Bookings have increased, Frontier’s about to go public and new pilots are being hired as the airline industry rebounds

Bookings have increased, Frontier’s about to go public and new pilots are being hired as the airline industry rebounds
Source: Shannon Stapleton, Reuters
Vaccines seem to be making people more comfortable with traveling, which is something that airline executives like too because it means that it’s less likely people will cancel their travel plans due to COVID-19 flare-ups.

What happened to the airline industry during COVID-19?

  • To put it mildly, the airline industry got beat up pretty badly from the pandemic.
  • Between travel bans, lockdowns and public messaging urging Americans not to travel, few people wanted to or could travel.
  • And the economic recession meant that many people couldn’t travel even if they had wanted to.
  • According to the Transportation Security Administration (TSA), the number of passengers who flew on April 14 of last year was only 4% of what it had been on the same day in 2019.
  • Just a month later, around two-thirds of passenger planes were put into storage due to the decreased demand for flights.
  • Before the pandemic, the global airline industry expected 2020 to be its biggest year ever, on track to generate US$872 billion in revenue.
  • Instead, it brought in only US$328 billion.

What about the stimulus packages? Weren’t they supposed to help airlines?

  • Stimulus packages helped airlines stay afloat for sure, but they were also largely aimed at keeping people employed.
  • In the United States, there have been three stimulus packages.
  • In the first, airlines got US$25 billion in loans that they will eventually have to pay back under a low interest rate and another US$25 billion in grants that had to be used to keep people employed.
  • In the second, airlines got US$15 billion, again provided with the guarantee that airlines wouldn’t enact furloughs or lay anyone off.
  • In the third, airlines got another US$14 billion and airports got US$9 billion to help enact better COVID-19 protocols, like social distancing and regular sanitization.
  • Other countries gave stimulus money to their airlines as well.
  • The EU gave European airlines more than EU€30 billion in bailouts.
  • In Asia, Singapore Airlines got around US$13 billion.

Are things better now?

  • In the US at least, the answer is yes.
  • Several major airlines in the US have said that future vacation bookings are starting to pick up.
  • “We believe the worst is now finally behind us,” said Gary Kelly, the chief executive officer of Southwest Airlines Co. “I’m relieved, I’m optimistic, I’m enthused, I’m grateful.”
  • Vaccines seem to be making people more comfortable with traveling, which is something that airline executives like too because it means that it’s less likely people will cancel their travel plans due to COVID-19 flare ups.
  • The biggest indication so far that airlines like American and United feel confident is that they’ve announced they’ll be hiring new pilots for the first time since the start of the pandemic.
  • Also, in March, budget airline Frontier said that they would be going public.
  • Frontier had previously filed for an initial public offering (IPO) well before the pandemic, but they withdrew their application after the pandemic hit.

So everything is back to normal?

  • Not quite.
  • Airlines have made it clear that the increase has mostly been caused by the increase in leisure travel.
  • Business travel hasn’t yet rebounded the same way and the general expectation is that it won’t rebound until businesses bring their employees back into the office, something expected to happen later this year.
  • International travel isn’t doing that well either.
  • Lots of international borders are still closed to visitors due to global hot spots and increased case numbers in countries like India are leaving countries feeling a bit skittish about getting rid of those restrictions for now.
  • Both of these segments of the travel industry will have to return in some capacity before the airline industry can successfully get back on its feet again.

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