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Epidemics

Airline Executives Optimistic as Travel Rebound Hits the Industry

Strategic Insights

— 2 min read

Airline executives, led by CEOs such as Gary Kelly of Southwest Airlines and Doug Parker of American Airlines, are expressing optimism about the industry's turnaround due to the rising vaccination rates, declining COVID-19 cases, and easing of travel restrictions. This spike in travel demand, which started in March, is expected to continue throughout the summer, with airlines reporting significant increases in bookings and revenue. However, passengers may find themselves facing higher ticket prices as airlines capitalize on the newfound demand and adjust their pricing strategies.

Key Takeaways:

  • Southwest Airlines reported a $1 billion loss in the first three months of the year, but the airline's early reservations for summer travel are so strong that it will operate nearly as many June flights as it did in 2019.
  • Delta's bookings in March were twice the level of January, while American Airlines' daily net bookings this week reached 2019 levels without the benefit of much international or business travel.
  • Alaska Airlines' average fares for peak summer flights booked to date are higher than 2019, with the airline's chief commercial officer, Andrew Harrison, stating, "I think you're going to see a sure but stable climb."
  • American Airlines' chief revenue officer, Vasu Raja, reported that booked ticket prices at the beginning of the year were about half of 2019 levels, but have increased to 90% for early summer bookings.
  • United Airlines' chief commercial officer, Andrew Nocella, stated that average fares paid for mid-June domestic leisure trips are up from June 2019, and the airline is managing fares more than it did during the pandemic.
  • Travelers are advised to start shopping for tickets now or risk higher prices or a less-than-desirable flight itinerary, with pockets of deals expected to appear on routes with intense competition and from budget carriers like Allegiant and Frontier offering $29 fares.
  • Airlines are cautious about over-expanding and maintaining a balance between supply and demand, with Southwest Airlines CEO Gary Kelly stating, "We're very well aware that it will still be messy and that we'll have to carefully manage."

Statistics:

  • Delta's bookings in March were twice the level of January.
  • American Airlines' daily net bookings this week reached 2019 levels without the benefit of much international or business travel.
  • Alaska Airlines' average fares for peak summer flights booked to date are higher than 2019.
  • American Airlines' booked ticket prices at the beginning of the year were about half of 2019 levels, but have increased to 90% for early summer bookings.
  • United Airlines' average fares paid for mid-June domestic leisure trips are up from June 2019.
  • Allegiant and Frontier are offering $29 fares via email promotions.
  • Southwest Airlines will operate nearly as many June flights as it did in 2019.

Sources:

  • Dawn Gilbertson, USA TODAY
  • Southwest Airlines earnings conference call
  • American Airlines earnings conference call
  • United Airlines earnings conference call
  • Alaska Airlines earnings conference call
  • Allegiant Airlines email promotions
  • Frontier Airlines email promotions
  • Google Flights
  • Spirit Airlines

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