In 2019, many metrics suggest the world saw peak travel. Due to the Coronavirus crisis and countries shutting their borders, the question of whether Peak Travel will ever return and if so, when, remains unanswered.
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Last year was arguably the best ever for travel. Airlines boarded more than 4.7 billion passengers. Inflation-adjusted airfare numbers for domestic US flights (including total cost of a trip) were the cheapest in at least the last 27 years (the furthest back BTS data shows.) Capacity increases outpaced GDP and put more seats on the market than ever before.
More passengers flew, airlines had more seats to sell and airfare was the cheapest it had ever been in 2019.
What Some Are Forecasting
Airline executives have weighed in with their thoughts on when travel will return to 2019 levels. Some have not been shy about their bleak outlooks. Specifically, as of May 11th, the ever-verbose Qatar Airways CEO, Akbar Al-Baker thinks recovery is a long way off:
“… the CEO, who heads one of the Middle East’s largest carriers, added he would be “very surprised” if travel demand recovered before 2023/2024.”
Likewise, on May 6th Emirates projected a long-term recovery period though not nearly as dire as Al-Baker’s assessment:
“We expect it will take 18 months at least, before travel demand returns to a semblance of normality,” Sheikh Ahmed bin Saeed al-Maktoum, chairman of Emirates, said in a statement.”
But those statements were made a month ago and neither has revised their estimates as of yet. US Carriers have been all over the place, at least two now predict it will see traffic levels at or exceeding 2019 levels before the end of the year.
Even as cities were closing, Marriott was re-opening hotels in China as early as February, so some are more upbeat than others.
What Do I Think?
Returning to normal operations in which active runways are no longer being used for aircraft storage is different than returning to its 2019 peak. As I mentioned last week, some airlines have expedited retirement plans for older equipment. But some went beyond that, as Delta did, replacing equipment recently renovated and not scheduled for near-term retirement. Some airlines have also reduced or eliminated very large aircraft like the A380.
Airlines also lost ground on trans-Atlantic rates. Coach flights from the US west coast to Europe remained in the range of $200-400 roundtrip more or less roundtrip. This was typically to combat Norwegian and WOW Air no-frills rates, but WOW went out of business a year prior to COVID-19. Norwegian has pulled out of long-haul flights (though I believe they will soon recant this) for a year. Pricing pressure won’t be a factor unless airlines add surplus capacity before they can fill the seats.
While recovery is starting to show and countries re-open, 2019 was the pinnacle of all travel based on passenger numbers. Given solely the structural changes, I have doubts that replacement aircraft will be able to keep up with unscheduled retirements.
Some travelers will be hesitant to return to destinations that are not yet out of the woods. Others won’t want to fly long distances whereby the visitor experience may be limited, altered, or lacking.
As such, my prediction is that Peak Travel may not occur again until at least early 2022. That said, there’s a possibility that it never returns to 2019 levels.
Peak Travel, as experienced in 2019, was great for travel businesses as well as travellers everywhere. I am not convinced that carriers will be able to return to peak levels for at least a couple of years if ever. Airlines and hotel chains may be scared that their businesses are susceptible to aspects outside their control and be more cautious going forward.
What do you think? Will we see Peak Travel return? If so, when do you think it will happen? If not, why not?