The Wall Street Journal - USA (2020-12-02)

A12| Wednesday, December 2, 2020 THE WALL STREET JOURNAL.

travel. “That’s a huge number,’’ Mr.

Baldanza says.

Airlines like American, Delta and

United in the U.S. and foreign carri-

ers like Lufthansa, British Airways

and Singapore are built around

business travelers. It affects where

they fly, how they design schedules,

how they configure planes and ev-

erything from plush airport lounges

to major investments in fancy new

terminals.

Some airline executives note

that technology has always stimu-

latedmorebusiness travel, not

less. The easier it is to make con-

nections in the business world, the

more reason there is to go meet

with people. Others say that this

time it’s different. Video technol-

ogy lives on all our laptops and

phones. Why not talk with a client

online instead of making a two-day

trip for an hour-long meeting?

Faced with a loss of business

travel, big airlines will no doubt try

to raise ticket prices for leisure pas-

sengers to make up for reduced rev-

enue. But that may be difficult.

Low-cost carriers represent about

20% of U.S. airline capacity and can

force airlines to match low prices. A

lot of leisure travel is discretionary

and if it gets too expensive, not as

many people will go.

Mr. Baldanza says he hopes we

are wrong: “I hope vaccines are

great and in 12 months the world is

living a somewhat normal life and

everyone who thought they

wouldn’t travel says, ‘Yeah I’m go-

ing to go travel.’”

winning business. But internal

company training sessions could

become virtual rather than in-per-

son. Multiplying the estimates of

lost trips by the share of business

travel in each of our seven catego-

ries gave an overall estimate of

trips lost: 19% to 36%.

Business travel has a dispropor-

tionate effect on airlines: The top

10% to 15% of customers at global

carriers typically account for

about 40% of revenue. Overall,

Bank of America estimates busi-

ness trips contributed $334 billion

to the entire travel industry’s $1.

trillion in revenue last year.

Typically people think of busi-

ness travel as sales people on the

road meeting with existing clients

and pursuing new ones, or people

attending conventions and trade

shows. But that is far from the

whole picture. About 25% can be

classified as sales and securing cli-

ents, according to our research,

and a further 20% for conventions

and trade shows. Add in support

of existing customers and a cate-

gory we called “professional ser-

vices,” which includes legal and

consulting work plus research, and

you get to about two-thirds of the

business-travel pie.

After combing through data

from various sources and surveys

from around the world, we found

some assumptions about business

travel need refining. About 20% of

all of it, for example, is for intra-

company meetings and training—a

category that could be replaced by

FROM TOP: AARONP/BAUER-GRIFFIN/GC IMAGES/GETTY IMAGES; SCOTT OLSON/GETTY IMAGES

Could the Pandemic Cut

Business Travel by 36%?

lac was not considered a luxury car;

that came later. It was just an aver-

age, very well-made vehicle.

My Cadillac was built a year later

and was exported directly to Mex-

ico City, where it spent most of its

life. Much later, a seller brought the

car to Dallas, Texas, with the hope

of finding it a new home. When I

bought it, it had not run in decades.

Les Holden, 68, a retired mortgage

banker living in Southern Pines,

N.C., on his 1904 Cadillac Model B

Rear-Entrance Tonneau, as told to

A.J. Baime.

IN 1996, I WAS DRIVINGin the

“London to Brighton” rally in Eng-

land, the world’s longest-running

motoring event, in my 1902 Ram-

bler when I noticed single-cylinder

Cadillacs passing me. At that time, I

had already been restoring brass-

era cars for a decade. [Brass-era

cars are brass-adorned vehicles

built from the late 19th century up

to about 1915.] I thought to myself:

I am going to look into buying a Ca-

dillac. So I put the word out.

That is when I first heard about

this 1904 Cadillac that was for sale

in Texas. The seller faxed me a photo

and I bought it right then, over the

phone. For the next eight years, I had

things made and collected parts

JOHN GESSNER FOR THE WALL STREET JOURNALwhile I worked on other cars. Then I

began the restoration in late 2005,

finishing it four years later.

The entire story of the founding

of Cadillac can be told through this

car. In 1902, Henry Ford was at-

tempting to launch the Henry Ford

Co. in Detroit. His investors got im-

patient and fired him. They brought

in an engineer named Henry Leland,

of the Leland & Faulconer Manufac-

turing Co., to help appraise Henry

Ford’s shop equipment to prepare

for selling it all. Leland looked it

over and said: Look, you guys have

a car here almost ready to go. I

have an engine that I made. You

can put that engine in this nearly

finished car and bring it to market.

