Airlines report dampening of demand ahead of holiday
The holiday travel rebound U.S. airlines were anticipating is starting to wobble.
Surging coronavirus cases have caused a “weakening” in bookings, American Airlines Group Inc. President Robert Isom said Thursday at a Skift conference. Earlier in the day, United Airlines Holdings Inc. followed Southwest Airlines Co. in warning that more customers are scrapping their trips.
“There has been a deceleration in system bookings and an uptick in cancellations as a result of the recent spike in covid-19 cases,” United said in a regulatory filing.
The slowdown threatens airlines’ push for a modest holiday sales boost at the end of a year in which air travel collapsed because of the coronavirus pandemic. Only two weeks ago, United was adding flights for the week of Thanksgiving, saying it expected its busiest week since March. Now, government leaders are discouraging travel, with the U.S. Centers for Disease Control and Prevention being the latest to urge Americans to stay home.
“We understand that people want to see their family and relatives and do it as they’ve always done it,” said Dr. Henry Walke, who has overseen the CDC’s day-today covid-19 response. “But this year we’re asking them to limit their travel.”
The CDC’s guidance Thursday came a day after Anthony Fauci, the influential director of the National Institute of Allergy and Infectious Diseases, recommended that people “think twice” about traveling over the holidays. That sets up the potential for increased tension between public health officials and the nation’s battered airlines.
The travel advisory complicates what has already been an uneven recovery for airlines that are burning through cash savings and trying desperately to lure travelers back onto planes, despite travel restrictions inside and outside the United States.
“Certainly with the increase in infection rates really throughout the country we’ve seen a dampening of demand,” said American Airlines President Robert Isom at an airline industry conference Thursday. “It’s too soon to tell how deep and how long there may be a depressed environment, but we’ve seen some weakening of bookings.”
Southwest Airlines warned last week of softness in booking trends. On Thursday, Chief Executive Officer Gary Kelly said the carrier is seeing an increase in cancellations, particularly those close to the date of travel. He said some drop in ticket buying was expected with the uncertainty from the election earlier this month, but those trends appear to be continuing through November and into December.
However, he said there has been an increase in new ticket purchases, too, and that the company is bringing in more business every month, even if the recovery has been uneven.
“We’ve already seen a seasonal uptick in cases, and that’s concerning,” Kelly said on a conference call. “Cancellations are up, but it looks like December will be in line with what we’re seeing in November, and maybe slightly improved.”