4th August 2021. Aviation | Leisure

Post-pandemic business travel; getting it wrong on Keynes again

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#1: Post-pandemic business travel

One of the post-pandemic questions is about the future of business travel. The global aviation body IATA has been pretty bullish that aviation will bounce back to previously projected levels of growth by 2024 or so. Others, such as the OECD and McKinsey, have been more doubtful, especially about business travel.

Now Axios suggests that business aviation might have been permanently affected by the pandemic.

Accoding to a new Deloitte survey:

76% (of companies) say they're turning more internal meetings that would require flying into online ones, 58% say they'll do fewer business trips overall and 55% say they'll specifically look at cutting back on international corporate travel

Two-thirds of respondents say they'll reduce the frequency of business trips to save money.

One of the ways that savings are expected is more hybrid meetings: a couple of people travel for a big meeting about a deal, and the others participate through Zoom or Teams.

Overall Deloitte reckons that business travel will still be running at 30% of pre-pandemic levels at the end of 2021. 

(Image via Wikipedia: CC BY-SA 3.0)

But it seems likely that travel will come back for things like trade shows and some conferences, and potentially for corporate retreats, which become more important in a world of hybrid work. In other words: forms of structured networking.

This matters for the aviation sector because business travel represents 10% by volume but something between 55-75% by revenues—so it represents a big dent in margins. 

It’s also a challenge for many airports, who justify both privilege and prestige by claiming that they are essential to the economic wellbeing of their regions—a claim that’s largely justified by business travellers rather than tourists. 

#2: Getting it wrong about Keynes

Here we go again, with the old canard about how hopelessly wrong Keynes got his projection about the future of work back in 1930. And by people who really ought to know better.

This is about Keynes’ article ‘The Economic Possibilities for our Grandchildren’, written in 1930. (It’s the first four pages of this pdf). 

This is the one where—looking out a hundred years—he anticipated that:

For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich today, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while.

In a recent Swamp Notes newsletter from the FT (sadly not online) two of its journalists who ought to known better pitched in about Keynes’ errors here: First Rana Foroohar:

He thought the rich would have the most leisure, the middle class a bit less, and the working class the least — but everyone would spend far fewer hours a day working. 

Keynes got the size of the economy right. But he was dead wrong about the curve of labour. As we all know, there’s plenty of work at the top end of the socio-economic spectrum, and the most successful meritocrats tend to do as much of it as they possibly can. 

The Swamp Notes format is usually an exchange between Foroohar and Edward Luce, who joined in this chorus:

Our leisured future was one of the prophesies Keynes got badly wrong.... What he missed was two things. First, most people do need something to do. They need to be needed psychologically. Our goal must surely be to make people’s livings more psychically satisfying and minimise the drudgery... Second, nations do compete, whatever economists say. Economics may not be a zero-sum game but geopolitics is.

Now Keynes was enough of an economist to include some assumptions, as follows:

I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not-if we look into the future-the permanent problem of the human race.

It’s also true to say that he under-estimated the capacity of capitalism to create new wants and desires—the essay was written just before modern advertising was invented.

And he also assumed that the pursuit of wealth for its own sake would have less attraction by the 21st century.

All the same, the fact is that we have a lot more leisure than we did in 1930, even if we just measure paid work. As productivity increases, working hours decline. There’s a useful article at the World Economic Forum on this, if you want to check the data. And if we include unpaid household work, the effect is stronger—with the advent of household appliances.

(Source: World Economic Forum)

It’s also pretty clear that we’re in the middle of a deep renegotiation about work at the moment, which I wrote about here quite recently. We won’t get to 15 hours a week by 2030, but that’s the direction of travel. 

Edward Luce’s point about “geopolitics not being a zero-sum game” is also striking. Because one of the things you can see in the WEF data is that the correlation between working hours, productivity, and GDP is not a strong one. 

Anyway, if you want to go further into this—and this is at going-down-the-rabbit-hole level—Tim Worstall spent quite a lot of time in a detailed discussion of all of this over at Forbes a few years ago.

j2t#143

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