PLANNING TO FLY SOMEWHERE FOR THANKSGIVING OR CHRISTMAS?
YOUR FLIGHTS MIGHT BE FULLER THAN YOU’D EXPECT DURING A PANDEMIC.
Airlines have reported encouraging holiday booking signs in the past two weeks – a welcome boost during a year of devastating financial losses – and executives appear confident ticket sales won’t dive as they did in early July amid an increase in cases of coronavirus, which causes COVID-19.
Budget carrier Allegiant Air told investors Wednesday the blows from COVID-19 spikes have gradually decreased throughout the year, a trend reported by other airlines, including giant Southwest.
“Based both on what our customers are saying and what our customers are doing, we see a clear divergence in terms of their attitudes toward the pandemic and their intentions towards leisure air travel,” said Scott DeAngelo, Allegiant’s chief marketing officer. “That is to say, customers believe the situation may once again be getting worse, but their leisure travel activity or their travel booking intent remains largely unchanged.”
United CEO Scott Kirby told CNBC on Thursday that bookings have “flatlined a little bit” due to rising case counts but said he still expected “pretty strong” holiday travel demand.
JetBlue Airways CEO Robin Hayes was so bullish about slowly improving travel demand and holiday booking trends on the airline’s earnings call Tuesday that an airline analyst asked if his script was written a week earlier.
Here’s why: the U.S. set a record last week with 481,511 new coronavirus cases over a seven-day period, according to an analysis of Johns Hopkins University data. Things haven’t improved, either: as of Sunday, 18 states – including Virginia, North Carolina, Utah, Illinois, and Colorado – set records for new cases in a week while five states – Alaska, Nebraska, Oklahoma, South Dakota, and Wisconsin – reported a record number of deaths in a week. As a whole, the U.S. set yet another record with 569,350 new cases.
More than seven months into the pandemic, some states – including most of the Northeast – still have travel quarantines remain in place. New York City Mayor Bill De Blasio has even urged residents not to travel out of state for the holidays for fear of inviting a second wave of coronavirus.
He’s not the only civic leader making that plea.
“I am not planning to travel this Thanksgiving unless we see significant improvements” in case trends, Dr. Allison Arwady, Chicago Public Health Commissioner, said at a news conference this week. “I would encourage you – especially if you normally are getting together with people who are older or have underlying health conditions – to think seriously about whether this is the year for travel.”
The Centers for Disease Control and Prevention has not wavered from its longtime stance on travel during the pandemic: “Travel increases your chances of getting and spreading COVID-19. Staying home is the best way to protect yourself and others from COVID-19.”
Airlines cite several reasons for their optimism while acknowledging the situation is fluid, and trends could shift anytime.
Pent-up demand for travel
Nearly eight months into the pandemic, people are itching to go somewhere. Airline traffic is still severely depressed from normal levels, but passenger counts have been on the rise. American Airlines said 45% of its flights were more than 80% full in September, compared with just 20% of July flights.
“We have seen signs of pent-up demand from customers who want to visit their family and friends or go on vacation,” JetBlue’s Hayes said.
Another holiday travel demographic driving demand: college students heading home for break.
“We think that traffic is going to hold up pretty well,” he said.
Hayes said JetBlue saw an impact on bookings over the summer as COVID-19 cases soared in the Sunbelt, but this time around, “we haven’t seen that yet.”
Southwest Airlines President Tom Nealon said on Oct. 22 that the airline has studied July booking and cancellation patterns to identify early warning signals about a decline in demand and so far has not seen any similar patterns despite the increase in cases.
“Perhaps people haven’t been as concerned about it as they were in the past,” he said.
Allegiant CEO Maury Gallagher summed up the gradual return of airline passengers this way: “It appears pandemic fatigue is setting in.”
Is the industry’s ‘flying is relatively safe’ mantra working?
Airlines have spent months trying to convince skittish travelers that flying is a relatively lower-risk activity, with the latest industry-sponsored study saying traveling on a plane poses less risk than grocery shopping or going out to eat.
They have hammered on the health and safety measures they are taking and repeatedly touted the hospital-grade ventilation systems in their cabins, where the air is refreshed every two to three minutes. Airlines are mandating masks and banning passengers who flout the rules. Delta says it has added nearly 500 passengers to its do-not-fly list since May, United about 300.
Alaska Airline CEO Brad Tilden said there is a “greater disconnect” between COVID-19 cases and bookings because the safety message is getting across to travelers.
“People that have flown are having a good experience,” he said. “They’re willing to come back.”
Cheap fares are also driving ticket sales
Airlines are also luring passengers back to the skies with cheap tickets. Southwest Airlines, which in pre-pandemic times launched just two major fare sales a year, has been running frequent sales with one-way fares often starting at $39. As always, prime holiday travel dates and times are largely blacked out. However, the restrictions haven’t been as onerous as usual.
JetBlue ran a holiday travel sale in late September, and President Joanna Geraghty said the airline was encouraged by the bookings.
Alaska Airlines, where average fares were down 17% in the July-September period, had a buy-one-get-one fare sale in August and is also running a promotion where travelers get a discount when Seattle Seahawks quarterback Russell Wilson scores a touchdown. Both boosted new reservations, with some travelers paying cash and others cashing in travel credits received from canceled flights at the beginning of the pandemic, officials said.
“We’re seeing the ability to stimulate traffic with lower fares,” .
ALASKA PRESIDENT BEN MINICUCCI SAID
American Airlines is confident enough in the pace of holiday travel bookings that it’s holding out some seats for sale in hopes of charging last-minute bookers more. That’s a regular practice in the industry, but this year, airlines haven’t been able to command much of a last-minute premium due to the plunge in travel demand.
“And so that’s a promising thing which we hadn’t seen in the past,” said Vasu Raja, American’s chief revenue officer. “Now this is a volatile environment. The recovery will be choppy, and should things change, we will respond accordingly. But right now, things are better than they were but far from sustainable.”
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