The recent talk of the world the last few weeks has been the Delta variant. US airlines have generally seen no impact from the variant on bookings and continue to plan for the recovery. While airlines are still watching it closely, most are not currently concerned about the variant upending plans. While previous upticks in cases have caused airlines to pull back on bookings, the recent increase in cases does not appear to be taking a toll on travelers’ plans to get onboard a plane.
Airlines speak on the variants
As carriers have held their second-quarter earnings call over the last week, a hot topic has been whether or not airlines have seen an impact from the recent case upticks attributed to the Delta variant. Here’s what each airline’s executives stated.
Delta CEO, Ed Bastian, said the following:
“As we’ve been monitoring our bookings and clearly we’re mindful of the risks around COVID and the new variants and the continued information that CDC provides us with. We have not seen any reduction or drop in demand looking out over the next 60 to 90 days, which is about as far as our crystal ball can go right now.”
United Airlines CEO Scott Kirby started the call off with this:
“As you’ll hear from our bullishness today, we haven’t seen any impact at all on bookings, which continue to just get stronger and stronger every week, but of course that is backwards-looking data. Since early 2020, however, no airline has been more willing to candidly acknowledge the risk and challenges posed by COVID-19, and importantly, no airline has been quicker to aggressively confront them than United.”
Southwest Airlines CEO Gary Kelly stated the following:
“While our bookings and revenue trends are even better than the month of June, and certainly better than second quarter as a whole, we’re very well prepared to manage and muddle our way through if the Delta variant affects our business, and so far, we’re not detecting any impact at all.”
TSA numbers show that passengers are coming back
A total of 13 days since the start of July have seen over two million passengers enter a Transportation Security Administration (TSA) screening checkpoint. Most of those days saw over 2.1 million passengers take to the skies. Even on the off-peak days, the lowest travel numbers have gone since the start of July was 1.6 million (on July 4th – a holiday), but excluding that, passenger numbers have not dipped below 1.8 million in a day.
Passenger numbers are not growing significantly week-over-week, but they are remaining high, and airlines are seeing loads return. In total, US airlines are seeing about 70-80% of 2019-levels of passengers flying.
The prevailing theories on the recovery
Airlines have generally said they are keeping an eye on the impact of the variant on the recovery. Still, most airlines provided some rationale for why they believed there would not be that much of an impact on their operations. For example, Mr. Bastian of Delta said the following:
“We know our customers are largely vaccinated. Our people are largely vaccinated. We have over 72% of Delta people are vaccinated, and the vaccines work, and they are giving people the ability to get back to their lives. So no, we’re not anticipating any changes at this time.”
Mr. Kirby provided a forceful endorsement of the vaccine:
“We think the most likely outcome is that the continued recovery in demand continues largely unabated. That’s the most likely and logical outcome because the evidence is overwhelming that someone who is vaccinated is highly protected against severe disease, hospitalization and death. The un-vaccinated still face an elevated risk of serious illness and death from COVID-19.”
He also discussed what he is seeing with United’s customers:
“And for United Airlines specifically, our customer surveys at the end of June also revealed that 84% of our MileagePlus members were already fully vaccinated.”
Incoming Southwest Airlines CEO Robert Jordan similarly highlighted the effectiveness of vaccines as a reason to feel confident in the recovery:
“The vaccine efficacy is what drove the surge in demand and booking starting in maybe late February and then the surge of demand here in the summer. The question would be, is the Delta variant or whatever variant comes in the future, somehow changing the efficacy of the vaccines, and there’s no – as far as I know – there is no evidence of that. I mean, the story is go get vaccinated because if you’re vaccinated, it’s working.”
Where there may be some pitfalls for airlines
The data so far indicates that the United States is still doing very well in the course of the pandemic. Recent data from the New York Times shows that the US is averaging 51,209 new cases a day at the time of writing. This is significantly higher than it was a few weeks ago, but the rise in cases has not taken a national trend like other surges.
The data so far shows that fully vaccinated individuals provide a high degree of infection from hospitalization, severe illness, and death. For many individuals, receiving the vaccine has helped boost their confidence in flying again.
In the case of those who are not vaccinated, there are precautions one can take to limit the chances of infection. This includes wearing a face covering, washing your hands frequently, and staying six feet apart from others.
The rise in vaccinations has been the main driver in bringing people back to the skies, and airlines are continuing to rely on their customers who are fully vaccinated, making bookings. As there is no domestic vaccination requirement to fly, airlines can fly the unvaccinated travelers who want to get away.
In past surges, airlines have pulled back capacity as bookings stalled and cancelations grew. However, in the last few weeks, airlines have been seeing bookings come in at record paces and yields from leisure travelers. Most airlines saw some level of profitability on their own – excluding government support – in June and are expecting those trends to continue.
This year has shown that when customers are able to travel, they do travel. European bookings have come back strong as different countries opened up, and airlines are flying full planes all across the United States. The one pitfall for airlines will be if new government restrictions or mandates are imposed.
Domestically, this could see states like Hawaii or New York that took a stricter approach through the pandemic to make some changes to the entry of unvaccinated travelers and may also extend those to fully vaccinated travelers. Internationally, this could see a tightening of borders for Americans – potentially even for vaccinated individuals.
The last big question will be if this impacts business travelers. Like Chicago, Boston, and New York City, some large metro areas have not seen large case spikes like parts of Missouri, Arkansas, and Florida. This could be good news for airlines looking forward to welcoming back more business travelers as schools reopen in the fall and companies send road warriors back out.
Some businesses may choose to limit travel to destinations seeing a surge in case counts, while others may only allow fully vaccinated employees to travel. Ultimately, there is still a little up in the air in this respect, but business travel has made signs of coming back.
Have you made airline bookings in the last few weeks? Are you worried about the Delta variant impacting your travel plans? Let us know in the comments!
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