The rebound in domestic travel is benefiting Alaska Airlines, with leisure travel bookings almost back to pre-pandemic levels. The Seattle-based airline, which has recently cemented its place as the fifth-largest carrier in the United States, says it saw a definite change for the better around March.
Things are looking optimistic, says Alaska Airlines CEO
“With the pace of vaccinations increasing, we saw a significant step-change in March. We achieved positive operating cash flow in March after 12 months of burning cash. So things are looking more optimistic,” Alaska Airlines CEO Ben Minicucci told NBC’s Lester Holt on Thursday evening. “Leisure bookings are strong, almost at pre-pandemic levels.”
Barring any further upsets, Mr Minicucci expects domestic leisure travel to take another 12 months to rebound to 2019 levels fully. After 12 months of sticking close to home, the United States is on the move again. Over 22,000 domestic flights are now taking off each day across the United States. That is around 15% fewer flights than took off in the same period in 2019, but over twice the number of domestic flights taking off each day this time last year.
In terms of raw flight numbers, Alaska Airlines is now operating substantially more daily flights than it did in May 2019. Right now, Alaska Airlines is averaging just shy of 1,000 departures a day. Two years ago, the airline was seeing daily departures around the 770-780 mark. One year ago, Alaska Airlines was operating less than 200 flights a day. However, raw flight numbers can give a misleading picture of the airline’s overall performance because they do not reflect load factors or average fares – both important performance metrics for any airline.
Business travel on Alaska Airlines lags leisure travel
Fuelling the rebound is the successful rollout of COVID vaccinations across the United States and a strong focus by all United States-based airlines on COVID safe practices inflight and in airport terminals. That is giving people the confidence to travel, and that’s benefiting carriers like Alaska Airlines.
What is still lagging is business travel. Ben Minicucci says business travel is now running at 25% of pre-pandemic levels. This is important because airlines make most of their money from typically high fare-paying business travelers. But the Alaska Airlines CEO is confident business travel will recover. He expects to see business travel running at 50% of pre-pandemic levels by the end of 2021.
“People need that human interaction. I think companies realize you still need that face-to-face. I think it (business travel) is going to come back,” Mr Minicucci told NBC.
Ben Minicucci confident business travel will bounce back
Nearly every other airline CEO and company CEO backs this sentiment. While Ben Minicucci admits to a fear in the early days of the pandemic that video conferencing apps like Zoom would obliterate the business travel market, he and most other CEOs have come to realise a virtual handshake will never match a person-to-person handshake.
“Business travel is not transactional. It’s about relationships,” United Airlines CEO Scott Kirby told CAPA Live in March. “Going to an event and socializing and having drinks, that’s where you get to know people whom you can pick up the phone and call them if you need them. We’re not going to get that from virtual events. It’s a question about human nature, and human nature has not changed.”
A rebound in leisure travel may help fill seats on Alaska Airlines. But most leisure travelers like to stretch their dollar and travel on low-cost tickets. That isn’t a sustainable long term proposition for a full-service premium airline like Alaska Airlines. Ben Minicucci will be counting on a rebound in business travel to fix that.
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