Delta variant's spread hampers Labor Day air travel, industry recovery

Delta variant's spread hampers Labor Day air travel, industry recovery
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The airline industry’s recovery has been grounded by the recent spike in COVID-19 cases, prompting U.S. travelers to cancel travel plans for Labor Day weekend. 

Air travel neared pre-pandemic levels in July — giving the airlines momentum and optimism for a robust fall season — but flight bookings dipped in August amid soaring infection rates fueled by the highly contagious delta variant.  

The Transportation Security Administration (TSA) screened less than 1.4 million travelers Tuesday, the lowest single-day total since early May, and a 34 percent decrease from the same day in 2019.

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Flight bookings for Labor Day weekend were down 15 percent from pre-pandemic levels as of late August, according to Adobe Digital Insights. 

Tori Emerson Barnes, executive vice president of public affairs and policy at the U.S. Travel Association, said the organization is monitoring forecasts that show overall Labor Day travel declining by 10 percent compared to 2019. 

“The percentage of American travelers with travel plans over the next six months remains strong at 88 percent, though more than 3 in 10 American travelers report that the delta variant is having a negative impact on their travel plans. Domestic business travel sentiment has also declined considerably in recent weeks," Barnes said. “The U.S. economy won’t fully recover until travel recovers, and that includes the return of the critically important business travel and international inbound travel sectors.”

The U.S. reported more than 4.2 million COVID-19 cases in August, making it the fourth-worst month for new infections, and virus deaths nearly tripled from July to August.

The Centers for Disease Control (CDC) Director Rochelle WalenskyRochelle WalenskyOvernight Health Care — Presented by Indivior — CDC panel approves boosters for some, but not based on jobs CDC panel authorizes COVID-19 vaccine boosters for high-risk people, those over 65 FDA authorizes Pfizer COVID-19 booster shot for older and high-risk Americans MORE on Tuesday advised unvaccinated Americans not to travel on Labor Day weekend and warned that vaccinated travelers also need to weigh risk of contracting the delta variant. 

Major airlines have already softened their bullish predictions to account for delta variant fears. 

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American Airlines last week said that its August revenue will be lower than expected due to weak flight bookings and an increase in customer cancellations driven by the rise in COVID-19 cases. 

“This has been and we expect will continue to be a very choppy recovery,” said Vasu Raja, American Airlines chief revenue officer, during an Aug. 25 investor conference.

Last month, Southwest Airlines CEO Gary Kelly said the company no longer expects to be profitable in the third quarter after it increased revenues in June and July. Southwest made significant cuts to its fall flight schedule, eliminating 27 daily flights from Sept. 7 through Oct. 6. 

Strong leisure travel throughout much of the summer buoyed airlines’ profits, but many in the industry were looking forward to the fall season with the hope that business travel would return in full force.

Those hopes may not be realized. While corporate America eyed a return to in-person events and meetings by September, many major companies have delayed their reopening plans due to the delta variant. 

An Aug. 31 poll from Morning Consult and the American Hotel and Lodging Association found that 52 percent of business travelers are likely to cancel their existing travel plans and don’t intend to reschedule them. Around two-thirds of respondents said they would take fewer business trips.

Even after the pandemic is over, 84 percent of large businesses in the U.S., Asia and Europe plan to spend less on travel, according to a Bloomberg survey released this week.

International travel, another major source of revenue for airlines, has also been crushed by the pandemic. It remains 55 percent below 2019 levels, according to industry trade group Airlines for America. 

The Biden administration has refused to lift restrictions on international travel despite tremendous pressure from the travel and tourism industry. The administration previously announced a roadmap to lift restrictions, but has not done so with worldwide COVID-19 cases on the rise. 

Meanwhile, the European Union this week recommended that member countries issue travel restrictions for unvaccinated Americans. More than a quarter of U.S. adults have not been vaccinated against COVID-19.

Airlines had expected that by this point, international restrictions would be lifted, not tightened. 

Some airlines were profitable in the second quarter of the year, but they would have reported huge losses if not for billions of dollars in federal aid. Congress has doled out $54 billion in pandemic assistance to help airlines keep employees on the payroll. That federal aid is set to expire at the end of this month.  

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Katherine Estep, a spokesperson for Airlines for America, said that if not for federal assistance, the airlines’ swift return “would have been dramatically slowed as the impacts of the pandemic would have been far more devastating to our industry and our workforce.”

As it stands now, airlines are not expected to push for an extension of pandemic relief, hopeful that the recent decline in travel is a blip in what had been a relatively strong summer. 

Lawmakers were already critical of the way airlines spent their existing pandemic aid. 

Sen. Maria CantwellMaria Elaine CantwellDemocrats demand more action from feds on unruly airline passengers Delta variant's spread hampers Labor Day air travel, industry recovery Wyden asks White House for details on jet fuel shortage amid wildfire season MORE (D-Wash.), chairwoman of the Senate Commerce Committee, along with Republicans on the House Oversight Committee, have questioned why airlines faced staffing shortages this summer despite receiving federal aid to retain employees.

Even with the decline in flights, airlines don’t expect a return to near-empty airports from the early days of the pandemic. United Airlines said Wednesday that it will carry three-quarters the passengers it did during Labor Day weekend in 2019, but more than triple the passengers it took on in 2020.