Summer air travel: Airlines are seeing demand despite rising ticket prices
“People haven’t had access to our product for two years and we won’t satisfy that thirst in a busy summer,” Delta Air Lines chief executive Ed Bastian said Wednesday in a call on company earnings. “There’s still a lot of that demand to come.”
Those trends, accompanied by other industry executives, are another positive sign for an industry struggling to regain its trend after the near collapse of air travel two years ago. The Transportation Security Administration regularly checks more than 2 million people daily at airport checkpoints – almost at levels recorded before the pandemic – but airlines are struggling to accommodate demand amid staff shortages and increasing flight cancellations.
Delta was the first major U.S. carrier to report revenues for the second quarter of this year, but other airlines indicate they expect strong results. In a filing with the Securities and Exchange Commission this week, American Airlines said it expects revenue to increase 12 percent in the second quarter compared to the same period in 2019.
Staffing levels are an obstacle for some carriers, despite the industry receiving $ 54 billion in the federal pandemic bailout meant to keep workers at work when travel demand continues. At Delta, Bastian said the issue is less about hiring than training. The carrier has added 18,000 employees since 2021 and staffing is 95 percent of pre-pandemic levels, Bastian said.
Flight cancellations, delays are stressful for tired travelers
He acknowledged the difficulties on Wednesday, apologizing to Delta customers even as he tries to reassure them that the carrier is doing its best to avoid delays and cancellations.
Copying the work of thousands of veteran employees who left during the pandemic was a challenge, Bastian said, adding that rebuilding costs have become significant. Executives said the carrier is expected to spend $ 700 million on overtime pay by the end of this year – 50 percent more than in 2019.
Delta reported second -quarter revenue of $ 735 million. In 2021, the carrier reported revenue of $ 652 million, fueled by billions of funds for the pandemic. It earned $ 13.8 billion in revenue this quarter compared to $ 7.13 billion in the same period last year.
The benefits come as airlines operate fewer flights as ticket prices rise. some U.S. carriers have cut their schedules, with some ending service to smaller communities while citing a shortage of qualified pilots.
On routes cut off during the pandemic, small airports are on a bumpy flight path
Delta previously announced that it would reduce 100 flights daily between July 1 and August 7, part of an effort to reduce delays and cancellations. Dan Janki, the company’s chief financial officer, said Delta operates a network 18 percent smaller than in 2019. The carrier said schedule cuts will continue until the end of the year with the goal of approaching. at pre-pandemic levels next year.
“We’re going to have the capacity to grow when we’re ready, but we want to make sure we’re focused on serving what we have,” Bastian said.
Peter McNally, an analyst at research firm Third Bridge, said despite Bastian’s enthusiastic analysis on Wednesday, the industry still faces challenges as it emerges from the pandemic.
“The underlying demand for air travel is strong, but it is a less profitable business today than it was before the pandemic,” he said in a statement. “Planning has become increasingly difficult for airlines and the lack of labor is an issue that is unlikely to be addressed any time soon.”
After a chaotic ramp-up last summer, airline executives this year pledged a renewed focus on reliability. Consecutive delays and cancellations over the Memorial Day weekend-and again during Father’s Day and Juneteenth holidays-prompted Transportation Secretary Pete Buttigieg to press airline executives on how they could avoid a similar crisis on the fourth holiday of July.
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The carriers blamed the Federal Aviation Administration, citing staffing shortages at major air traffic control centers.
In a memo to employees after the July Fourth holiday weekend, Jon Roitman, chief operating officer of United Airlines, said the FAA’s air traffic management initiatives have been responsible for 75 percent of carrier cancellations in the past which is four months.
The memo got a sharp response from the FAA, which said many other issues were to blame.
“It is unfortunate to see United Airlines combine weather-related Air Traffic Control measures with ATC staffing issues, which could be misleading to imply that most of those situations are a result of FAA staffing,” he said. said the agency in a statement. “The reality is that many overlapping factors have affected the system, including airline staffing levels, weather, high volume, and ATC capacity, but the majority of delays and cancellations are not due to FAA staffing.”
Airlines have cut summer schedules, aimed at avoiding high-profile meltdowns
The reduction in flight schedules includes a downside for customers.
While data released Wednesday by the Bureau of Labor Statistics showed that airfares dropped slightly from May to June, the cost of a plane ticket has risen significantly since the beginning of the year. According to a June report of data collected for the travel industry by Adobe Analytics, the price for a domestic airline ticket has jumped 47 percent since January.
It also means fewer options for customers when their flights are delayed or canceled, although the price increase has done little to dampen travel enthusiasm. On July 1, the TSA reported that it had screened nearly 2.5 million people-the busiest day for air travel since Feb. 11, 2020.
Among the nation’s largest carriers, American and United will report earnings next week. Southwest Airlines will follow on July 28.