US airlines are showing signs of slowing down again but this time there shouldn’t be a taxpayer bailout.
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Airlines Slowing Down Again
Some carriers have outright said that fall bookings are down, others have not been as verbose. There’s no question that things are slowing down, it’s more a question as to why. There are a pair of obvious indications as to why.
Delta Variant
Delta (the “Air Line”) has already foreshadowed that the rest of the year is a lost cause of status holders and business travelers and renewed status through January of 2023, elevating those who already earned status in 2021 to the head of the pack in the upgrade line. United and American are insistent there is more cash to glean from their clients but also recognize that virtually no one will re-qualify and have once again lowered the requirements but not to zero.
The Delta variant is spreading and businesses (who travel on shorter notice, pay higher fares, and book more premium options) are putting off business as usual a little while longer. There is a potential for a major shut down again, though a full shut down seems unlikely at this time. All the same, the Delta variant of COVID-19 appears to be hampering air traffic again, at least into the future.
Normal Leisure Cycles
Summer is far and away the busiest travel season for airlines. The weather is generally nice, kids are out of school, and there are lots of events worth traveling to. Labor Day (September 6th, 2021) is that last grasp of summer before travel begins to taper off and usually business flights would pick up the slack. This is the end of a normal leisure cycle which makes the drop in traffic normal. At the same time, the airlines are likely less sure when the music will stop this year than in years past and do not have business travel to carry them through to the holidays.
Clear Signals
When I’m looking for a canary in the coal mine, I turn to my inbox. The offers have been flying in fast and furious lately. Specifically, from carriers that are prone to offer a deal because right now they have them.
Forward bookings are not looking good and the discounters are a good way to see that materialized. Allegiant, Spirit, and Avianca (both LifeMiles and the airline itself) have been flooding my inbox. The following are a very limited sampling of the barrage from airlines lately.
It’s not just cash tickets either. LifeMiles are not just on sale to buy, transfer, or gift lately but also to redeem. Miami to El Salvador is just 10,000 points roundtrip or even less if you were gifting them to someone else, buying on a bonus, or transferring from a credit card partner.
Spirit is offering flights from Pittsburgh to Fort Lauderdale (over 1,000 miles) as low as $18.64 each way. That price is BEFORE the airport trick which could drop it even lower, though at these prices – why bother?
No More Government Bailouts
Say it again, louder, for the CEOs in the back. No. More. Bailouts. No more loans, no more credit facilities, airlines get nothing if traffic comes to a standstill again. Enough is enough.
Southwest Airlines is apologizing to their flight attendants who are at their wits’ end. The airlines took every available opportunity to recapture lost revenue over the busy summer months and for that we saw flight cancellations and meltdowns.
Southwest decided against taking government money, JetBlue has already paid its loan back. They were model citizens. United, instead, took your money and decided to purchase 270 new airplanes – because apparently all of the ones that were good enough to fly in 2019 but were parked in March of 2020 are no longer good enough. American Airlines just filed 31 mistake fares and they aren’t honoring any of them. (Is this $10 fare a mistake or just a cheap ticket?)
Nonstop Flights: Los Angeles to San Francisco or Salt Lake City $20 r/t [August-December] – American Airlines
$10 each-way. You may want to pick these up before this post gets copied by other “deal” bloggers.https://t.co/UaOBxPEpzL#Airfare #Flights #Travel
— Escape Flights – LAX (@EscFlightsLAX) August 17, 2021
The carriers had a chance to keep slimmer operations, pay back debts before investing in new equipment, and to build cash reserves so this wouldn’t happen again. Some, airlines had a chance to treat customers better – but decided against it.
Conclusion
Whether it’s a resurgence of COVID-19, business reluctance, and/or the normal leisure cycle airline traffic is slowing again. But this time, no matter how loud the CEOs whine – no bailouts.
What do you think? Have you seen signs of the airlines slowing down? Do you think we will re-enter a full shut down? Is there a case for bailouts if we do?
The mistake fare is actually a $0 fare Kyle. The ~$10 each way is just taxes of which AA gets nothing. It is hard to imagine a better example of a genuine mistake fare. If I recall you want to start a travel agency-like service; it might be good to understand what a “fare” actually is, or at least know how to read a fare construction in ITA.
