Airlines have already begun culling their summer schedules due to staffing and plane shortages, and maximum passenger limits have been imposed by airports, impacting leisure and business travel.

Summer travel is back, and while airlines and airports have had more than a year to prepare to avoid the travel chaos that besieged the industry last summer, there are no guarantees.

Let’s start by looking at the prospects. US summer travel is forecasted to reach an all-time high—a staggering 257 million passengers from June through August, showing an almost 1% increase from 2019 figures—according to the trade group Airlines for America. The paradox is that the number of flights will be down by about 11% compared to four years ago due to operational constraints such as national air traffic controller shortages and delays in the arrival of new aircraft.

Airlines are also battling with their capabilities and external limitations, preventing them from flying as much as they would like. For instance, United Airlines stated that it would need 10% more pilots and 5% more aircraft to provide the same number of pre-pandemic available seat miles (ASMs), Skift reported in May 2023.

Now zoom out for a more global view: While business travel is still recovering from the effects of COVID-19, it’s forecasted that global passenger demand will rebound to pre-pandemic levels on most routes this summer. The 2023 Deloitte corporate travel study found that about a third of corporate travel budgets would be spent on international travel—a more than 10% increase from 2022. Businesses based in the US and Europe are following a similar trajectory in terms of spending on overseas trips.

The travel industry is taking a lesson from last year

Crippling labor shortages led to travel chaos last summer, and since then, airports, airlines, and government agencies worldwide have bolstered their staffing levels. Despite these preparations, those traveling during peak periods in Europe and North America may still experience delays and hassles due to surging passenger demand.

Supply-chain issues are impacting airline capacity

There is also a need for more planes, a shortage that could hamper growth. Boeing and Airbus are experiencing supply-chain bottlenecks, leading to delays in aircraft. . As a result, carriers have had to make changes. For example, Europe’s largest airline, Ryanair, announced it would be trimming its July schedule because of the expected delivery delay of around 10 Boeing 737 MAX aircraft due to manufacturing complications.

In an April interview with Reuters, International Air Transport Association (IATA) Director General Willie Walsh warned that global airline capacity would be lower than expected this year and will likely remain constrained until 2025 due to delays in new aircraft deliveries and a shortage of spare parts. Walsh pointed out that the recovery might take longer, extending beyond 2025.

While disruptions are likely during peak traffic periods, airport executives at a recent Airports Council International meeting reassured that these challenges would only persist for part of the summer. However, labor shortages continue in certain areas, with some airports, like Amsterdam’s Schiphol, potentially being understaffed in the early weeks of the season.

In response to these challenges, airports started to instant passenger limits during peak travel times, consequently driving up ticket prices.

But there’s a silver lining

While staffing challenges and passenger limits are constraints, there are also areas of opportunity that will make 2023 better than 2022 for corporate and leisure travelers. A significant area of opportunity is enhanced technology and airport workflows—measures that aim to reduce congestion and improve the passenger experience.

Constraints

• Staffing challenges
• Plane shortages
• Airport limits on passengers
• Rising prices

Opportunities

• Intelligent booking solutions
• Enhanced airport tech
• More flexible work schedules (to fly on off-peak days)
• Improved sustainability measurements and initiatives

From here, we’ll answer consumers’ questions about summer 2023 airline capacity and the effect on corporate travel, highlighting the constraints on summer travel and the areas of opportunity for a better trip.

What is the current state of airlines for summer 2023?

This year will significantly transform the travel industry, with impacts rippling out to leisure and corporate travel. While business travel may continue to be affected by companies restricting nonessential travel and the adoption of virtual meetings, travel demand for summer 2023 is expected to exceed pre-pandemic levels, driven mainly by the strength of leisure fliers.

US airline executives have reported solid bookings for the peak travel period. However, they also mentioned operational constraints that limit their ability to fly as much as they would like.

Why have airlines been reducing service?

In March, the FAA requested airlines to reduce service in the New York area due to a severe lack of qualified air-traffic controllers. The agency reported that the region’s controller capacity is at just 54% of its target, predicting a 45% spike in delays for the summer.

The FAA said it gives airlines “the ability to reduce operations during the peak summer travel period, likely to be exacerbated by the effects of Air Traffic Controller (ATC) staffing shortfalls.”

As airlines adjust their capacities and schedules in response to booking trends and operational constraints, there’s a significant effect on leisure and corporate travel, and it warrants a deeper look into how these changes will unfold.

What do airline service reductions mean for corporate travel?

These flight reductions have led to record revenues and solid airline yields, not to mention high fares for travelers, impacting both leisure and corporate travel.

Suppliers can charge more for their services when supply decreases (in this case, with fewer flights mandated by airlines) and demand remains constant or increases. In other words, airports order airlines to fly fewer flights, meaning airlines can charge a premium for the seats they fly, resulting in soaring ticket prices for leisure and business travelers.

