2022 likely to be a year of unknowns for airline business, consultant says
Airlines now competing with other leisure activities; Southwest adds new fare category; Delta changes base fare rules
The ongoing COVID-19 pandemic means 2022 will likely be another year of upheaval in the airline business, according to a report issued by IdeaWorks, a Shorewood-based air travel consultancy.
The report was issued in late November by IdeaWorks in conjunction with Dublin, Ireland-based CarTrawler, a global provider of technology solutions for the travel industry.
The airline industry must adapt if it expects to resemble what it did prior to COVID, said Jay Sorensen, IdeaWorks president.
“During the 20 months of the pandemic, people have developed different spending habits that don’t involve travel,” Sorensen said. “Those spending habits are going to be very sticky. Just because the pandemic eases doesn’t mean that those consumers will leap back into spending money on travel.
“This is especially true if travel remains as difficult and inconvenient as it is now.”
The situation mostly applies to international travel, he said.
Still, the competition for airlines these days is more than simply competing against one another.
“Prior to the pandemic, we assumed the travel industry was an artesian well ... forever nourishing an ever-growing supply of planes and hotels,” Sorensen wrote in the report. “The pandemic has taught us that competition does exist for the air travel spending by leisure and business travelers.”
Even if that competition is coming from a bass boat.
“For those leisure travelers seeking fun, the purchase of a fishing boat or cottage, or spending more money at local restaurants, can provide long-lasting enjoyment,” Sorensen said.
The competition from technology is well-documented. “For business travelers, there are plenty of occasions when a Zoom call provides a proxy for a business trip,” Sorensen said.
That means airlines will have to work even harder to persuade many people to return to the skies.
Airlines “have competition now for the discretionary spending of leisure travelers and the annual budgets of corporations,” Sorensen said in the report. “Woe be to the airline executives — and frontline employees — who forget this.”
During the coming year, “airlines will face moments ... that define whether they continue to struggle or return as robust providers of service to leisure and business travelers,” Sorensen said in the report.
Airlines must “work harder to become convenient and predictable partners in the lives of (their) customers again,” he added. “The process begins with accepting that changes have occurred.”
International travel is likely to continue to be difficult, as countries close their borders in response to outbreaks of COVID variants.
“I think 2022, for cross-border travel, is going to be difficult,” Sorensen said, especially for places where border crossings can be a hassle.
“In the U.S., we’re lucky,” he added. “We have an entire giant country to roam around in.”
Southwest adding new fare category
Travelers who “wanna get away” will have a new option on Southwest Airlines next year.
In a presentation to investors Dec. 8, the airline announced that it will introduce a “new fare product” midway through 2022.
The fares will appear in a fourth column on Southwest’s website alongside its current Wanna Get Away, Anytime and Business Select offerings.
Southwest is the market share leader at Milwaukee Mitchell International Airport.
Details of the new fare category have yet to be revealed, but Southwest Executive Vice President and Chief Commercial Officer Andrew Watterson said it will be above the airline’s lowest-priced Wanna Get Away category and offer enhanced attributes for which “customers will happily pay a little bit more.”
He said that the new product will be available for business or leisure travelers.
Watterson also said Southwest is probably done adding new airports for a while.
Instead, the airline plans to focus on maturing the 18 new markets it has added since 2020 as well as its Hawaii service.
Executive Vice President and Chief Financial Officer Tammy Romo said, so far, they’ve not seen “material impact from the latest COVID wave” in bookings.
Barring unforeseen circumstances, the Dallasbased airline expects to report a profit in its fourth quarter and throughout 2022, Romo said.
The airline also expects to add at least 8,000 jobs next year.
Changes coming to Delta’s Basic Economy class tickets
Look closely at the terms and conditions on Delta’s website, and travelers will find some big changes coming to the airline’s cheapest fare class.
As of Dec. 9, new Basic Economy tickets booked for Jan. 1 and beyond will no longer earn miles toward Delta’s SkyMiles frequent-flyer program nor contribute toward elite Medallion status. Delta is second in market share at Mitchell. Customers who want to earn miles for reward trips or qualify for the perks that come with Medallion status, such as seat upgrades and access to airport lounges, will have to book Main Cabin tickets or higher.
Delta is also tightening its change policy, which had been relaxed throughout the pandemic.
A special temporary waiver had allowed customers to change or cancel Basic Economy flights without paying fees on travel through Dec. 31.
That waiver has been extended to Jan. 31 for Basic Economy travel originating in Europe, Africa, the Middle East and India. For everyone else, starting in the new year, no changes will be allowed on Basic Economy flights. Customers can, however, cancel their tickets for partial credit, which is new.
Cancellation fees will be deducted from the value of the original ticket. For travel within the U.S. and Canada or from the U.S. and Canada to Mexico, Central America or the Caribbean, the fee is $99. That fee shoots up to $199 for all other international travel originating in the U.S. and Canada.
In most cases, an eCredit will be issued for a future trip after a cancellation, but there are a few exceptions.
If the cancellation fee is higher than the original ticket price, customers won’t get anything back.
Delta’s website says, “It’s recommended to purchase a Main Cabin ticket or higher for customers who value greater flexibility, advanced seat selection, overhead bin space, no change fees, and the continued ability to earn miles in the SkyMiles Program and earn towards Medallion Status.”
USA TODAY contributed to this report. Contact Joe Taschler at (414) 224-2554 or jtaschler@gannett.com. Follow him on Twitter at @JoeTaschler or at facebook.com/joe.taschler.1.