Hi Alan – Thanks for reading and for your comments. While your barb appears founded, I can demonstrate cases where this is incorrect. For example, the last airline traffic slowdown resulted in $16 one-way fares from LAX-Miami (https://simpleflying.com/us-airlines-slashing-fares/). I traveled on an INTENTIONAL $0.57/each way fare with Spirit here: https://liveandletsfly.com/buy-spirit-airlines-tickets-at-airport-for-big-savings/ ($3.42 total fare for three passengers roundtrip.) This is not a new practice either: https://www.holidayextras.com/news/hx-travel/airline-ryanair-offers-1-million-seats-for-1p-11252.html
While fares were intentionally filed for $16, the $10 fare with a potentially similar slow down in traffic is a genuine mistake? I am not so sure that’s clear. The Miami flights were offered in coach because American was still able to sell add-ons, premium fares, and other revenue sources for flights that would have been flown for cargo purposes anyway. Like Spirit’s $0.57 fare, the $16 fares (which would have been sub $5 excluding taxes, facility, and other fees) were offered as Basic Economy with the same restrictions as Spirit.
This is another reason why consumer protections are important in the US. The lines between a “great deal” and a “genuine mistake” was $6 in this case. In the case of Spirit the difference between a “great deal” and a “genuine mistake fare” would have been $0.57.
Consumers shouldn’t have to go to ITA and file through fare construction to know that a $16 fare is valid and a $10 fare is not.
If the airlines couldn’t see this slowdown on the horizon shame on them. Fall has traditionally been slow, leisure travel drops off, and there should never have been an assumption that business travel would resume. Lots of holiday economy award seats are available. Travel uncertainties are very much part of the picture.
Vaccines that lose effectiveness.
Media making $$$ off of fear.
Governments demanding 1940 level compliance.
Social media encouraging group-think.
What did we expect?
We’re a society of weenies now. Scared by our own shadows.
We did this to ourselves, and it’s going to hurt a lot more in the coming years as we learn just what we’ve done.
Aaaaaand it’s the anti-vaxxers such as yourselves that are clogging up the ERs and using the ventilators all over the South at the moment
#getthejab
I would imagine it’s just fall season blues primarily, and the Delta spread is just secondary. The past several years I’ve booked September/October flights because fares are at the lowest year round. But yes, no bailouts. Especially you, Delta. You can’t get away with your [redacted by admin] “Bistro boxes” instead of meals forver.
Of course it’s slowing down. People are going back to school and work. Happens this time every year. Cases are starting to flatten and decline for the time being. More and more data on the delta scariant is blowing holes in the narrative that it’s more “dangerous.” Airlines will be fine.
All airline employees know to take vacations after Labor Day. Then the flights are open and you can get the entire family on no problem. You get the Thanksgiving bump and then the Christmas Bump. Then comes Spring Break. It is a cycle. It is predictable. Book a late September – October vacation. Enjoy the cheap fares!
It’s really sad to see commentators cheer when airlines’ bookings turn down. It almost seems as if you’re rooting for these airlines to be liquidated and hundreds of people to lose their jobs.
@Radio – Thanks for reading and for your comment. I am not sure if you’re suggesting that I am rooting for this because I am not. I am always happy to see lower prices like any consumer, but not untenably low prices. And to your point about airline employees, I think you meant more than hundreds of job. In my estimation, a collapse of demand would result in tens of thousands of jobs at stake, not hundreds. Just the United layoffs were slated at 13,000 during the pandemic.
Your harsh language (criticism that’s rather over-the-top as I read it) makes it sound to me like you’re rooting for at least one major airline to be liquidated. I was trying to refrain from engaging in too much hyperbole. That’s the media’s stock in trade.
I will accept your reading of tone with regard to American Airlines, there’s years of dissatisfaction with management there (founded in my eyes, but perhaps not.) But with regard to United, they claimed they needed billions to save jobs then instead of returning that good natured emergency loan, they placed the second largest order for new equipment in the history of the United States. Those with a calculator at UA headquarters in Chicago will note that the bill for those jets won’t come for a while but neither will repayment of the taxpayer loan either. And frankly, it’s just really, really, not a good look. That’s especially true when there is still a desert full of non-UA equipment that is newer and nicer than some current aircraft available for deep discounts – that’s really not good stewardship.
That said, you’ve twice mentioned that I was suggesting some sort of liquidation and even after re-reading the piece, I can’t find from where you’ve inferred that. A liquidation would be incredibly unlikely for a variety of reasons in the US, a merger – perhaps, but again, I am not sure where I approach that topic either.
