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Europe’s largest banks plan to cut business travel permanently to half pre-pandemic levels after the withdrawal of the coronavirus crisis, as many of the new forms of remote work developed during the closure are they become the norm.
Big bankers want to learn from last year’s lessons to cut costs and bolster their green credentials, but plans will be worrisome for airlines and hospitality groups that rely heavily on business travel to make a profit and expect a quick recovery once the restrictions are lifted.
Noel Quinn, chief executive of HSBC, told the Financial Times he hoped to reduce his own trips by about half after Covid, making fewer longer trips to the lender’s global hubs to reduce the number of flights needed.
Meanwhile, the British group Lloyds Banking and the Dutch bank ABN Amro have become two of the first major lenders to set formal issuance targets across the bank. Lloyds pledged to “maintain the momentum” generated during the pandemic by keeping travel carbon dioxide emissions below 50% of 2019 levels.
ABN aims to halve its air travel compared to 2017 over the next five years, in part by banning bankers from taking flights between its European offices and forcing them to catch the train.
For airlines and hospitality groups, it could turn out to be a savage blow. The business class is one of the most lucrative sources of revenue for some airlines, while international hotels and other hospitality groups, such as restaurants and bars, can earn much of their revenue from executive functions and events for entrepreneurs.
According to PwC, corporate travel can generate up to 75% of airlines ’revenue on some international flights.
It also undermines the predictions of some industry leaders, such as Ryanair CEO Michael O’Leary, who last week’s forecast business travel would fully recover from the crisis.
For domestic banks, such as Lloyds, reducing travel may be relatively easier, although it will require a reduction in face-to-face meetings with commercial clients and foreign investors. However, even international-focused investment banks anticipate substantial cuts.
A senior executive at another bank with operations in several countries said his bank had not yet set the ultimate goal, but was also considering limiting travel “to half the pre-pandemic practice.”
Andy Halford, chief financial officer of Standard Chartered, which is headquartered in London, although it conducts most of its business in emerging markets, was more cautious than some colleagues, but still expected bankers ’moves to be roughly a third lower than previous pandemics.
“Meetings with investors to make updates, roadshows around the world, I hope these things are reduced. Many investors can get the same out of video. But town halls with a lot of staff, important executive meetings. . . will have to continue. The moral impact is worth the effort, ”he said.
A one-third drop would be in line with recent predictions by Star Alliance CEO Jeffrey Goh, but other airline executives have been expecting a less severe drop. Shai Weiss, Virgin Atlantic the chief executive told the Financial Times this month that the company planned long-term success of up to 20 percent, while O’Leary was even more optimistic.
Several senior bankers said they wanted to resume some types of travel, such as visiting staff and key customers, but realized that by 2020 it had shown that many trips made in the past were superfluous.
“I think people don’t see the point in doing everything they used to do,” said a senior investment banker. “Fly for a one-hour meeting and come back, for example. These things will disappear. “
Maintaining some of the remote work habits developed during the pandemic also provides an easy opportunity for banks to cut costs at a time when many are struggling to achieve sustainable returns in an era of low interest rates. HSBC alone saved $ 300 million in travel expenses in 2020 compared to the previous year.
The slowdown also reduced the bank’s annual CO2 emissions by about 73,000 tonnes. Although the biggest contribution of banks to climate change comes through their contribution loans to highly polluting industries, travel-related emissions are an important part of its direct carbon footprint.
A 50% drop in travel by the UK’s four largest banks compared to 2019 would save close to 120,000 tonnes of CO2 emissions each year, according to FT calculations.
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