Why American Loves Bleisure Travelers
The airline's chief commercial officer has a clear version of where he thinks business travel is going. But is he right?
Dear readers,
Conventional wisdom suggests no market segment can replace corporate travelers, who once paid big money for last-minute availability. But Vasu Raja, American's chief commercial officer, said otherwise Thursday on the airline's first quarter earnings call.
He's bullish on blended travelers — some airlines call this segment “bleisure” — who combine a leisure trip with some form of business, even just a meeting or a quick sales call. American reports this group makes up 35 percent of the airline’s traffic, up from 30 percent before the pandemic. It’s a counterweight to business travel, which now accounts for 30 percent of American’s traffic volume, down from 40 percent, with a smaller slice than ever booking on corporate contracts.1
"The blended yields that we see are coming in at values that are 8 percent to 10 percent higher than the very traditional business trips that they replaced," Raja said.
This new revenue source was among several changes in customer behavior American executives outlined on Thursday’s call. More than it competitors, American is betting this is a sustained change in how people travel, and it rebuilt its strategy in response. Previously, American, like most full-service carriers, relied on corporate contracts and large travel agencies to fill many of its highest-priced seats. Now, Raja is obsessed with having a direct relationship with customers.
Early returns suggest this plan — along with American’s emphasis on the most profitable flying, rather than network development — is working. American was the rare U.S. airline to turn a first quarter profit, reporting $10 million in net income on revenues of $12.2 billion.
Here are three changes American has made in its strategy shift.