The United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport on March 13, 2019 in Burlingame, California.
Justin Sullivan | Getty Images
US airlines are laying the groundwork for a travel recovery that will take months, if not years.
Some operators are buying new planes, while others are training pilots and even hiring staff. The decisions they make now will affect how they will be positioned to capitalize on an eventual recovery in air travel.
To be sure, U.S. airlines are still struggling, losing $ 150 million a day, said Nick Calio, CEO of Airlines for America, an industry group that represents United Airlines, American Airlines, Delta Air Lines, Southwest Airlines and other major airlines. American airlines lost more than $ 35 billion last year and passenger numbers fell more than 60% from 2019 to around 370 million, the lowest since 1984, according to the U.S. Department of Transportation.
“We are hopeful that by the end of the year we will reach equilibrium,” Calio said on Tuesday in testimony before the Chamber’s aviation subcommittee at a hearing on the industry’s prospects for recovery.
Capacity fell by half compared to last year, while passenger traffic is still over 60%, the industry group said.
But with the increase in vaccinations and new Covid-19 infections well below peak levels in early January, airlines are beginning to see signs of recovery. The House approved a $ 1.9 trillion coronavirus aid package last week, which included a third round of federal payroll assistance for airlines, $ 14 billion that will help smooth the blow for a eventful first semester if it passes the Senate.
Defrost signs
Discount carriers like Spirit Airlines and Allegiant Travel Co. have been the most optimistic. Spirit plans to start training new pilots and flight attendants this month for the first time since the pandemic began.
Their business models focused on price-sensitive domestic leisure travel, even before the pandemic, which fared better than international and business travel last year. These two segments, sometimes overlapping, were a mainstay of the major airline networks before Covid-19 spread around the world, generating entry bans, quarantine orders and breaks on business trips.
But even the big airlines that were forced to reimagine their business during the pandemic are seeing some good points.
“Spring break demand has been more robust than we expected,” Ankit Gupta, vice president of network planning and programming at United, said in an interview. “Summer booking standards are improving.”
Network planners like Gupta played an even more crucial role for airlines in the past year, as they need to balance maintaining low air costs while increasing service where pockets of demand arise. What makes the job more difficult is that travelers are booking closer to their travel dates because of so much uncertainty in the pandemic.
Spring Training
United said on Monday it was increasing its order for Boeing 737 Max planes. The company did not disclose how much it paid, but aviation consultancy Ascend by Cirium said the Max 9 planes are valued at $ 45.5 million each, a drop of about 8% compared to the beginning of 2019.
United’s commercial director, Andrew Nocella, told the team that the purchase “helps us position ourselves to meet the demand we expect to see in 2022 and 2023 and puts us on the path to more opportunities for our employees in the future.”
Delta President Glen Hauenstein on Monday echoed Gupta’s optimistic sentiment, saying at a Raymond James conference that, starting two weeks ago, the airline saw a significant increase in travel demand for short-term travel and for This summer.
Delta said on Friday that it wants all about 1,700 pilots who were not flying back in active status by October. In January, the Atlanta-based carrier intended to return only 400 of them.
The turnaround will not be immediate, with travel restrictions on long-distance travel expected to last until more people are vaccinated. Airlines for America estimates it will take until 2023 or 2024 to return to 2019 passenger volumes.
John Laughter, Delta’s senior vice president of flight operations, told pilots in a note on Friday that the airline is “preparing to return to 2019 flight levels by the summer of 2023.” He noted that “customers will dictate the path to our recovery”.