“Today, with the robust demand trends that we see in our return to profitability, we don’t just see the light at the end of the tunnel, we’re exiting the tunnel,” United Airlines Chief Executive Scott Kirby said in a call with analysts this week.
Several domestic airlines reported earnings in recent days, with executives noting the need for more workers to handle rising passenger counts. Increasing coronavirus caseloads across much of the country have done little to dampen enthusiasm for travel with more than 2.2 million people passing through airport security checkpoints Sunday — the most since pandemic began.
Despite concerns the delta variant could depress demand for travel, airline executives said they are not seeing an impact on bookings and expressed confidence that demand for air travel would grow. They said any slowdown would likely be short-lived.
“I’d acknowledge that shutting down or continuing the reopening also has a political dimension to it and that’s a lot harder to predict, and so it’s possible we’ll have a temporary pullback in the reopening,” Kirby said. “But given the data science around vaccines, that seems like a lower probability outcome, and regardless, it will be temporary even if it does happen.”
The recovery is largely being fueled by leisure trips, but also by an earlier-than-expected return of business travelers, executives said. Analysts have predicted that the lucrative business travel market would not come back to pre-pandemic levels until 2023 or 2024.
“Some of our largest corporate accounts have already lifted all travel restrictions and many have already returned to the office,” said Doug Parker, chief executive of American Airlines, adding that he expects business travel to fully recover next year.
Gary Kelly, chief executive of Southwest Airlines, said Thursday the air carrier is eyeing the rising spread of the delta variant, but these days is better positioned to handle a possible downturn.
Still, airlines acknowledged that many customers — expecting the same level of service they experienced before the pandemic — are finding longer waits, delays and fewer options when flights are canceled. Despite adding flights, there aren’t as many as before the pandemic, leaving customers with fewer options when cancellations occur. And there often are fewer customer service representatives to help.
Ed Bastian, chief executive of Delta, said passenger demand has come at such a fast clip that “it’s taken us all a little bit of time to catch our breath.”
The bumpy restart has drawn the attention of lawmakers in both parties. Sen. Maria Cantwell (D-Wash.) sent a letter to executives of six domestic air carriers last week inquiring about their difficulties in boosting staffing levels when they received billions of dollars in federal government support to keep workers on the job.
“I am concerned that, at best, these airlines poorly managed … marketing of flights and workforce as more people are traveling, and, at worst, they failed to meet the intent of tax payer funding and prepare for the surge in travel that we are now witnessing,” Cantwell wrote.
Airlines executives, however said, that without the federal Payroll Support Program, resuming operations would have been even more difficult. Aid to passenger airlines ultimately totaled $54 billion.
“The federal support was critical to keeping our industry afloat and keeping our employees employed and being in position for the recovery,” Bastian said last week. “As we’ve talked on this call, one of the biggest challenges we’re having now is getting everything fully stood up even though we’ve kept a lot of our employees.”
Airlines say they are rushing to retrain recalled workers and hire new employees to staff operations in key markets to meet the demand. Executives say it has been particularly challenging to find entry-level workers, such as those that work at airport ramps. Southwest said it recently increased pay to $15 an hour to be more competitive.
Bastian said the airlines has not had trouble finding job applicants. The challenge, he said, is in training — a process that can take months.