Delta CEO says surge in business travel is coming

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T0719DELTAPAX_C_HR [Credit: Delta]
A survey of its corporate accounts showed that 36% of Delta's large corporate customers expect to fully return to pre-Covid volume no later than next year. Photo Credit: Delta

Delta CEO Ed Bastian is bullish about business travel recovery as corporate sales volume has begun rapid growth.

"I think the surge is coming. Just like on the leisure side, we are getting ready for it on the business side," Bastian said during the airline's Q2 earnings call on Wednesday. 

Delta reported that corporate sales volume in June was 40% of June 2019 volume, doubling March results, when corporate sales were off 80%. 

T0628PODCAST_RT_HR [Credit: Rebecca Tobin]
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The carrier expects that by the end of September, domestic corporate sales volume will reach 55% to 60% of 2019 levels, president Glen Hauenstein said. 

Improvements in high-yielding corporate sales at Delta reflect broader market trends. According to ARC, corporate travel sales by U.S. travel agencies was off 51.6% from 2019 for the week ending July 11. During the final full week of June, corporate sales were off 62.2% from 2019. 

Bastian said that a recent Delta survey of its corporate accounts showed that 36% of the carrier's large corporate customers expect to fully return to pre-Covid volume no later than next year and another 21% of those accounts expect to fully restore their travel programs by 2023.

Just 5% of Delta's corporate accounts said they will never again reach pre-Covid travel spending levels, Bastian said. The other 38% weren't certain how quickly they'll ramp up travel. 

Hauenstein added that nearly 95% of Delta's corporate accounts made at least some bookings in June. 

Mask mandate

During the earnings call, Bastian expressed ambivalence about the whether the federal government should let the mask mandate on air travel expire on Sept. 13. 

"I think it's important that medical experts make those decisions, not airlines," he said. ... "I appreciate people not wanting to wear masks. I don't like wearing a mask when I'm onboard either, but it is something we need to do to keep people safe."

T0712BUSINESSTRAVEL_SS_HR [Credit: Faber14/Shutterstock.com]
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Bastian said that whether the DOT lifts the mask mandate in September will likely depend upon the U.S. vaccination rate. He added that if some international borders remain closed at that time, ending the mandate wouldn't help getting them reopened.

Ultimately, said the Delta CEO, there are as many reasons to keep the mask mandate as to end it.

Delta reported operating revenue of $7.1 billion during the second quarter, a 43% drop from the second quarter of 2019 (the figure includes $1.5 billion in federal payroll grants). Still, increased air travel demand coupled with federal support enabled Delta to record net income during the second quarter of $652 million.

With travelers returning to the sky, Delta's operating revenue in the second quarter was up 76%.

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