People are flying again … sort of
For the first time in weeks, Americans are booking more flights than they’re canceling, and US airlines are adding flights to their schedules.
Southwest and United Airlines both said Tuesday they are pulling back on the deep cuts in their current schedules because of improved bookings.
It’s only a modest improvement, but any good news is welcome in the airline industry, which needed a $25 billion bailout to keep operating. After weeks of essentially zero demand for US air travel, even a small improvement in passenger demand, bookings, and trip cancellations, is a step in the right direction.
Southwest said the number of flight bookings outpaced cancellations in May. Cancellations had been outpacing bookings during the majority of March and April.
It hasn’t changed its guidance for how many flights it expects to have this month, as Southwest still forecasts that the schedule will reduced by 60% to 70% from last year’s schedule for the month. But it raised its forecast for June: It said it expects to have only a 45% to 55% reduction in capacity in the month compared to a year ago.
And the picture at Southwest still isn’t rosy. It said it expects its revenue to be down between 85% to 90% in May compared to a year ago. Southwest predicts it will sell only 25% to 30% of the seats on its greatly reduced schedule of flights this month.
As bad as that is, it’s better than its earlier forecast of a 90% to 95% drop in revenue, when Southwest expected to sell just 5% to 10% of its flights. And it expects June revenue to be down 80% to 85%, selling about 30% to 45% of seats. But it cautioned that the environment remains uncertain.
Southwest, the nation’s fourth largest airline behind American, Delta and United, said its final numbers for April show revenue down between 90% to 95%, and that it sold only 8% of its seats.
Unite also said customer cancellation rates fell, while it expects demand for both domestic flights and certain international destinations to improve for the remainder of the second quarter of 2020. United expects its scheduled capacity for July 2020 to be down about 75% compared to a year ago. But that’s an improvement from the 90% reduction in its May and June schedules.
Still, United warned that it “plans to continue to proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand.”
A slow return
US airlines reported losses of more than $2 billion in the first three months of the year, and that occurred even though the industry didn’t see the fall off in traffic until early March. Much larger losses are forecast for the second quarter.
But as more of the nation reopens for business, the number of passengers passing through TSA checkpoints at US airports is also showing signs of improvements. The traffic Monday at 9.3% of the traffic during the third Monday of May last year. That’s far better than the low point of 3.6% of year-earlier traffic through the checkpoints on April 16.
Southwest CEO Gary Kelly has repeatedly said that he expected air travel would start to return when the country started to reopen. But he said he didn’t know how much, and how fast, that return in demand would take place.
JetBlue Airways also told investors on a recent call that it believes the low point in air travel demand was reached in mid-April, although its executives also warned the recovery would be slow.
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