For corporate travelers, the cost can be even higher if flight changes lead to missed engagements and opportunities. Last year this cocktail of pent-up demand and labor shortages led to delays, disruptions, and diversions. It’s not unreasonable to predict that surging passenger demand during peak periods in Europe and North America could still result in long lines, baggage piles, and delayed flights.

Despite these challenges, travel demand, particularly from leisure fliers, is anticipated to rebound to pre-pandemic levels in summer 2023. US airline executives have emphasized the strength of demand and solid bookings for the peak travel period. However, they have also acknowledged that they cannot fly as much as they would like under the current operational constraints, including their capabilities and external factors.

In summary, airlines have had to reduce their summer schedules due to staffing shortages and other issues, impacting leisure and corporate travel for summer 2023. While optimism exists for a smoother travel experience and strong demand, challenges remain, and travelers may still face high fares and potential disruptions.

How do new corporate policies reflect the changing nature of business travel?

Corporate travel is constantly evolving —it’s transitioned from booming to paused to booming again in the past four years alone. During that time, the nature of business travel has changed significantly due to multiple factors, including the increased constraints and potential challenges associated with summer travel.

With high ticket prices and a higher likelihood of complications, companies may suggest that employees opt for remote meetings over in-person gatherings during the summer. When travel is required, companies may emphasize flexibility, opting for refundable tickets—which could lead to an added cost burden—or credits for future flights.

The nature of business travel has changed, however, and there’s been a remarkable increase in offsites and team events, which can be easier for employees to attend during the summer months. So while individual contributors might be traveling less for one-off client meetings, entire teams are coming together to collaborate. Corporations are continually thinking through their travel policies, making individual travel more flexible while emphasizing group travel.

The rise of bleisure travel

Bleisure, a blend of business and leisure travel, is rising as corporations and employees alike try to maximize value from fewer flights. This trend sees employees extending their business trips for leisure purposes, which helps them recuperate from work stress and explore new places, and has gained traction due to airline capacity limitations, as companies strive to optimize travel budgets providing staff with added perks.

This is an excellent way for corporate travelers to optimize their journey and to help corporations save money on travel costs. By adding on a leisure trip, they can adjust their flight days to reduce reliance on peak travel days, leading to less expensive flights, less likelihood of disruption, and a smoother all-around journey.

Work from Anywhere policies

As corporations have become more comfortable with remote working arrangements, “work from anywhere” policies have become mainstream, and they’re often leveraged to manage travel limitations. Employees can now choose their work locations, negating the need for domestic travel and significantly reducing international travel. This has also reshaped the business travel market: An employee may choose to travel to a place for a meeting and stay to experience the destination outside of work.

Sustainability policies

Sustainability goals could lead to less corporate travel. The 2023 Deloitte corporate travel study indicates that 40% of European and 33% of US companies state they must cut trips per employee by over 20% to meet their 2030 sustainability goals.

Because businesses want to decrease their environmental effect and adopt greener travel policies, travel suppliers hoping to attract and retain corporate clients are becoming more invested in reducing their carbon footprint.

As awareness of environmental affect grows, sustainability becomes crucial to corporate travel policies. Airlines themselves are also joining this effort, with Frontier Airlines, for instance, planning to expand its fleet while maintaining a focus on fuel efficiency and reducing carbon emissions.

In addition to loyalty programs and flight times, sustainability is becoming a factor in business and leisure travelers’ decision-making process.

How will technology affect corporate travel this summer?

While we’ve talked a lot about the constraints caused by staffing issues and passenger limitations, there are opportunities for an improved travel experience this summer through improved booking solutions and airport technology.

Biometrics

In an era where contactless operations are essential, biometrics are set to transform the travel experience, with more airports and airlines adopting facial recognition and fingerprint scanning for identity verification and boarding, thus reducing touchpoints, enhancing safety, and improving the efficiency of the travel process.

AI and other technology

Artificial Intelligence (AI) and technology have the potential to solve some of the challenges posed by summer 2023’s reduced airline capacity.

Predictive analysis, AI-powered chatbots, and intelligent algorithms enable corporations to streamline travel planning and mitigate potential disruptions while also helping airlines optimize their reduced resources and manage customer expectations effectively. This summer, for instance, airlines like Delta and Frontier are leveraging data and technology to predict travel demand better and arrange flight schedules.

Conclusion: Summer’s airline capacity issues will have cascading effects on corporate travel

The effect of the summer 2023 airline capacity reduction on corporate travel is multifold. While corporations were already moving towards “work from anywhere” policies and promoting leisure travel, fewer flights at higher prices further supported those practices.

While summer 2023 is likely to be chaotic for aviation stakeholders and travelers, incredible progress is also being made in flexibility and technology. The aviation industry is adapting rapidly, blending technology, flexible policies, and changing demographics to navigate its way forward.

Travel well-informed with A Briggs 

An experienced visa specialist can help you navigate the complexities of border crossing requirements. Contact A Briggs for a quote today.