The tech giant’s latest tinkering with office policies will likely chip away further at the legacy carriers' traditional corporate travel volumes.
Amazon’s decision to allow corporate employees to work from home may mean diminished business for its large airline partners, experts warn. But as with consultancy PwC’s own permanent move to remote work, it’s likely the tech giant’s corporate travel volumes will be redistributed more than reduced. And that’s good news for regional airlines.
A company of Amazon’s size can’t really implement an unwieldy blanket policy, so it’s giving teams the power to decide how many days will be needed.
“For our corporate roles, instead of specifying that people work a baseline of three days a week in the office, we’re going to leave this decision up to individual teams,” said CEO Andy Jassy in a company blog post on Monday.
But don’t expect a rush to Costa Rica just yet. “At this stage, we want most of our people close enough to their core team that they can easily travel to the office for a meeting within a day’s notice,” Jassy said.
Even a slight change in working patterns could impact the airlines in the region. Amazon is the largest employer in the state of Washington, with 80,000 employees. In a ranking of the biggest corporate travel programs in 2019, it spent $500 million on flights in the U.S., not that far behind Deloitte, which spent $583.1 million.
And let’s not forget it saved at least $1 billion in travel and related expenses during 2020, due to coronavirus putting the breaks on business travel. “This had a major impact on Seattle-Tacoma International Airport, hotels, and the two main airlines, Alaska Airlines and Delta Air Lines,” said Mark O’Brien, managing partner of Avenue 5 Consulting.
With new working habits and more virtual meetings, we shouldn’t underestimate another ripple effect.
“Alaska Airlines may need to look at adding new routes to its network if some key locations are identified with higher concentrations of relocated HQ workers,” said Ryan Hohag, director, global air practice at Advito. “However, a more likely scenario is broad fragmented demand which Alaska could address by bolstering its partnership with American Airlines — enhanced benefits, more codeshare routes.”
One beneficiary could be regional airline SkyWest, which has predicted the post-pandemic economy will be tied to the small communities.
“Out in the west, there’s a massive exodus out of California,” said Chip Childs, CEO of SkyWest, which operates small jets for Alaska Airlines, Delta Airline, American Airlines and United Airlines.
“It’s going into all the small [and] mid-sized cities. And all of this new market scenario post-pandemic where people want to live and work is going to completely change the dynamics of what regionals can do going forward … Demand for regional aircraft is going to increase,” he added, speaking at the end of September.
Meanwhile, the extra flexibility could simply lead to more urban migration.
“My guess is [employees] may relocate from inner city locations to nearby suburbs or rural areas that are less expensive, but still near the office so a flight won’t be necessary,” said Lisa Lacey, managing consultant at Advito.
At the same time, some might decide to relocate from expensive San Fransisco, Los Angeles or San Diego living areas to Denver, Dallas or Phoenix where the cost of living is less, but they still have access to major airports, she added.
More announcements are likely to follow, and not just from technology firms but other industries too, leading to more regional alliances and a major corporate travel supply chain shake-up.
Airlines reporter Edward Russell contributed to this news story.
Tags: alaska airlines, amazon, american airlines, coronavirus, coronavirus recovery, corporate travel, corporate travel management, deloitte, delta air lines, remote work, seattle, united airlines, washington dc
Photo credit: Amazon is giving teams the power to decide how many days can be worked remotely. Bryan Angelo / Unsplash