US airlines thrown a curveball as consumer habits change post-pandemic
Send a link to a friend
[May 10, 2023] By
Rajesh Kumar Singh
CHICAGO (Reuters) - Shifting travel patterns by consumers in a
post-pandemic world are forcing airlines to guess at what is the "new
normal" as they seek to adjust by cutting flights, revamping networks
and packing even more passengers into planes.
Even as the thirst for travel remains strong, the changing trends are
driving up airlines' operating costs and hurting revenue.
They are also fueling worries about the strength of travel spending amid
growing economic uncertainty, leading to a 6% drop in airline shares
from their highs in January.
"Today's flexible work conditions are helping to drive changes in
ticket-purchasing patterns." Citi analyst Stephen Trent said. "Let's get
used to it."
No-show rates have gone up as customers are changing their travel plans
more frequently than before.
Travel demand has also softened on days in the middle of the week, but
has strengthened on peak days. A Reuters analysis of U.S. Transportation
Security Administration data shows passenger traffic this year on
average has fallen 14% on Tuesdays and Wednesdays compared with Mondays,
and then it rebounds on Thursdays.
Similarly, customers are booking trips well in advance compared with
last year, leading to a moderation in ticket sales close to the date of
travel. Citi's data shows that these so-called close-in ticket sales
have moderated for a third straight week, but those for trips in June
and July have improved.
![](http://archives.lincolndailynews.com/2019/Sep/05/images/ads/current/stclara_lda_SPONSOR_090519.png)
Those evolving patterns have forced companies to adjust.
Frontier Airlines decided to slash flights on Tuesdays and Wednesdays by
about 20%, citing weak demand. It marks a shift from last year when some
airlines said midweek was less of a trough.
The Denver-based carrier attributed the change to flexible work
arrangements, where more people are spending two to three days a week
working in the office.
"The most common two days in the office are Tuesdays and Wednesdays,"
said Daniel Shurz, a senior vice president at Frontier Airlines. "That's
why travel for leisure is the hardest on Tuesdays and Wednesdays."
In contrast, the ultra-low-cost carrier last week said its revenue per
available seat mile on peak travel days is stronger than before the
pandemic as customers are willing to pay a lot more to travel on the
other days of the week.
Frontier has eliminated an unspecified number of routes as part of its
network restructuring. It now expects capacity this year to be up
19%-22% from last year compared with previously estimated growth of
23%-28%, resulting in higher operating costs.
Changing travel patterns are also affecting United Airlines, which has a
relatively small presence in the Caribbean and Florida where demand is
usually strong in the winter.
![](http://archives.lincolndailynews.com/2023/May/10/images/ads/current/cindyscottage_sda_SHG_2023.png)
[to top of second column] |
![](../images/051023PIX/busine76.jpg)
A Delta Airlines jet comes in for a
landing in front of the Empire State Building and Manhattan skyline
after flights earlier were grounded during an FAA system outage at
Laguardia Airport, in New York City, New York, U.S., January 11,
2023. REUTERS/Mike Segar/File Photo
![](http://archives.lincolndailynews.com/2017/Jul/22/images/ads/current/rohlfs_lda_072017.png)
Since the Chicago-based carrier's network is more focused on
business traffic, which has not fully recovered to pre-pandemic
levels, its revenue suffered in the last quarter. United last month
said it wants to expand its Florida network.
"We believe demand is just structurally different than it was
pre-pandemic," CEO Scott Kirby said. "We're still figuring out that
new normal."
BUMPING AND OVERBOOKING
Airlines are also seeing a change in ticket sales.
Passengers are booking flights earlier than they did through much of
the pandemic, when travel restrictions and health concerns made
planning in advance difficult.
United said bookings for trips within 21 days are weaker than those
beyond 21 days. Delta Airlines reported that bookings for trips
inside 30 days were declining, while those outside 30 days were
stronger.
Carriers did not share comparative data for last year, but Southwest
Airlines Co said bookings for trips closer to the departure date
have weakened compared to last summer.
Delta Air Lines Inc CEO Ed Bastian ascribed it to an attempt on the
part of customers to lock in the opportunity to travel sooner as
well as elimination of flight change fees by many airlines.
It is having a cooling effect on domestic airfares.
Data from online travel agency Hopper showed average domestic
round-trip airfare declined 15% to $285 in April from last year.
While the fare data has stoked concerns about consumer demand,
Hopper's lead economist, Hayley Berg, said overall spending on
travel has gone up.
The waving of change fees, meanwhile, is encouraging people to
revise plans at the last minute, affecting the proportion of seats
sold, known within the industry as passenger load factor. Delta's
load factor in the March quarter dropped by 4 percentage points from
a quarter ago.
To tackle this problem, Delta has said it now plans to overbook
flights even more. The company declined to share its plans.
The move runs the risk of bumping more passengers off flights.
![](http://archives.lincolndailynews.com/2023/May/10/images/ads/current/LPL_small%201.gif)
Last year, it denied boarding to more customers than American
Airlines and United, U.S. Transportation Department data shows.
However, except for two passengers, all the travelers voluntarily
agreed to be paid to change their flights.
"We had a lot of stability pre-pandemic," Delta President Glen
Hauenstein said. "We're adjusting here into what I would call a new
normal."
(Reporting by Rajesh Kumar Singh in Chicago; Editing by Ben Klayman
and Matthew Lewis)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |