While many United States-based airline CEOs are cautiously optimistic the worst of the travel downturn is behind them, one senior industry figure is more skeptical of a fast recovery. Airlines for America’s CEO Nick Calio is warning against assuming that the industry is bouncing back.
Mr Calio spoke to Yahoo Finance on Wednesday. He said while confidence is returning among the airline industry and travelers, there’s no guarantee this trend will continue.
“The one thing we’ve learned throughout the pandemic is that you can plan, but you can’t forecast,” Mr Calio said. “The patient is still in intensive care, to be honest.”
United States-based airlines report an improving flying environment
Over the past week, most major United States airlines have updated guidance regarding their financial and operational trends. All the airlines say they continue to experience significant negative impacts to passenger demand and bookings due to COVID-19. But the outlook is improving.
Southwest Airlines, United Airlines, Spirit Airlines, and Delta Air Lines have all flagged a better than anticipated domestic flying environment over the next couple of months.
“Revenue for the second half of March 2021 is booking better than we initially expected. In addition, costs are coming in towards the better end of our initial guide,” says Ted Christie, Spirit Airline’s CEO.
“Recent improvements in leading indicators of demand are encouraging as COVID counts decline and vaccination rates accelerate with more customers purchasing tickets in all windows from spring break to fall,” says Delta Air Lines.
Nick Calio hopeful, but hedging his bets
While Mr Calio welcomes the improvement, he doesn’t think it’s necessarily set in stone. The Airlines for America boss acknowledges the travel demand is there, but it depends on many variables, not least COVID case counts declining and vaccination rates increasing.
“It’s hard to forecast,” Mr Calio says. “This virus has been very tricky. We’re hoping that we’re making real progress. If that happens, the numbers will stay up.”
Nick Calio and the airlines he represents will be hoping the numbers do improve. United States-based passenger airlines lost US$35 billion across 2020. Across January and February, revenues at those airlines were down two-thirds compared to the same two months in 2019. Airlines for America says it will take airlines years to pay off the debts incurred in 2020.
“We had our best weekend in over a year this past weekend. All that’s good news. With that said, we’re still flying 50% less people than we used to at this time a year ago,” Mr Calio said.
The stars need to align for a fast airline industry recovery
Airlines for America argues it will take more than an efficient vaccination rollout to get passenger numbers back to 2019 levels. COVID case numbers need to continue to decline. Travel restrictions, including border closures and quarantine regimes, will have to ease. There will need to be a general economic rebound across the United States. Travel markets will have to bounce back, including the all-important corporate travel market. Right now, most pundits expect the corporate travel market to be among the last market segments to recover.
It’s an elusive combination of factors that need to align. While the Airlines for America CEO is pleased things are looking up at the airlines, Nick Calio suggests that the finish line isn’t in sight yet.
What do you think? Is Nick Calio right to be skeptical of a fast recovery across the airline industry? Post a comment and let us know.