As states begin to ease restrictions put in place during lockdown, there are some signs showing a slight rise in travel for late May compared with the previous month. While it’s way too early to make any solid predictions regarding positive trends, the industry welcomes these signs with open arms. It’s hard to see how things could get much worse. Few businesses have been slammed by this coronavirus as completely as air travel. For months there’s been no good news from the International Air Transport Association (IATA), the trade group for the world’s airlines. In late March, IATA Director General and CEO Alexandre de Juniac painted a dismal picture, calling the pandemic the “deepest crisis” the industry has ever faced and noted that airline revenues had “fallen off a cliff.” In recent weeks, there are finally some signs of good news ahead. After a precipitous decline in March and a virtual flatline in April, travel demand is clearly starting to pick up, however slowly. On Thursday, May 21, the US Transportation Security Administration (TSA) screened 318,449 passengers - the highest number for a Thursday since March 19. On the very next day, they screened 348,673 passengers which turned out to be the best Friday since March 20. Undoubtedly, passenger traffic has been steadily increasing since mid-April, when the TSA screened fewer than 685,000 passengers in an entire week!
The normally busy summer travel season has just started, bringing with it more uncertainty than ever before in recent memory. The pandemic has led millions of Americans to cancel both business and vacation travel. Airlines have lost billions of dollars in revenue, idled hundreds of jets, cancelled thousands of flights and slashed most capital expenditures. Roger Dow, US Travel Association President and CEO, said in a press release, “Our national economy is in a recession but the travel industry is already in a depression. Travel-related businesses have been hit disproportionally hard by the pandemic’s fallout and, unfortunately, our workforce is on the front lines of that struggle.” Though the airlines are still reeling, burning through cash at a rate of tens of millions of dollars per day, business is picking up. On May 15, airlines flew nearly 7,000 flights and the number continues to grow.
#AmericanAir, just last year the world’s largest by fleet size, flew more customers on May 20 than on any day since March 22 when the pandemic was just beginning to take hold in the US. Despite this increase, the carrier cautioned that travel demand is still down some 84 percent compared with the same period in 2019. “In April we had a 15 percent load factor and so far, month-to-date in May, we’re at 35 percent,” American’s CFO Derek Kerr reported during a digital investor conference last week. Contrast that with April of 2019 when American was flying airplanes 85 percent full. The measure, known in the industry as load factor, climbed up to 86 percent in May of last year. With demand slowly returning Kerr cautioned that American Airlines will need to “right size” the company heading into fall and 2021. With that in mind, the airline announced on Wednesday that it would be "restructuring" its staff deeper than its capacity cuts, planning to eliminate 30 percent of management and support staff while its fleet size will be cut upwards of 20 percent.
#Delta Airlines has also seen increased demand as the summer vacation season begins but a full recovery appears far in their future. Thanks to a rise in domestic leisure bookings in June and July, the carrier’s net sales are up “modestly versus our conservative forecast,” said CFO Paul Jacobsen recently. The airline offered retirement and buyout packages to employees on Thursday in an effort to cut costs as the virus continues to adversely affect its operations. Delta had approximately 91,000 workers at the end of 2019, according to a company filing. Those employees who accept the buyout offer will get 4 to 20 weeks of severance pay, a year of paid medical coverage and a year of travel benefits as detailed by an internal video message. Those who qualify for early retirement would receive up to 26 weeks of severance, 2 years of medical coverage and a year of travel benefits. The Atlanta-based airline is also planning to offer early retirement to its unionized pilots with final details to be released as soon as next week.
#SouthwestAir just resumed serving in-flight drinks and snacks after a 2-month absence due to the COVID-19 outbreak. But you won’t be able to cash in any of those coveted drink coupons just yet because alcohol hasn't been returned to the menu. The nation’s largest domestic carrier explained in a recent memo to flight attendants their decision stems from a pick up in travel seen just ahead of the typically busy summer season. Southwest expects its flights to be anywhere from 35 percent to 45 percent full in June, compared with only 8 percent in April. Like other airlines, they first modified and then suspended in flight food and beverage service in order to limit interactions between flight attendants and passengers as concerns about the virus started to spread. While Southwest has never had a layoff in its 49-year history, CEO Gary Kelly said recently they would first offer a voluntary separation package to workers with details to be announced on June 1. Even with the recent upward trend, the number of available airline seats will still far out number customers in the near term Kelly reported in a video message to employees on Friday.
The new CEO at #United Airlines, Scott Kirby, reported this week that business is improving. On Wednesday, United carried almost 50,000 passengers. That’s up from fewer than 10,000 on several days in mid-April, though far fewer than they normally carry this time of year. Most airline executives would try and spin that as a positive but Kirby, noted for his bluntness, claimed there was nowhere else to go but up. “It’s just mathematical,” he offered during a discussion at the Annual Bernstein Strategic Decisions Conference. “As more time goes by, there’s fewer bookings left to cancel.” Despite this uptick, the carrier will do away with 13 officer positions as it consolidates roles and restructures some key departments. In addition, they also plan to eliminate more than 3,400 management and administrative positions on October 1. Those job cuts represent about 30 percent of United’s roughly 11,500 management and administrative employees, most of whom work at headquarters in Chicago. Just last year, they extended the lease for their 16-floor, 830,000 square-foot headquarters space at Willis Tower through 2023.
In other news, the #TSA recently implemented changes to the security screening process to reduce the potential for cross-contamination at checkpoints in order to help prevent the spread of the virus. Instead of handing boarding passes to the TSA officer at the document-check position, travelers now place boarding passes (paper or electronic) on the actual boarding pass readers themselves. Once scanned, the boarding pass is then shown to the officer for visual inspection. This change reduces the officer’s need to touch boarding passes. Travelers are also advised to place carry-on food items into a clear plastic bag and place that bag into the bin. Since food items often trigger an alarm during the screening process, separating the food from the carry-on bag lessens the likelihood that an officer will need to open the carry-on bag to remove the item for closer inspection. (Those enrolled in TSA Pre-Check are not required to remove items from their bags.) All passengers should also allow for social distancing to reduce direct contact whenever possible without compromising security and are being encouraged to wear facial protection during the screening process.
Before you fly again, do check for additional changes that may have been imposed by your airline or departure airport. They might affect how much time you’ll need before your flight.
Until next time...stay safe.
We have noticed an increase in the number of planes flying from, and en route to, Heathrow in the abnormally clear and blue skies over England! Recovery will take a long time!