Airline Business Weaker Due to Delta Variant

Aug 16, 2021

While summer traffic has been promising, there are troubling signs that the profit season for airlines may have peaked early – due to the continuing Pandemic.

TSA bookings year over year show positive growth throughout commercial aviation. Compared to 2019, the year before the pandemic began to ravage airlines, today’s air traffic is 80% of what it historically should be for August. 

However, it may be too early to declare the pandemic behind us. With the Delta variant clogging hospitals with unvaccinated Americans, airline travel is showing severe signs of weakening. For the third straight week, airline bookings are down and far weaker than in 2019. System bookings are currently 53.8% lower than 2019 levels. That could show that the most profitable quarter for airlines may be shorter this year than the historical average. If the trend continues, many airlines will not have enough summer profits to get them through the rest of 2021 as they might have wanted. 

The cause of the general malaise within airlines can be attributed to the continued COVID-19 pandemic. 

Lucrative business and international travel is down at all airlines and show few signs of a quick comeback. Popular destinations for American air travelers, including France, remain on the CDC’s “Do Not Travel” list. Hawaii is restarting restrictions on travel to the islands, including group sizes. Several other resort destinations are asking visitors to leave as soon as possible, while others extend border closures. All of which are challenges that airlines do not need right now. 

Southwest attributed a general slowdown “close-in reservations” for August to the Delta Variant in an SEC filing last week. Delta, Hawaiian, Air Canada, United, and Frontier have imposed some vaccine requirements for employees. 

recent study of air travelers conducted by Longwoods International is not helping relieve fears of long-term, pandemic-related slowdowns for air travel. According to the research, a shocking 67% of communities want to shut their doors to tourists and their money. This number is high and growing; two months ago, it was at 47%, an already incomprehensibly high figure for areas dependent on tourist revenue. The study also found other indicators that COVID-19 concerns are a serious threat to aviation. 

30% of respondents reported that they would rather drive instead of fly to their next travel destination, with 25% choosing domestic rather than international travel. The number that said COVID-19 concerns would “greatly” impact their travel decisions over the next six months was a staggering 34%. 

If all these indications of weakening air travel demand are accurate, airlines may have hit the high point of their profit season. 

Recent Articles