I think we all recognize that demand for air travel has fallen greatly in the past few weeks as a result of the coronavirus situation (both directly, and due to the uncertainty created by it).
Continue reading: Southwest CEO: Drop In Demand Has “9/11-Like Feel”
Share your questions, experiences, and thoughts below.
U.S. airlines are quite big and while i'm sure they will be hit hard by it, I don't think it would be the same thing that happened after 9/11. Delta, United, and American all have over 7 hubs each with flights everywhere. If something was to happen, they would most likely consolidate their operations. Meanwhile, LCC's rely on demand for their profits. I'm sure Spirit and Frontier would be hit the hardest as well as Southwest (and maybe Jetblue). AA sure will have to pick themselves up though to keep fighting. I hope this means AA status goes up in value.
Other interesting tidbit from this is that 'airlines' charges are 8% of all spending on AMEX.
When LUV sneezes, SAVE catches pneumonia. Southwest is down about 20% this month; Spirit, nearly 50%.
Lucky I would love to hear your take if you would hold off or cancel travel booked for March, to regions that are not in the red CDC list.
A world recession is already here. I believe there will be a market crash sooner, rather than latter. The runup from the Great Recession was nothing more than QE by the fed and everyone else in the world followed with their own QE version. In other words, this recovery was not a genuine run up.
As for the COVID-19, it is moving in leaps and bounds (Seattle is a ghost town) and not moving in weeks or months. Although, the 2003 SARS started from almost the same area and is part of the COVID-19 family. If you look at that time-line, the SARS started dissipating in May and into that summer. I am hoping this will happen here.
*Waiting for people to comment "COVD-19 IS A SCAM AND PEOPLE ARE DUMB TO PANIC"
@ Izz -- Just to jump in here, but I think it depends largely on what your coronavirus concerns are.
Ultimately, we can all take precautions wherever we are. Avoiding traveling likely doesn't help as much as avoiding touching your face and eyes. But if you are going to be stressed about illness or quarantine to the point where you wouldn't be able to enjoy your trip, maybe wait a month or so. Otherwise, and if you wouldn't be self-quarantining at home if you stayed in the country, may as well travel.
We are, at this point, not canceling travel to non-quarantined locations.
@ MKLDH
You're right, it's not a scam, but life goes on. But, unless you want to self isolate from now until it's over - maybe the middle of 2021 - just stay the course.
I flew into London from DC a couple of days ago, a total of 60 people on an A330. I will be flying back in a couple of days. Then to ORD and back to LHR a week or so later. Rinse and repeat for a month or so.
Wise, unwise? I don't know. I'll take whatever precautions I can. But sitting in my home in DC will not get my bills paid.
The funny thing is that United, et al have been focused on the corporate traveler able to steer $24,000 or more to their airlines. Everyone else they could care less about. They have ratcheted up requirements with no real improvements but plenty of changes we didn't like.
Guess, what unlike those corporate travelers I'm still flying. I'm still paying for business class tickets to Europe and Asia because I run a small business. And even before this Covid stuff my spend on US airline has been in decline as they have continuously given me less reasons to spend.
So one can only hope that the airlines stop taking our business for granted. But I suspect that at United, American, Delta HQ they are literally running around like headless chickens trying to downgauge as fast as possible. On those remaining aircraft I'm only flying their planes as connecting flights to the foreign airlines I now prefer to fly. But they are not entitled to my business.
i thin that while loads and ticket sales are bad now, one the virus is over everything will return to normal unlike 9/11 where there was long term people being afraid to fly and the economic fallout from the 08 crisis.
Southwest is a purely leisure airline, hence it's impacted more than UA, AA, and DL which have a much wider traffic mix. It won't be long before more cash-strapped airlines fold for lack of cash (Norwegian, Asiana, possibly CX). Watch it unfold. The big US airlines will be fine because despite all the criticism they have learned from the past and created large cash piles to weather storms like this one.
"Are consumers back in the driver’s seat?"
I have family members working in the industry who have been hit hard. It's painful to see. But if anything good comes from this, I hope it's the consumer getting back a little leverage. The past few years we've been getting squeezed, figuratively and literally, by the airlines. Business was good. They could take us for granted.
"much as avoiding touching your face and eyes"
While that is true, the reality is that it is near impossible to do since it is such a habit/reflex thing. It was amusing to see a medical person say the same thing then w/o realizing it, she was touching her face.
And another part of the problem is that YOU (any traveler) may be willing to take the risk but unfortunately everyone around you is also being put at risk since you could come back and then show symptoms only after you have exposed spouses, older parents, young children, etc.
It is really a tough decision and I've traveled after various terrorist events so I'm not easily scared but I've avoided going back east to visit family since my father is in his 80s and I'd hate to be a carrier and get him sick.
I'll be flying SWA on Sunday to MSY for a 4 day trip. I'll see if things are slow on SWA. Honestly I doubt it since that's the start of Spring Break here in DFW area.
Just checked SW prices to CUN, no cheaper than normal. If they are seeing this type of drop in demand you would think they would lower prices.
Unlike in 2001 I see domestic travel quickly recovering once the virus is contained and goes into hiatus in the summer like the flu. People who travel for work and family will still travel domestically. Internationally that is a different story. Big no to East Asia for 2 years at least and probably no cruise or Europe for a while.
I saw this week where analysts expect UA's profit to remain on target as they are taking action to match capacity with demand and oil prices are way down. Also, 52 week target price for UAL remains at 104 unchanged from before CV.
Hope so! I am a UAL stock holder hanging tight in addition to a 1K
The sentiment of most I talk to, as well as mine, is the complete unknown factors involved with travel and Coronavirus. I am not as nervous about getting it as I am about getting quarantined in some odd place. I was supposed to go to Anchorage next week via Seattle. I postponed the trip. More so as the thought of being quarantined in Alaska some 4K miles from home is not something I want to risk...no matter how low the odds.
Further, just watching the debacle unfold with the Fed managing things is not instilling much confidence in the public. The cruise ship off S.F. is a perfect example. That is a humanitarian crisis waiting to happen and no one knows what to do.
At least at home I have a semblance of control over care. Once I am "out there" all bets are off.
I'm curious to see if companies who've restricted travel will now slash travel budgets once they realize they can still conduct business and save money by using teleconferencing services. That has potential to really hurt the US3 but would depend on how many companies do/realize this and what percentage of income the US3 get from said biz travelers.
Southwest is a purely leisure airline, hence it’s impacted more than UA, AA, and DL which have a much wider traffic mix. It won’t be long before more cash-strapped airlines fold for lack of cash (Norwegian, Asiana, possibly CX). Watch it unfold. The big US airlines will be fine because despite all the criticism they have learned from the past and created large cash piles to weather storms like this one
Totally false, WN is not.
Roberto Cusato - Conventional wisdom says business travel has been hit much harder than leisure travel, what makes you think it's the opposite?
Callum - That is not correct as of this moment but people expect it will be true soon. Either way Roberto has no idea what he is talking about, WN has tons of non-leisure traffic
i stopped flying SW (rendering my companion pass and lots of miles useless for now) since Nov when they were in the news for safety concerns (not validating and confirming inspections of purchased used foreign aircraft, possibly flying millions of passengers in aircraft not properly certified as airworthy, plus weight and balance infractions, and the FAA also getting their hands slapped by congress for not performing adequate oversight of SW’s safety)
it didn’t get a ton of coverage but i won’t fly them again unless their “safety culture” actually concerns itself more with safety and less with profits. don’t know if this has affected what SW is seeing for demand.... as i mentioned these reports didn’t seem to get much coverage
@Simon
Because AMEX charges airlines 8%
Don't think your perks and rebates come from nowhere, TINSTAAFL
For comparison, in most cases VISA / MASTER charges them 3%
Four flights on Southwest in two days. 4 out of 3 I was stuck in a middle seat on a sold out flight. I guess it depends on the location where you’re flying.
Particularly with Covid-19 the ridiculous spending requirements to get status like 1K on United are a joke. I have zero loyalty now. I will take the flights with the best pricing and service. Lifetime Gold is enough. My main worry traveling is quarantine, which puts many countries in Asia off limits.
