The impact of Covid-19 on the economy inspired a plethora of hot takes on how the world was set to change forever.
Among those opining on how the world might differ was Microsoft founder Bill Gates, who predicted that more than 50 per cent of business and corporate travel would disappear in the post-coronavirus world.
His view was that the pandemic would make people feel more comfortable working remotely and they would no longer have the need to venture abroad for their meetings. This was a perfectly rational argument to make, but fast-forward to 2023 and the world’s biggest airlines are again pouring billions into business-class seats and perks.
Speaking to NZ Herald aviation editor Grant Bradley for an interview featured in today’s episode of the Stock Takes podcast, Emirates president Sir Tim Clark called out those who predicted the demise of business class.
“People used to say to me, ‘Ah, Tim, it’s all over. No more corporate business.’ I said, ‘Good, keep saying that, it’s what I want you to say.’ Even Mr Bill Gates said that corporate travel is over, but he would say that because of Teams and Microsoft. They have never been so wrong.”
Clark says the current trends show the appetite for corporate travel is still there as much as it was before.
“Business has returned with such a vengeance that many of our cabins are full.”
Clark says that Emirates made a call early on that business travel would return and invested heavily in being ready for the uptick.
“We took the decision in the middle of Covid to go after product. A lot of airlines re-entered the game by cutting, cutting, cutting. We went completely the other way by putting in more and more and more… You’ve seen the refurbishing. We’re putting a new business class in. We’re doing lounges. We’re doing new generation of just about everything. We’re sparing no expense to get the product where it needs to be.”
Clark’s team didn’t make this call on a whim, but rather based it on what they had seen previously in the aviation industry.
“There are a lot of naysayers who wouldn’t recruit and wouldn’t believe things would come back, even though people like us were saying: ‘You remember the 2008/2009 crisis? You remember the 1998 crisis? Do you remember the ash cloud? Do you remember 9/11? Do you remember all of that? Oh, yes? Do know what happened after that? Surge, surge, surge. Unbelievable restoration of business.’”
These lessons are just as applicable in times of economic strain, with history showing time and again businesses that increase investment during a downturn end up increasing market share when the economy eventually rebounds.
That said, the aviation industry still has some massive challenges ahead which Clark will have to contend with.
Listen to the full episode of the Stock Takes podcast to hear more from Bradley and Clark on the big shifts coming for airlines and a prediction on whether prices will finally come down.
Stock Takes is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every Wednesday and are brought to you with support from Fisher Funds.