Airlines For America CEO Nick Calio joined Yahoo Finance Live to analyze the airline industry’s recovery and when investors can expect the travel industry to recover completely.
Video transcription
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ADAM SHAPIRO: Airline stocks are under pressure today, but yesterday, Delta, United, Southwest, American all hit 52-week highs as the reopening trend continued to help benefit airlines. We’ll bring Nick Calio. He is the president and CEO of Airlines for America, a commercial group that represents the majority of carriers here in the United States. Nick, it’s good to have you here. And before we dive into the numbers, how would you describe where we are right now with the recovery of the airline?
NICK CALIO: The patient is still in intensive care, to be honest, Adam. You have seen many anecdotal accounts from many trips. We had our best weekend in over a year last weekend. All of that is good news. With that said, we are still flying 50% fewer people than we used to fly a year ago.
SEANA SMITH: Well, Nick, with that in mind, I think there was a lot of optimism when we got the numbers we got yesterday from many of these big planes. But when you look at the trend, or maybe the lack of it, are you sure that this rally has legs? Or could we see another setback here after spring break before summer?
NICK CALIO: The only thing we learned during the pandemic, Seana, is that you can plan, but you cannot predict. Our hope is that we will continue to see this increase in numbers. We see a very high pent-up demand for travel. People want to leave. They feel more confident when they find out how safe you are on a plane, as more people get vaccinated. Therefore, we believe it is sustainable. But again, it is difficult to predict. This virus was very complicated. And we hope to be making real progress against that. If that happens, the numbers will remain high.
ADAM SHAPIRO: And one of the ways we saw it was at Delta, which filed an 8-K order with the SEC yesterday, and they said, citing, “Domestic demand is improving across the reserve curve. Bookings for trips older than 60 days account for 32% of new bookings, and that is a drop of just three points from 2019. “When you talk to airline CEOs, whether it’s Ed Bastian of Delta or the others, what they are talking about we know the virus can be complicated, but are they worried that the government might get in the way of new regulations?
NICK CALIO: This is always a concern when you are in the aviation business. As you know, we are one of the most regulated companies in the world and certainly in this country. But so far, the government has been a very good and very willing partner. They know how much we drive demand, how we can help strengthen the recovery. And they basically used airlines as the federal government’s unemployment office for airline employees, which is important because, as demand increases, we need to have our frontline employees available.
And airline employees are different from many others. It does not mean that they are better, but they are required to undergo constant training, recycling, certification and recertification. Therefore, you cannot dismiss a pilot for two or three months, throw him the keys to the plane and say that he will fly on Friday. You have to be fully trained and recertified to make sure we are as safe as possible.
SEANA SMITH: Nick, a trend we’ve seen is that people seem to be close – reserving closer to when they’re actually traveling. And that, of course, is different from some of the trends that we saw before the pandemic. To what extent, however, does this put some of the airlines at a disadvantage when you look at the fact that they simply cannot schedule as they used to do before the pandemic?
NICK CALIO: Well, here we can plan. And we have done that. What you discover is that some flights are full, many other flights are almost empty. But to meet demand, we have to have available capacity. This is a kind of bet in the sense that if you have the seats and they are occupied, you will make money. If you have the seats, but don’t fill them, you lose or lose more money.
ADAM SHAPIRO: In fact, Nick, I think Delta is the only airline that still blocks the middle seat. They will revisit this at the end of April. But, from now on, we have no reported case of an airline super spreader event. So, when the CDC said recently, don’t travel, but they were saying that you can have small meetings between vaccinated people, did they miss something?
NICK CALIO: Well, look, the CDC is doing its best to do its job. We disagree about the safety of air travel. People have to be smart about it. And what we tell people, we try to give our potential passengers as much information as they can, so that they can make an informed judgment about whether they want to get on a plane. And since the early days of the pandemic, as you know, Adam, we have been leaning towards science and data.
We met with a group of aviation stakeholders. We went to Harvard School of Public Health, its National Preparedness Leadership Institute, to ask them to take a look at all the science and data available to work with manufacturers, airlines, airports and other interested parties. Get all the information possible, make your own modeling, as well as what US Transcom had done and all the modeling we were doing.
The end result was an independent report. They said that all of the risk mitigation multilayers we have implemented – our air filtration systems are better than in operating rooms. Face mask requirements, improved health statements, improved cleaning and disinfection, new boarding and disembarkation procedures and, based on Harvard’s recommendation, how we perform air and when we perform air during disembarkation and disembarkation, everything contributes to this by being safer – being an air travel – being safer than most routine activities, including going to a supermarket, a library, a restaurant, a bar and actually welcoming people into your own home.
ADAM SHAPIRO: Okay, we wish you all the best at Airlines for America. Nick Calio is the president and CEO. Thank you for joining us.