Air transport | The “new normal” smiles on carriers

Markets are in turmoil and inflation is putting pressure on consumers. But people continue to travel. A lot.

Travel hasn’t slowed down much after the end of the summer, and airline executives are now saying they expect shifting and picking up travel trends to keep them busy during the holidays and next year.

“Many of the demand trends we’ve seen emerge during the pandemic are becoming more consistent and shaping our business direction for 2023 and beyond,” American Airlines CEO Robert Isom told reporters and analysts at the conference. a conference call on Thursday to discuss the carrier’s quarterly financial results.

The airline feels “very optimistic about overall demand, even in an uncertain economic environment”, he added. The leaders of United Airlines and Delta Air Lines share this optimism.

One of the main reasons is that the ability to work remotely, full or part time, has allowed Americans to travel more and combine personal and business travel — a transformation that seems sustainable and one that carriers are planning, executives say. .

“There has been a permanent structural shift in the demand for leisure due to the flexibility that hybrid working allows,” United CEO Scott Kirby said on a conference call with reporters and analysts on Wednesday.

Other trends also contributed to the strong financial results of the three airlines during the quarter that ended in September. Lucrative business travel and international travel continue to rebound. And even setbacks have a silver lining: Limits on airline growth have allowed flights to fill.

United reported a profit of US942 million, compared to US695 million for Delta and US483 million for American. All expect revenues and profits in the last three months of the year to be higher than in the same period of 2019, although they will offer fewer flights.

Increased Flexibility, Altered Realities

The benefits of traveler flexibility go beyond revenue. Passengers have started to spread out their journeys, reducing fluctuations in demand between busy weekends and calmer mid-week days. Vacation travel is also spreading out, executives say.

Traditionally, Labor Day weekend marks the end of the summer season, with travel slowing down until resuming for Thanksgiving and Christmas. But the flexibility of working remotely encouraged people to keep flying last month, according to United.

On some days in September, the company achieved as much revenue as during the peak of the summer, helping to make September the third month in United’s history for revenue per seat and per mile flown, a industry standard measurement. And October is on track to do better than September.

Even intraday travel is changing in ways that ease the pressure on airlines. At American, travelers have long preferred flights departing before 8 a.m. or after 4 p.m., so the company has focused its flights on both ends of the weekday. But American said it has begun to see a small but noticeable shift in favor of midday travel.

Customers who combine leisure and business travel also tend to have a closer relationship with the airline, American Chief Commercial Officer Vasu Raja said during Thursday’s conference call. These customers are twice as likely as a typical business customer to sign up for American’s loyalty program and three times more likely to sign up for an American-branded credit card if they don’t already have one. a.

What’s good news for airlines can be bad news for bargain-hunting travelers. Fares have come down from peaks in the spring and summer, but holiday flight prices are likely to start rising rapidly, according to Hopper, a travel booking site.

United said this week that demand between Thanksgiving and Christmas was on the rise, with flight sales during the first two weeks of December ahead of what they were in 2019.

Deals may still be available, if travelers are flexible about when and where they fly. Some flights abroad are notably cheap around Thanksgiving, for example. But even these flights sell out quickly.

Cramped Carriers

Although the recovery in international travel and business travel, two profitable parts of the business, has lagged that of domestic travel over the past two years, airlines say both are now rebounding.

Airlines have struggled to expand their fleets, with Boeing and Airbus struggling to overcome delays in delivering new aircraft. American said Thursday it expects to receive 19 Boeing 737 Max 8s next year, up from 27 previously planned. United expects to receive 179 planes next year, but recognizes there is a risk of delays.

Both carriers argued that the federal government had also limited growth. United said air traffic controllers were overstretched, and American said delays in approving visas for foreigners visiting the United States, compared to 2019, had hampered the recovery.

Stresses on the sector have contributed to operational meltdowns over the past two years, including some over the summer as airlines tried to weather disruptions caused by weather and other factors. But the carriers have made some positive changes.

About 1.4% of flights were canceled last month, down from 2% in August, according to FlightAware, a flight tracking website. Just over 17% of flights in September were delayed, compared to over 22% in August.

After all the hardships the industry has endured in the early stages of the pandemic, this is a moment executives can savor, at least for now.

“We currently see no signs of slowing demand as we head into the new year,” the American Airlines CEO said. “But as always, we will continue to closely monitor the macroeconomic environment. »

This article was originally published in The New York Times.