In the months (and years) following the terrorist attacks of September 11, 2001, airline travel was fundamentally altered. Despite a host of new measures to increase safety, not until April 2004 did airlines see passenger loads reach pre-9/11 levels. The COVID-19 pandemic is having an even more dramatic impact on plane travel, according to current and former airline executives. On the prospect of when travel could return to pre-COVID-19 levels, a former CEO of American Airlines, Robert Crandall, flatly predicted in the Wall Street Journal that “you are never going to see the volume of business travel that you’ve seen in the past.”

Official statistics support this view. Passenger travel fell off a cliff after the pandemic struck. Transportation across all modes fell, as of April 2020, to 10 percent of its average level during 2000—more than two decades ago. According to Transportation Security Administration data, numbers at US airports are only 68 percent below last year’s levels (as of September), as opposed to down 95 percent in early April. That leads folks to wonder how long it will take until people are once again comfortable enough to starting flying for work or leisure.

Results from our Survey of Business Uncertainty suggest that US companies expect much lower travel expenditures even after the pandemic is over. Executives also expect to triple the share of external meetings—those with clients, patients, suppliers, and customers—conducted virtually relative to the pre-pandemic situation.

In the SBU wave fielded from July 13–24, we asked business decision makers to forecast the size of their travel budgets after the pandemic relative to their pre-pandemic budgets. We also asked how the share of external meetings conducted virtually will change.

Unfortunately for the transportation and travel industries, our results cast doubt on the prospect of a quick and complete rebound.

Air travel accounted for roughly 40 percent of 2019 travel expenses for most broad industries, with the remainder split between accommodation and all other travel costs. Industries such as business services, information, finance, and insurance accounted for an outsize share of overall travel spending, 42 percent in our data.

The pandemic led many companies to halt or severely curtail travel, but the question is how business travel recovers fully after the pandemic. Unfortunately for the transportation and travel industries, our results cast doubt on the prospect of a quick and complete rebound. Companies anticipate slashing their annual travel expenditures by nearly 30 percent (relative to 2019 expenditures) when concerns over the virus subside. The expected decline in spending is particularly severe for the industries mentioned earlier. Companies in these industries are marking in a nearly 40 percent reduction in travel spending after the pandemic is over.

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Overall, these results paint a fairly pessimistic picture, and companies surveyed are not alone in this view. A forecast from the International Air Transport Association projects air travel will remain below its pre-pandemic trend through 2024.

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Such a large, broad-based reduction in travel spending not only suggests a sluggish and potentially drawn-out recovery for the travel, accommodation, and transportation industries, but it also indicates that companies expect to shift from face-to-face meetings to lower-cost virtual meetings. And that’s exactly what we found when we asked companies about the share of virtual meetings they held in 2019 versus the share they anticipate holding in a post-COVID-19 world.

After the pandemic ends, companies anticipate conducting roughly half of all meetings with external clients, customers, patients, and suppliers by videoconference. Said another way, they expect the share of virtual meetings to triple relative to pre-pandemic averages.

The coronavirus pandemic is reshaping the economic landscape in myriad ways. Business travel appears to be front and center in this transformation.

Move over, jet lag—here comes Zoom fatigue.

This article is adapted from a post by the authors that appeared on the Federal Reserve Bank of Atlanta’s macroblog.

David Altig is executive vice president and research director at the Atlanta Fed. Jose Maria Barrero is assistant professor of finance at Mexico Autonomous Institute of Technology, Nick Bloom is the William D. Eberle Professor of Economics at Stanford, and Steven J. Davis is the William H. Abbott Professor of International Business and Economics at Chicago Booth and a senior fellow at the Hoover Institution. Brent Meyer is a policy advisor and economist at the Atlanta Fed. Emil Mihaylov is a research analyst at the Atlanta Fed. Nick Parker is the Atlanta Fed’s director of surveys.

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