Small and medium businesses are flocking to the skies with corporate travel surging in the past year and Flight Centre tipping solid growth throughout any economic downturn.
The ACCC has handed down its final report into airline competitiveness, concluding that despite the entry of new airlines such as Bonza, airfares simply remain too high and flight cancellations too great.
Data from Flight Centre’s Corporate Traveller division showed that in the first five months of 2023, the level of travel taken by small and medium-sized enterprises was 25 per cent greater between the three biggest capital cities than the same period in 2022.
Sydney was the most popular destination for business travellers with a 27 per cent year-on-year jump, followed by a 24 per cent increase to Melbourne, and Brisbane recorded a 21 per cent bounce.
It comes as the economy shows further signs of a slowdown with GDP up 0.2 per cent in the March quarter, while NAB’s business survey for April highlighted business conditions has weakened further in the face of inflationary and interest rate pressures.
Corporate Traveller global managing director Tom Walley said that falling airfares would keep demand for business travel strong.
Corporate Traveller global managing director Tom Walley said that the Flight Centre outfit expected falling airfares both domestically and internationally would keep demand for business travel strong against the backdrop of economic pressures.
“We expect that businesses travel will continue to step up a notch even more in the months ahead,” he said.
“The assumption is that as capacity returns to and exceeds pre-Covid levels then airfares will fall and that would allow businesses to keep up their travel schedule for less.”
Mr Walley said that Corporate Traveller had won a lot of business from SMEs and did not expect to be affected by a cooling economy, with solid growth expected in FY24. Shares in Flight Centre last traded at $20.97 on Friday.
Demand for business travel was being driven by SMEs operating in the construction, services, healthcare and social assistance, manufacturing, and finance and insurance sectors.
Sydney to Melbourne — the sixth busiest air route in the world — had a 49 per cent market share of SME travel, according to Corporate Traveller, while Brisbane to Sydney had 26.5 per cent and Brisbane to Melbourne 24.5 per cent.
Sydney saw the biggest spike in demand for business travel. Picture: NCA NewsWire/Bianca De Marchi
Despite the rise in virtual meetings during Covid-19, Mr Walley said that the pandemic had in the end highlighted the importance of face-to-face meetings.
“Initially we thought that the surge in travel demand last year was a sugar rush, but it has gone from strength to strength with businesses viewing it as a necessity to winning over clients and attracting talent,” he said.
“Covid has also changed the way corporates travel with flexible working driving a swing towards ‘bleisure’ travel where people are looking to add a couple of days onto their itinerary for leisure.”
Government data from the Bureau of Infrastructure and Transport Research Economics showed that the cost of domestic airfares were more expensive than a year ago despite falling oil prices, which had largely been blamed for the rising cost of travel.
BITRE’s Real Domestic Air Fare Index for May showed that the best discounted ticket was a score of 63.7 compared to 57.8 in the same period last year, while business fares were 54.5 compared to 45.9.
The Australian Competition and Consumer Commission released its final report on the domestic airline industry last week, which said that there was evidence market domination by Qantas and Virgin Australia was hurting customers — with service reliability worse and fares higher than in 2019.