Change take
The tech giant’s latest tinkering with office policies is likely to further reduce the legacy airlines’ traditional business travel volume.
Matthew Parsons
Amazon’s decision to allow corporate employees to work from home could result in lower business for its major airline partners, experts warn. But as with the permanent move by consulting firm PwC to remote work, it’s likely that the tech giant’s business travel volume will be more than reduced. And that’s good news for regional airlines.
A company the size of Amazon cannot implement a cumbersome, blanket policy, giving teams a chance to decide how many days to take.
“Instead of pretending that the employees work in the office three days a week for our corporate roles, we leave this decision to the individual teams,” said CEO Andy Jassy on a company blog on Monday.
But don’t expect a rush to Costa Rica just yet. “At this point, we want most of our employees to be close enough to their core team that they can easily travel to the office for a meeting in a day,” said Jassy.
After Effects
Even a minor change in work patterns could have an impact on airlines in the region. With 80,000 employees, Amazon is the largest employer in Washington state. In a ranking of the largest corporate travel programs in 2019, it spent $ 500 million on flights in the United States, not far behind Deloitte, which spent $ 583.1 million.
And let’s not forget that it saved at least $ 1 billion in travel and related expenses in 2020 as the coronavirus disrupts business travel. “This had a big impact on Seattle-Tacoma International Airport, hotels, and two major airlines, Alaska Airlines and Delta Air Lines,” said Mark O’Brien, managing partner of Avenue 5 Consulting.
With new work habits and more virtual meetings, we shouldn’t underestimate another ripple effect.
“Alaska Airlines may need to consider adding new routes to their network if a higher concentration of HQ relocated employees is identified in some key locations,” said Ryan Hohag, director, global air practice, Advito. “A more likely scenario, however, is a broadly fragmented demand that Alaska could address by strengthening its partnership with American Airlines – improved benefits, more codeshare routes.”
A beneficiary could be regional airline SkyWest, which has predicted the post-pandemic economy will be tied to the small communities.
“There is a massive exodus from California in the west,” said Chip Childs, CEO of SkyWest, which operates small jets for Alaska Airlines, Delta Airline, American Airlines and United Airlines.
“It goes in all small ones [and] medium-sized cities. And all this new post-pandemic market scenario where people want to live and work will completely change the dynamics of what regional airlines can do in the future … The demand for regional aircraft will increase, ”he added when speaking at the end of September .
In the meantime, the added flexibility could simply lead to more urban migration.
“My guess is [employees] can move from downtown to nearby suburbs or rural areas, which are cheaper but still close to the office so no flight is required, ”said Lisa Lacey, Managing Consultant at Advito.
At the same time, some might choose to move from the expensive residential areas of San Francisco, Los Angeles or San Diego to Denver, Dallas or Phoenix, where the cost of living is lower but they still have access to major airports, she added.
More announcements are likely to follow, not just from tech companies but from other industries as well, leading to more regional alliances and a major upheaval in the business travel supply chain.
Airline reporter Edward Russell contributed to this news.
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