I’d rank the slow bookings from highest to lowest as 1. Summer is over, kids are back in school. 2. Delta variant has stopped the already limited business travel plans for fall. 3. Mask mandate extended into 2022 is making people think twice before booking fall and winter trips right now. It’s not the sole reason but enough to make people delay flights, especially long haul. 4. Must of the world is locked down or headed back there. 5. Bad experiences with airlines such as IROPs, bad press. 6. Places like Hawaii discouraging tourist travel is also on the list. Once the airlines start pushing for 100% vaccinated flights and the economy continues into massive inflation this is going to be a long winter for airlines I have a feeling.
Ironic that United retained staff, pilots, and functional planes. They have not cancelled hundreds of flights each week this Summer. And they have fewer recorded incidents of acting out. And, they will be requiring employee vaccinations. It all adds up to the only airline I will (continue) to fly.
Our company travel is at a bare-bones, critical-only level for one reason right now: the mask mandate. We have hundreds of people that normally travel several times a month, often on long cross-country or trans-pacific flights, almost always purchased within 7 days, and very often in F class.
Our business leaders have been very vocal about their disdain for masks on long flights, and have been transparent about the fact that we will remain largely grounded until masks become optional. Our travel budget is measured in the millions, and I can’t imagine that we are the only one sitting things out until sanity returns.
And yet millions of truly essential workers are wearing their masks each day, in rough conditions and much longer days, and somehow soldier on.
Playing a very small violin for the horror of wearing a mask while flying in domestic F.
There’s no violin to play, as these frequent fliers are simply sitting it out. These aren’t the people that get into screaming matches with FAs or throw tantrums on planes. These are seasoned travelers (likely all vaccinated) that buy the high-margin tickets which account for the bulk of the mainline’s profit. And while I have great respect and appreciation for essential workers that have to wear masks, it is a matter of fact that they are not the profit center for the airlines.
You can roll your eyes and make all the snarky comments you want, but everyone connected to or following the industry knows that business travel is the main profit driver and it won’t be back until the masks are optional. If you want an even better example of this, check out what happened to participation and attendance at some of the professional trade shows in Vegas since the mask mandate went back in place. Brutal. We have one coming up in October that we downsized from 260 attendees to 14 – just enough to (sort of) staff a booth.
It will be very interesting to see what happens now that 2021 is shot for business travel AND the spigot of bailout money is closed. My friends in our travel department are predicting that holiday season fares are going to have to spike at least 20-30% higher than normal to help offset the loss. With stimulus/extended unemployment money running out, we may be approaching the point at which leisure fares are high enough to stave off the worst of the….novice fliers…we’ve seen lately.
See you are trying to be the bully while degrading Americans spending their money while sitting in coach. Why do you think you are so special?
I don’t believe I’m special and I don’t see how I am bullying or degrading anyone. I simply stated a couple facts and then made some predictions based on those facts.
The facts: 1) High-margin business travel won’t meaningfully recover until there is a return to some sort of normalcy (optional masks, normal in-flight service, etc.). 2) There will be no more bailout money coming from the government. Not with an election on the horizon and the horrible opinions of airlines right now. 3) Leisure travel will continue to be the only real source of revenue until at least February.
My opinions and predictions: 1) Leisure travel can’t sustain mainline carrier profits, at least not at current fares. 2) With mask mandates back on the west coast and in Vegas, leisure travel has already declined in most places except Florida, which has increased (this is actually a fact and not an opinion) which makes it harder to raise fares for many routes in the current environment. 3) I believe the only way for airlines to make it through 21/Q4 and 22/Q1 is probably to dramatically increase fares when/where they have a chance, and that will be throughout the holidays. 4) I believe those increases will be high enough that many of the inexperienced fliers with tight budgets that have been packing airlines all year may be priced out of the market for late fall/winter travel.
I think it’s pretty clear that the airlines were betting big on a healthy return to business travel in the fall (you can find numerous statements from airline execs to back this up if you search). For obvious reasons, most wouldn’t say the words “end of the mask mandate” out loud, but when they reference “mid-September” or “after 9/13”, it’s pretty clear what they meant. Whether it was reading the political tea leaves or just an overdose of hopeful optimism, I don’t think they really had a plan B. It will be interesting to see what travel industry partners like Amex do now. Suddenly that big annual fee increase on Platinum doesn’t look like such a good idea.
My predictions may turn out to be right or they might turn out to be wrong. I’m not sure what part of this was offensive in any way.
If you think the airlines are slowing down now, just you wait until our Dear Leader bans all the horrible unvaxxed second-class citizens. My guess is that they’ll ‘slow down’ to an absolute stop at that point.