United Airlines Boeing 737 Max 9 plane lands in Burlingame, California at San Francisco International Airport on March 13, 2019.
Justin Sullivan | Getty images
US airlines are laying the groundwork for a travel recovery that looks set to take months, if not years.
Some carriers buy new planes, others train pilots and even add personnel. Decisions they make now will affect how they will be positioned to take advantage of any air travel recovery.
Certainly, US airlines are still struggling and losing $ 150 million a day, said Nick Calio, CEO of Airlines for America, an industry group representing United Airlines, American Airlines, Delta Air Lines, Southwest Airlines, and other major airlines. US airlines lost more than $ 35 billion last year, and passenger numbers dropped more than 60% from 2019 to about 370 million, the lowest number since 1984, according to the United States Department of Transportation.
“We hope we will break even by the end of the year,” Calio said in a testimony before the House Aviation Subcommittee on Tuesday at a hearing on the industry’s outlook for recovery.
Capacity has halved compared to last year, while passenger traffic is still down by more than 60%, the industry group said.
But as vaccinations soar and new Covid-19 infections well above their early January peak, airlines are starting to see a glimpse of recovery. The House last week approved a $ 1.9 trillion coronavirus relief package that included a third round of federal wage relief for airlines, $ 14 billion that will help soften the blow of a choppy first half of the year if it passes the Senate .
Signs of a thaw
Discount carriers such as Spirit Airlines and Allegiant Travel Co. were most optimistic. Spirit plans to begin training new pilots and flight attendants this month for the first time since the pandemic began.
Even before the pandemic, their business models focused on price-sensitive domestic vacation travel, which has outpaced international and business travel over the past year. Those two, sometimes overlapping segments, were a pillar of major network airlines before Covid-19 spread around the world, leading to entry bans, quarantine orders and business travel breaks.
But even major airlines that had to rethink their business during the pandemic are seeing some bright spots.
“Spring break demand was higher than we expected,” Ankit Gupta, United’s vice president of network and planning planning, said in an interview. “Looking up summer booking patterns.”
Network planners like Gupta have played an even more important role for airlines over the past year, as they need to strike a balance between keeping the airline’s costs low and ramping up service where demand grows. Making the job more difficult is that travelers book closer to their travel dates due to so much uncertainty during the pandemic.
Spring training
United said on Monday it was increasing its order for Boeing 737 Max planes. The company has not disclosed how much it paid, but aviation consultancy Ascend by Cirium said Max 9 planes are valued at $ 45.5 million each, down about 8% from early 2019.
Andrew Nocella, United’s chief commercial officer, told staff that the purchase “will help us meet the demand we expect to see in 2022 and 2023, and move us towards more opportunities for our employees in the future.”
Delta President Glen Hauenstein echoed Gupta’s upbeat sentiment on Monday, telling a Raymond James conference that the airline began two weeks ago with a significant increase in demand for short-term travel travel for this summer.
Delta said Friday it wants all approximately 1,700 pilots who did not return to active status in October. In January, the Atlanta-based airline was aiming for a return of just 400 of them.
The turnaround won’t be immediate, with travel restrictions for longer-distance travel expected to linger until more people are vaccinated. Airlines for America estimates it will take until 2023 or 2024 to return to 2019 passenger volume.
John Laughter, Delta’s senior vice president of flight operations, told the pilots in a note on Friday that the airline is “preparing to build back to its 2019 flight level by the summer of 2023.” He noted that “customers will lead the way to our recovery”.