall travel spend will be maintained or increased for the rest of the year. This is consistent with outlooks from previous surveys.”
Overall, Delta executives seem focused on finding ways to increase revenue, even if it means raising fares for business travelers in the process.
“I think we have the very best revenue team in the business and I think that we are very confident that we have a path forward; there is more revenue for us to garner, from corporate [in particular], as we continue to separate ourselves from the pack in terms of our products and services,” said Hauenstein. “And really that’s what our future is about; it’s about getting paid for [our] high quality of services.”
Photo credit: A Delta Air Lines Boeing 767-300ER lands in 2013. Andrew Cohen / Flickr