By Natalie DeCoste
Many industries have been hit hard by the Coronavirus pandemic but seemingly none as much as the travel industry. But now with vaccination rates on the rise and restrictions lifting it looks like travel is on the rebound.
Airline tickets prices for summer travel have shot up about a week after President Biden delivered a speech saying that he hopes everyone can be with their loved ones by July 4. Because airfare is routinely purchased weeks or months in advance, it can be a good measure of how the general public is feeling about the pace of recovery.
“Starting in July, summer 2021 fares are looking increasingly like summer 2019 fares. If anything, supply is only going up as we head into summer. High prices suggest planes will be full,” said Kevin Williams, a Yale economist.
At the start of the year, the outlook for the airlines had looked bleak. With Covid cases surging and the death toll high, few people were looking to travel. But now, the interest is returning with Delta saying that its net sales, the difference between new ticket sales and refunds, doubled from January to March.
In early February, the average price of a ticket for July travel was $278. By April, the average price for a flight in July grew 5% to $293.
Another indication of the uptick in demand is now airlines can start to charge premiums for last-minute bookings again.
Despite the hopeful outlook for the industry, airlines are still financially stressed and reporting losses.
Delta reported a net loss of $1.2 billion for the first quarter on Thursday. This is the company’s fifth straight quarter of losses. Nevertheless, Delta said that its operation began generating cash again last month for the first time in a year, and passenger revenue for the month of March jumped 50% from the previous month.
Domestic leisure bookings are currently at 85% of their pre-pandemic levels which puts them on track to hopefully put Delta and the other airlines in a position to turn a profit this summer.
“It’s clear that our business is turning the corner. We’re into an active recovery mode,” said Delta Chief Executive Ed Bastian.
Southwest Airlines is also preparing for an uptick in travel. The company is recalling all flight attendants from voluntary extended leave beginning June 1. American Airlines is also facing a brighter future where, as of late March, the airline had returned to 90 percent of its 2019-level bookings. American Airlines has also reported that its operation has stopped losing cash in March, excluding debt.
“This crisis is all about demand. It’s not like the oil price crisis, where the challenge was about costs. This crisis originated on the demand side, and now you see supply and prices responding to new demand,” said Vikrant Vaze, an associate professor of engineering at Dartmouth College who studies the airline industry.
