Reflecting On 2021: The Return Of Air Travel

Early 2021 offered a very limited view into the recovery. As air travel started to come back, the airline industry responded in different ways. Leisure travel led the way, but business travel also started to come back. To get a sense of how air travel returned and airlines managed that return, Simple Flying spoke with a series of executives in the US to talk about what things were like a year ago.

Leisure travel led the way

Leisure travel had been more resilient through the recovery than business travel. New, flexible work practices coupled with a rise of remote learning and a yearning to visit outdoor leisure destinations led airlines to plan their summer 2020 capacity around those hotspots. However, by the end of 2020, airlines faced the promise of the vaccine rollout, as Daniel Shurz, SVP of Commercial at Frontier Airlines, explained:

“We were building our plan for 2021 with the idea that vaccines would roll out. We came to the conclusion, based on what we thought the calendar was, that March spring break would be the sort of first big uptick in demand.”

Early 2021 seemed to be a continuation of 2020. Airlines kept their schedules relatively light, though every airline kept their eye on March, with spring break serving as a kind of bellwether for what leisure travel would look like.

Another major low-cost carrier, Spirit Airlines, also had a bullish outlook on 2021, as John Kirby, Vice President of Network Planning at Spirit, discussed:

“I remember sitting here about a year ago, thinking about 2021…we basically had a plan to grow out of this. We we were bullish on 2021. We know in history that typically low-cost carriers do very well coming out of industry crises.”

March proves to be a success

Things significantly improved in March of 2021. With vaccinations continuing to roll out and travelers more confident to book, traveler numbers grew significantly:

Traveler numbers came back, but so did opportunities in the airline industry. Grant Whitney, Chief Revenue Officer at Sun Country, discussed how the airline benefited from its broader plans in the industry more than just seeing passengers step onboard planes again:

“There was an inflection point in that period, where the demand really strengthened. March was quite strong,  on a destination specific basis, and for us, that was a really interesting time, because that was coincidental to when we did our IPO. We still feel very good about the future for us, but I think the IPO was really a very critcal point for this company to put its best foot forward and the market supported, backed up what our business case, our growth proposition was by having a really succesful IPO.”

Sun Country’s initial public offering (IPO) was a success and came as the industry saw a significant rebound. Airlines were adding thousands of flights seemingly every day to try and keep up with demand that was not just strong for the season but was resilient through to the summer.

Coastal demand makes a comeback

Not too long after that, coastal demand started to make a comeback. These primarily business-oriented markets had traditionally lagged behind other markets, though started to make big comebacks. In New York City, Chuck Imhof, VP of Sales – East at Delta Air Lines, discussed how the airline saw its base of customers return:

“New York has a high concentration of consulting firms and investment bankers. So it wasn’t really until their customers were willing to see them that we started to see an uptick in travel. I would say probably May/June, we started to see some of that gap close to the system, and so much of their ability to travel was driven by their customer base.”

Business travel relies not just on the corporation looking to send employees on the road, but on customers or operations willing to receive those employees, and that was part of the delay that Delta saw in the coastal markets, even if leisure travel started to make a return quicker than business. Mr. Imhof also stated that Boston returned a little quicker than New York, given the concentration of healthcare, insurance, and some tech sectors that kept humming along during the crisis and returned to travel.

Airlines also tried to do some more interesting things with their network. American, for example, decided to try point-to-point flying on some leisure-oriented summer routes. American particularly added some weekend flying to cities out of Orlando. Brian Znotins, Vice President of Network and Schedule Planning at American Airlines, discussed how the airline thought about those additions.

Considering the overall fleet, American Airlines was looking at two options. It had aircraft that were traditionally dedicated to domestic business markets, but with business travel down, American had a different situation on their hands:

“If my profitable DFW-LaGuardia isn’t profitable and I’m going to park that airplane, the opportunity cost for that airplane is really low to try an Orlando spoke flight and maybe we’ll learn something with that Orlando spoke flight that will not only benefit us during the pandemic because of demand, but it may benefit us in the future if it proves to be good.”

The next phase: international

While the return of domestic travel was a huge boost to US airlines, the return of international travel was something that airlines needed to boost their financial fortunes and start to truly come out of the crisis. Over the summer, things started to reopen abroad, particularly in Europe.

As a result, airlines started to turn their attention to serving the international points as they reopened. Delta Air Lines add Dubrovnik and bet on the strength of its customer base to do so. Over the summer, international started to come back strong, as Mr. Imhof spoke about with Delta Air Lines:

“As soon as the restrictions loosened in, in Europe and around the globe, we saw the pent up demand. Certainly, we saw bookings to London, throughout all of Europe, skyrocket once those restrictions were lifted.”

However, American Airlines took a slightly different approach to reflecting on the summer:

“We were happy that things reopened, but even then, you know, you look at our Athens service and it did okay, over the course of the summer of 2021, but it wasn’t fantastic. And so things are opening up, but we really didn’t see  planes get truly fall like yield that that mattered until 212FF got lifted in November. That was really the big change.”

While Europe reopened for Americans, the United States did not reopen to Europeans until November. As a result, planes were relatively full going to Europe, but coming back, planes were relatively empty as carriers could only fly US citizens, permanent residents, and some international travelers who met exemptions.

Ending 2021: a good year with some uncertainty

Overall, 2021 was a year of recovery, as many airlines recognized and publicly discussed. However, it was filled with its own challenges. Airlines started to recognize the disruptions associated with trying to get crews and planes back in place, ramp up hiring, and fly enough to meet demand.

There were plenty highlights. American Airlines returned to Israel. Delta Air Lines bet big on Boston. Spirit added many new routes and cities. Frontier ordered new planes and entered new destinations. Sun Country came off a successful IPO and expanded significantly. Overall, the world looks different in 2022 than it did in 2019, but with plenty of lessons learned from 2021, the industry is looking ahead and ready to see what comes next.

Source: https://simpleflying.com/return-of-air-travel-reflections/