Travel Ticket

Opinion: Airlines takeover suspended as Covid-19 strikes again

By Lupe D. Sharp


However, thanks to the Delta variant of Covid-19, hospitalizations are once again approaching pandemic peak in several parts of the United States, and those moments of hope have been canceled for now. While the Delta variant has inconsistently affected various regions, it has managed to introduce an element of uncertainty that seeks to reverse the return of business and international travel, and at least dampen the growth of the domestic leisure market.

After a busy summer season, US holidaymakers started to pull back again last month, likely due to the increase in Covid cases. More than two million passed through Transportation Security Administration (TSA) checkpoints each day for much of June and July, but the volume fell well below the two million mark in the second half of the year. August and almost every day in September so far.
Airlines are seeing an increase in cancellations and a drop in bookings. Earlier this month, major U.S. carriers warned investors that third quarter results would not be as bullish as expected, attributing the weakness to a general deceleration in demand linked to the Delta variant and Hurricane Ida . And while the return of children to school has always tended to reduce the demand for leisure travel, the industry would normally expect this to be partially offset by an increase in domestic business travel and international. This is not the case this year.

Domestic demand is unlikely to pick up until Thanksgiving or Christmas. Based on this easing, we now expect domestic pleasure travel in the United States to return to 2019 levels by next summer – essentially on the same schedule as before vaccinations took off. That, of course, could be reversed by another variant if a significant number of unvaccinated Americans continue to resist getting vaccinated.

International

Internationally, the outlook for recovery to 2019 demand levels is a bit bleaker, in large part thanks to new travel restrictions in Europe – conveniently enacted at the end of the holiday season. But even before the hammer fell, especially on American travelers, international capacity around the world – the measure of seats deployed and distance flown – had only increased to 44% from 2019 levels in September of this year. year, according to our own analysis. flight data. US capacity on international flights was 53%.
At the same time, once strong travel segments, such as beach trips in Cancun and the Caribbean, are also affected by a series of powerful hurricanes. While hurricane season is never a popular time to visit these places, the worse-than-usual weather outlook and the fact that Florida is a Covid hotspot are expected to compound the seasonal decline.
Finally, as long as Covid outbreaks continue to occur, it is difficult to see how governments can lift travel restrictions until there is a smarter, less cumbersome way to prevent cross-border infections than to impose quarantine and testing. The Biden administration recently said it would ease travel restrictions for foreign visitors vaccinated from November, but even so, we don’t expect international travel to return to 2019 levels for some time in between. 2023 and 2024.

Business

Probably the biggest disappointment for airlines is the failure of business travel to recover as businesses nationwide – even in states where the percentage of people vaccinated is high and Delta is more contained – pull back. the reopening of the offices.
Before the variant took off, the outlook was optimistic, with business travel starting to pick up in March. Corporate ticket sales peaked at around 49% of 2019 levels the week of July 11, up from 17% the week of March 14, according to the Airlines Reporting Corporation.
In our own June poll, nearly 80% of U.S. business travelers who responded said they plan to book a business trip within the next three months. But by August, that sentiment was starting to fade, according to a survey by the Global Business Travel Association, with the number of people willing to travel down five percentage points from July. The expected rise in business travel has been held back by the outbreak of Covid-19 and companies’ decisions to continue to rely on video conferencing rather than exposing employees to Delta. As of the week of September 19 – a period when business travel normally resumes – corporate ticket sales were only 38% of 2019 sales.

The end result for travel may seem obvious, but returning to demand levels of 2019 will be difficult to achieve – even in the midst of an impressive economic recovery – if large numbers of people go unvaccinated and Covid-19 is unvaccinated. is not contained. Until we have to forestall the spread through vaccination, increased demand will remain vulnerable to variant outbreaks and any sign of a return of Covid.


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Lupe D. Sharp
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