Vaccination in the US has been aggressive considering the high numbers of transmission and deaths that the country was and still is going through. Now it looks like America’s travellers are booking flights for post-pandemic vacations which is a strong sign that U.S. airlines are ready for take-off, according to aviation consultant Mike Boyd.
“When you look at what they’re doing, I’m very confident that they’re going to get through this now. They’re going to have to grow back, but they’re going to get through this,” he told Yahoo Finance Live while cautioning that passengers may still be wary of travelling to locked-down locations.
“They’ve been afraid to get to New York City and find out it’s under quarantine, or LA is shut down, or things like that. When we get more confidence in the destination, we’re going to see more people flying. But right now, no one wants to fly to a place where they can’t buy a hamburger,” said Boyd, the president of Boyd Group International, which provides analysis for airports and aviation businesses.
The data backs up Boyd’s contention that the airline industry is recovering. According to the Transportation Security Administration, more than 1 million people passed each day through the nation’s airports between March 11 and March 28. By March 28, that number was over 1.5 million. During that same period in 2020, the number fell from 1.7 million to 184,000, as the coronavirus shuttered much of the nation’s economy.
Of course, that’s lower than numbers in 2019, when the daily number of passengers fluctuated between 2.1 million and 2.6 million. Analysts are still encouraged by the numbers, though.
“U.S. airline trends appear encouraging as the bookings recovery (early March through present) is the strongest it has been so far in the pandemic at 70-80% of 2019 levels,” Raymond James Analyst Savanthi Syth told clients in her most recent note.
While U.S. domestic fares remain up to 20% lower than comparable fares in 2019, Syth pointed out that the average round-trip U.S. domestic fares for May to August have increased.
Airlines will start reporting their first-quarter earnings next month with Delta Air Lines kicking off the reports on April 15. At the JPMorgan Industrials Conference on March 15, Delta CEO Ed Bastian struck an optimistic tone.
“The real story for the quarter, you know, kicked in about five or six weeks ago when we started to see bookings pick up, and that coincided clearly with confidence in the marketplace, people starting to book their spring and summer plans,” the Delta CEO said.
Amid this confidence, airlines have begun expanding their flight schedules. United announced flights, starting in April, between New York and California as the airline launches new routes from JFK International Airport.
For its part, American Airlines has expanded its flights to South America and said last week it’s already paid off a $550 million loan it received last year from the U.S. government to get through the worst of the coronavirus pandemic. The airline received the loan as part of the coronavirus aid package known as the CARES Act.
“This prepayment is a shining example of the importance of the CARES Act,” American CEO Doug Parker said in a statement. “Our industry was in danger of shutting down one year ago when the CARES Act was passed. This important legislation, including the $25 billion secured lending program for airlines, demonstrated that our leaders understood the challenges facing our economy, and their quick action stabilized our industry and kept our workforce intact.”
Southwest, managing an upturn in demand, made news Monday when it announced plans to buy 100 Boeing 737 Max jetliners with options to purchase an additional 155 737 Max aircraft over the next 10 years. The first 30 planes will be delivered in 2022 as part of a $10 billion investment to update Southwest’s fleet.
For his part, Boyd says the U.S. airline industry “is recovering very well because of its domestic traffic upturn. He points out that 31% of U.S. airport traffic is driven by international travel, which is coming back much slower than domestic.
“We’ve got an incredibly smart management, the rest of the world is going to be the thing we’re not going to be too sure about until we get some control over the COVID overseas,” Boyd said. While he predicts overall airline traffic will be down this year, he says airlines will make money by the end of 2022.
By Joe Cusmano