Demand for Air Travel Decreasing

Lonely at the airport

Airlines saw a surge in demand at the start of July as holidaymakers started to travel again. But for the coming months, the airlines are planning on cutting flights instead of adding more flights as there is an increase in coronavirus cases.

There have been new cases in the South and Southwest, which are resulting in travel restrictions. Many businesses that recently reopened will be affected such as restaurants and bars.

Executives from Southwest, American, Spirit, and Alaska airlines detailed the sudden fall-off in already shrunken travel demand in a series of quarterly earnings conference calls Thursday, echoing recent reports from United and Delta.

“In short, the crisis continues,” American CEO Doug Parker said.

American Airlines

American Airlines was the first to add more flights to its summer schedule. However, it was booking 45% of its seats in May and about two-thirds of its seats in June. It was booking more as many states were easing their restrictions and reopening their economies.

However, from this month bookings are declining as travelers opt not to travel due to quarantine rules and closed businesses, the airline says.

Net bookings are currently down 75% to 85% from a year ago. As compared with year-over-year declines of 35% to 40% in some Sun Belt markets after they reopened. Net bookings are new bookings minus trip cancellations.

“This is less about people’s concern about flying and much more about having a reason to travel,” Parker said.

Due to decreasing demand, American Airlines plans to cut its flights for August and September.

Southwest Airlines

Southwest Airlines CEO Gary Kelly said the “unexpected” rise in coronavirus cases this month will result in fall off in business. The airline is planning to adjust its flight schedules for August and September.

“We’ve seen a dramatic impact to our trends, as far as traffic, revenue and bookings,” he said on the airline’s earnings conference call Thursday.

“We knew this would be a long, saw-toothed slog with a lot of unexpected twists and turns, and it’s proving to be so,” Kelly said. ”Our country and the world needs to beat this virus. Until then, we’re going to have to be resilient. We’re going to have to persevere and we’re going to have to manage.”

Spirit Airlines

Spirit Airlines was the first airline to see an increase in bookings and it added more summer flights to its schedule.

“We’ve seen another setback in demand,” CEO Ted Christie said. “We expect the rest of the summer to remain challenging for us and the industry.”

However, Spirit will offer fewer flights this fall and will make changes in its schedule for a busy holiday travel period.

Alaska Airlines

Alaska Airlines CEO Brad Tilden said the Seattle-based carrier, which is strong on the West Coast, was on “really nice clip” through the July 4th holiday weekend.

“It seemed like every day there were 1,000 customers more than the previous day,” he said.

Then the new coronavirus cases started to increase in the US.

“That’s the thing that’s making us nervous about August and September,” Tilden said. 

“The environment is quite a bit different than it was 30 days ago.”

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