Business Travel Demand 'Strong,' Say Delta, United

Corporate travel remains "strong," according to executives from Delta Air Lines and United Airlines who spoke Thursday during Morgan Stanley's 12th annual Laguna conference.

"Business travel is quite strong on a year-over-year basis, up high single digits, low double digits," Delta president Glen Hauenstein said. "That appears as though it's accelerating as we head into the fall. … Business travel in totality is already way above where it was pre-pandemic levels. But managed corporate travel has been a laggard, but it is really approaching—well, [it] is at 2019 levels, [and] now going beyond that."

When asked to break down trends in domestic, international and corporate segments, United CFO Mike Leskinen said that as seen from the releases of the carrier's competitors, "the incremental news has been positive across the board," adding, "we expected that, but it's nice to see it come to fruition."

"Corporate revenue for us is up 15 percent," Leskinen added, not identifying the timeframe for that comparison. "Really proud of that. So strong corporate results, domestic results are inflecting very nicely."

Hauenstein also said that based on its most recent corporate client survey, about "80-some-odd percent" of customers expected to maintain or increase their spend. "That wasn't quite a record, but it was much higher than the norm," he said. "We expect continued demand strength through the fall."

End-Customer Focus

Further, sounding not unlike former American Airlines chief operating officer Vasu Raja, Hauenstein noted that Delta has "decided" it wants to "attach ourselves not only to the corporation and not only to the travel management company, but we really want to work on that relationship with the end consumer," he said. "Because in the end, the end consumer is the one who really chooses what flight they want to be on and what airline they want to be on. And historically, our sales teams were geared to just make sure we had the right agreements with the corporation, and we had the right agreements with their travel management company to ensure that Delta was in the mix.

"I think moving forward, we realize that loyalty resides more at the personal level than at the corporate level," Hauenstein continued. "When you're on us for corporate, your probability of being on us for leisure is extremely high. And the people who are buying the higher-end leisure fares tend to be the people who are buying the corporate fares. So there's a synergy and getting that synergy to work better for Delta and better for you is something we're very, very focused on, ensuring that it's not only B-to-B, but it's B-to-B-to-C."

Delta, which was significantly affected by the July 19 Crowdstrike and Microsoft IT outage, released updated third-quarter guidance on Thursday. The carrier now projects revenue to be flat to up 1 percent year over year, compared with prior guidance of a 2 percent to 4 percent increase. Delta's third-quarter capacity outlook is up about 4 percent year over year, compared with 5 percent to 6 percent previously.