Pundits always say debt is good when the economy is well. Then all the sudden they blame everyone for having so much debt when the economy suffers. Even if the virus issues die down in a week, investors are seeing how much debt the conglomerates have and I believe this virus crisis is going to spill over into a debt crisis. Just my two cents but personal credit card debt is out of control, student loans, mortgages, car payments, etc....and with low interest rates for so long corporations borrowed like a drunken sailor. No, the nonstop up up up of wall street days are over. We are going in for a hard correction.
So, the airline business, being driven by the same rules of supply and demand as every other business on the planet, and having to operate large inter-related schedules of flights, whether the planes are full of revenue passengers or empty, we can expect to see lots of discounting and promotions to fill up all those empty seats, right?
But, no, despite the catastrophic descriptions of the fall-off in bookings, the airlines are most definitely in no rush to sell off those empty seats.
So, either the actual revenue fall off is not nearly as dire as reported, or the airlines are more worried about giving travellers a break on fares than they are about flying planes with huge numbers of empty seats.
What I have heard generally is it isnt the virus per se that keeps folks from traveling. Plenty of sensible precautions you can take, plenty of advice on how to look after yourself whilst traveling. No, the underlying theme I hear is largely the fear of getting quarrantined at destination or enroute, OR airlines canceling flights and not being able to get back when they need to be.
Oddly enough, in the UK at least, trains still seem to be full. I dont know what its like over on the Continent.
Roberto Cusato- How can Southwest be "purely leisure airline" ? Do you mean workers do not fly the fastest routing always ?
@Janet - completely agree with you. After being 1K for 10 years (and 1MM) and always having the spending limit of 15K in mind, I now have given up almost completely on UA and now fly Delta and international airlines as a free agent. Amazing experience realizing what I missed out on all these years!
@Bert @Janet exactly. Don't fly much Delta though (unless the fare is amazing). It's really cool to see how different the airlines are. This is another area were United has gotten very lazy. Pitty the person flying and only having the same meal choices because the airline can't be bothered to change the menu more frequently.
@J Exactly. I've been looking at a lot of (semi-necessary) flights I need to make and the cost has not come off at all, if anything the price has gone up, which means I put off the trips that are absolutely not necessary. That doesn't make sense to me... why wouldn't you drop prices to fill or at least semi-fill planes?
@MKLDH Well the hysteria is certainly a scam and bogus. Personally I'm more concerned about the NRA virus as an American living in NYC. I'm more afraid of being taken out by a stray bullet than corona virus.
I really don't know why Americans as a group are buying into the hype to be honest. With the number of deaths due to heart disease I think it's pretty disconcerting that the lines aren't non-existent and the stocks haven't plummeted for KFC, Popeyes , McDonald's etc.... It's astounding what people allow themselves to be panicked by.
@Shauna. I am sure the thousands trapped on the Princess Death Cruise off San Francisco might argue a bit with your "scam and bogus" argument. As well would love a bucket of fried chicken right about now.
People are dying. Many more will. Your calling it a scam and bogus strikes of Trumpism "fake news" and will only make it worse as you try and encourage people to wear rose colored glasses and be oblivious to the fact that this moment in history is anything but normal.
The drop is real. On a flight that is usually full, a got a full row of 3 to myself. Most rows were full. Maybe a quarter of them had 4 of 6 seats full. Just a few rows had only 2 of 6, maybe 4 rows.
@Shauna:
Choosing to 'dine' at KFC, Popeyes, McDonalds et al, is a choice one makes. Contracting the Coronavirus is not.
Well, I just had the best sleep possible on my recent NRT-SFO United flight. I was in economy with 4 seats to myself on a 777. I had more room for my feet than up in business class (not cramped in the tiny cubby hole they call business). In fact I would say all the economy passengers were horizontal for this flight. It was wonderful and reminded of flying TPAC routes of the past.
I also flew HKG-NRT on ANA's 767 and I counted 23 passengers.
It's a wonderful time to fly.
Flew on Sunday out of DAL. Line at security was non existent at 9:30 am, but at the gates all full. Our flight to MSY was completely sold out. And MSY new airport was crazy busy. This is not 9/11 like.