Three of the biggest U.S. airlines say demand is weakening for the usually busy Thanksgiving period as the CDC cautioned Americans against traveling for the holiday.
United Airlines, Southwest Airlines and American Airlines said Thursday that they have seen an increase in cancellations and a decrease in new bookings as a surge in COVID-19 cases has rattled nearly every state in the country along with much of Europe.
“We understand that people want to see their family and relatives and do it as they’ve always done it,” said Dr. Henry Walke, who has overseen the Centers for Disease Control and Prevention’s day-to-day COVID-19 response. “But this year we’re asking them to limit their travel.”
The travel advisory complicates what has already been an uneven recovery for airlines that are burning through cash savings and trying desperately to lure travelers back onto planes, despite travel restrictions inside and outside of the United States.
While airports are expecting their biggest crowds of the pandemic during the Thanksgiving holiday, the increase in COVID-19 cases heading into the winter months has chilled demand.
“Certainly with the increase in infection rates really throughout the country we’ve seen a dampening of demand,” American Airlines President Robert Isom said at an airline industry conference Thursday. “It’s too soon to tell how deep and how long there may be a depressed environment, but we’ve seen some weakening of bookings.”
Southwest Airlines warned last week of softness in booking trends. On Thursday, CEO Gary Kelly said the carrier is seeing an increase in cancellations, particularly those close to the date of travel. He said some drop in ticket buying was expected with the uncertainty from the election earlier this month, but those trends appear to be continuing through November and into December.
However, he said there has been an increase in new ticket purchases, too, and that the company is bringing in more business every month, even if the recovery has been uneven.
The COVID-19 pandemic has already been responsible for the biggest financial challenge to airlines in aviation history, with the largest U.S. carriers reporting more than $20 billion in losses in the last two quarters and furloughs that have shrunk the industry. Passenger traffic is down more than 60% compared to pre-pandemic levels, carriers have parked hundreds of planes and those planes that are left flying are only half full on average.
In the last two weeks, major airlines have added thousands of flights to Thanksgiving week schedules trying to capture last-second buyers. This new surge in cases shows how fragile the recovery has been, including major setbacks in summer and fall corresponding with a rise in COVID-19 cases.
CDC officials targeted their warnings around the risks for large gatherings of family and friends for the Thanksgiving holiday, but also cautioned against traveling to communities across the country and carrying COVID-19 between areas.
“As part of our nation’s greatest traditions, we need to consider the safest way to celebrate this holiday admist this critical phase of the COVID-19 pandemic,’ Walke said.
Willingness to travel is at the lowest point since July after steadily recovering in recent months, according to travel data company Destination Analysts.
Kelly warned that Southwest’s business isn’t expected to improve much in the first quarter of 2021, particularly during January when traffic is usually slow. In fact, he said traffic could be depressed for years.
“We need to be mentally prepared for a really tough 2021 and then look forward to a much better recovery in 2022 and then maybe the possibility that things are normalizing back to 2019 levels by 2024,” Kelly said.
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