The recently passed U.S. tax bill significantly lowering the corporate tax rate will likely result in an uptick in business travel, according to Bank of America analysts.
Industry analyst Andrew Didora says the corporate tax cuts will be beneficial to carriers like United Airlines, American Airlines and Delta Air Lines, which often work with corporate clients. Nearly two-thirds of the airlines’ revenue comes from business travelers.
“We view tax reform as a significant positive for corporate spending, and we believe this can drive a pickup in corporate travel pricing,” said Didora. “Since 2014, we estimate corporate pricing is down 14 per cent. This, coupled with strong international fundamentals, should create a solid backdrop for the legacy airlines that are more levered to corporate travel than domestic, leisure-oriented airlines.”
The U.S. Congress passed a bill in December to lower the corporate tax rate from 35 to 21 percent, and President Donald Trump signed it into law.
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