After the lengthy disruption to global movement, analysts are considering recovery pathways for corporate travel.
Pre-COVID-19, the business travel market was worth approximately US$1.5 trillion. China and the US comprised half of that and the industry’s projected growth was five per cent per year. However, for one of the most pandemic-affected industries, 2020 was a disaster, says McKinsey & Co partner Vik Krishnan, telling a McKinsey forum that global corporate travel spending contracted 52 per cent.
Looking toward the future, Krishnan says “while there might be a surge in corporate travel at the end of this year, how much of that will maintain in 2022 and beyond is yet to be seen”.
Corporate travellers claim that they won’t mind travelling again, but not to the extent they used to before the pandemic. For any return of corporate travel normalcy, rising vaccine rates are vital. They are the catalyst to ensure industry supply and demand is balanced, projecting the number of people eligible to travel. As numbers climb, appropriate preparations can begin within the relative industries.
McKinsey has segmented travel into four archetypes for the return of the frequent flier:
Never left 15 per cent are resilient travellers who will return immediately.
FOMO (fear of missing out): 60 per cent will return to flying seeking a first-mover advantage.
Wait and see: Five per cent will reintegrate slowly.
Never returning: 20 per cent includes cost-focused firms and tech-focused digital natives.
“When the demand does come back, it will be a deluge as opposed to a trickle,” says Krishnan.“Managing the balance will be complicated. Many are not prepared to handle that volume at demand currently.”
While global travel recovery hinges on vaccination levels and open border policies, it finally means a chance for the industry to make ground after the enormous losses of the past two pandemic years.
In its October outlook for industry financial performance the International Air Transport Association (IATA) revised losses for 2020 to US$137.7b from US$126.4b; and for 2021, US$51b (up from US$47.7b). For the period 2020–22 total losses could top US$200b, said IATA Director General Willie Walsh.
To survive, airlines have dramatically cut costs and adapted their business to whatever opportunities were available. That will further reduce the loss to US$12b in 2022.
Demand (measured in revenue passenger kilometres or RPKs) is expected to be 40 per cent of 2019 levels for 2021, rising to 61 per cent in 2022. Total passenger numbers, expected to reach 2.3 billion in 2021, are forecast to grow to 3.4 billion in 2022 — similar to 2014 levels and significantly below the 4.5 billion travellers of 2019. Demand for air cargo is expected to rise to 13.2 per cent above 2019 levels for 2022.
NFPs ride the storm
The AICD’s annual survey of NFP directors, released on 23 November, revealed a resilient and versatile sector. Pandemic-driven operational changes will stick, with 95 per cent of respondents saying their service delivery had changed and almost half believing post-pandemic opportunities will increase. However, mergers and winding up were reported at an all-time low in the life of the survey. Priorities for the next 12 months included responding to these opportunities, as well as dealing with workforce issues and more focus on innovation. Other priorities included protecting the lives and wellbeing of clients, responding to changes in the operating environment, clarifying strategic direction, diversifying income sources and developing new services and products.
Profit/loss 84% reported making a profit or breaking even.
Government support 82% agreed the NFP sector needs more financial help from governments.
Executive confidence 83% were confident in executive decisions.
Purpose 77% thought they were effective in meeting their purpose.
Financial reserves 35% used financial reserves to fund operations.
Economic outlook 81 per cent are worried about the strength of the economy.
Director IDs are coming
Applications for Director IDs opened in November. Get ready to apply by setting up your myGovID if you don’t already have one.
- Director ID applications opened from November. Existing directors will have until 30 November 2022 to apply, while new directors appointed between now and 4 April 2022 will need to apply for a Director ID within 28 days of their appointment. Penalties apply for not having a Director ID.
- Director ID requires a myGovID which is separate from the MyGov account used to access Commonwealth services.
- Director IDs must be personally applied for by directors and are subject to proof of identity.
What is it?
A Director ID is a unique 15-digit numerical identifier assigned to eligible directors as proof of their identity based on a one-time application. Directors will keep their Director ID forever, regardless of whether they change directorships, change names or move overseas.
The Director ID requirement is a component of the Government’s Modernising Business Registers Program (MBR Program) aimed at preventing the use of fraudulent director identities and making it easier to track unlawful activity, including phoenixing.
The Director ID regime will be administered by the Australian Business Registry Services (ABRS). Strict rules will apply to how director IDs can be used. For now, the ABRS advises that Director IDs will not be searchable by the public.
Who needs to have a director ID?
Directors (or alternate directors acting in that capacity) will need to apply for a Director ID if they are a director of either:
- A company, which will have an Australian company number (ACN)
- A First Nations corporation
- A corporate trustee, for example, of a self- managed super fund
- A charity or NFP organisation that is a company or First Nations corporation
- Registered Australian body, which will have an Australian Registered Body Number (ABRN). For example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated
- A foreign company registered with ASIC and carrying on business in Australia (regardless of where that individual lives).
Director IDs aren’t required for those who are:
- A company secretary, but not a director
- acting as an external administrator of a company
- Running their business as a sole trader or partnership.
When do I need to apply?
- Existing directors under the Corporations Act, or who are appointed as a director on/before 31 October 2021, have until 30 November 2022.
- Existing directors under the CATSI Act, who are appointed on or before 31 October 2022, have until 30 November 2023.
- Individuals appointed as a director under the Corporations Act between 1 November 2021 and 4 April 2022 will need to apply within 28 days of their appointment.
- Individuals appointed as a director under the Corporations Act after 5 April 2022 will need to apply prior to their appointment.
- Individuals appointed as a director under the CATSI Act from 1 November 2022 will need to have applied prior to their appointment.
Eligible directors who fail to apply by these deadlines could be issued with an infringement notice or face civil or criminal penalties.
How do I apply?
Directors are able to apply for their Director IDs on the ABRS website.
Check for updates to the AICD Director IDs page.
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