So they did, naming the car after

the French explorer who founded

Detroit in the early 1700s, a man

named Cadillac. So Cadillac

launched its first production car in

1903, which was the same year

Henry Ford ended up launching

Ford Motor Co. At that time, Cadil-

MY RIDE| A.J. BAIME

This 1904 Model B Helped

Launch Cadillac and Detroit

I did a lot of the restoration my-

self. I disassembled and assembled

the 8.25 horsepower engine, for ex-

ample. But for some of the work, I

turned to professionals. The brass

restoration was done by Britten’s

Brass Works in Michigan. The up-

holstery was done by Zimmerman

Coach Trimming in Pennsylvania.

They stuffed the upholstery with

refined horsehair, as

it was done origi-

nally, using uphol-

stery tacks of the

same size and spac-

ing as how the car

was originally

crafted.

I will never forget

the first test drive.

Since the Cadillac

had lived almost all

its life in Mexico, and

hadn’t run in de-

cades, that 3-mile

test drive was prob-

ably the first time

this American car

had ever been driven

on an American

road. Since then, it

has won numerous

national awards at

car shows.

Few 1904 Cadillac Model B’s still

exist, and to me this one has to be

among the most accurately re-

stored in the world. Nothing was

left to chance. To motor along at

25 mph, considering all the history

this Cadillac has seen and all the

work put into its restoration, is to

me an experience that is tough to

put into words.

Les Holden with his 1904 Cadillac Model B Rear-Entrance Tonneau.

online sessions. Commuting by air

to work totaled about 5% of all

business travel in the past. Post-

pandemic, that could be reduced

by working remotely. In both those

categories, we estimated a mini-

mum 40% of that travel would be

replaced by technology and it

could be as high as 60%.

At the other end of our scale,

we estimated that the loss from

sales trips would be somewhere

between zero and only 20%. Con-

ventions and trade shows likely

will bounce back because they are

seen as efficient ways to meet cli-

ents and keep track of competi-

tors. There will be bigger losses in

categories like technical support,

where trips can be replaced by vir-

tual visits.

We vetted our findings with peo-

ple in the industry, such as airline

executives, U.S. and international

trade associations and corporate

travel agencies. Their feedback led

to some refining of categories and

supported our findings.

The worst-case scenario—los-

ing more than one-third of all

business travel—would reshape air

Why not talk with a

client online instead of

making a two-day trip

for a short meeting?

THE MIDDLE

SEAT

SCOTT

McCARTNEY

E

ven if Covid-19 vaccines be-

come widespread, business

travel is likely to be

changed by the pandemic.

Travel budgets have been

slashed and some meetings

will remain virtual; conferences and

conventions may be crimped.

But by how much? It matters

not only to airlines and their em-

ployees but also their custom-

ers—travelers. That’s because

higher fares paid by corporate

customers actually subsidize

cheap fares for vacationers.

What’s more, less business travel

means that airlines schedule

fewer flights on business routes,

like trips to New York, Chicago,

London and Tokyo. That means

fewer seats for leisure travelers.

Estimates of permanent change

in the airline industry have ranged

from the CEOs of American, United

and Delta all saying business

travel will come roaring back in

full, though it may take a few

years, to observers like Bill Gates

who recently suggested half of all

business travel will never return.

Guesses aside, a look at data

suggests between 19% and 36% of

all air trips are likely to be lost,

based on a business-travel analysis

I worked on with three airline-in-

dustry veterans.

“Brick-and-mortar retail has

been devastated by e-commerce

and I think this is a parallel story,’’

says Jay Sorensen, president of

IdeaWorks, an airline-industry

consulting firm and a member of

our group. The others are Ben Bal-

danza, former chief executive of

Spirit Airlines and a current board

member of JetBlue, and consumer

advocate Charlie Leocha, president

of Travelers United, a passenger-

advocacy organization.

We started meeting weekly on-

line when the pandemic began.

We commiserated on the abrupt

travel-industry depression. And

we became frustrated with the

lack of good data on how the

Covid-19 pandemic would affect

airlines and travel.

We compiled data on business

travel from disparate sources and

broke down the market by travel

purposes, such as sales, technical

support or conventions and trade

shows. That’s not how the market

is usually measured. Most data on

business travel looks at how much

auto makers or other industries

spend on trips. Then we estimated

the minimum and maximum per-

centage of trips that might be lost

to technology in each category.

Some purposes are more easily re-

placed by technology than others.

Sales calls are more likely to fully

return to in-person meetings be-

cause of the competitive nature of

Departing Los Angeles,top and awaiting bags, above, at Chicago’s O’Hare.

PERSONAL JOURNAL.

NY