LONDON – The fight against the low demand for international flights doesn’t want to blow over as corporate travel retains the most affected position. The latest move by the American legacy airlines was to deploy twin-aisle aircraft on domestic routes.
As stated by various sources business trips are still down and may never even return to pre-Covid levels (Bouwer et al., 2021; Walt, 2021). Therefore, it becomes pivotal for airlines to find their balance point, simply put, to be conformed to a new model required by the market.
The current context sees leisure firms in the lead and tends to put FSCs on a slippery slope as they mostly rely on corporate travel.
According to a recent analysis by the Global Business Travel Association, despite the rapid distribution of the vaccine, the return of business is only expected in 2025 (GBTA, 2021), while leisure flights (Visiting Friends & Relatives included) show a recovery close to Eurocontrol’s most optimistic forecast (Eurocontrol, 2021).
Cirium schedules data reveals that two American majors, American Airlines and United, have started operating wide-body aircraft on domestic routes. For instance, AA flies from Miami (MIA) and both New York (JFK) and Los Angeles (LAX) with the Boeing 777, United operates JFK-LAX with the 787 (Cirium, 2021).
By contrast, Cirium says, Delta has decided to continue deploying its widebodies on the long-haul, despite the international demand in April 2021 was 87.3% below April 2019 (IATA, 2021).
Another sticking point is the number of aircraft parked or stored during 2020 due to the coronavirus. To date, fleets of legacy airlines, civil aviation database Planespotters.net shows, are almost entirely active.
Nevertheless, it should be noted that during the pandemic airlines withdrawn a remarkable number of wide-body aircraft, including 18 Delta Boeing 777s (Delta, 2020), 16 767s, and 24 American Airlines Airbus A330s (AA, 2020).
Obviously, the withdrawal of many jets results in an unavoidable drop in flights. First, because replacing sixty widebodies is not an immediate process. And it is a trivial observation.
Secondly, U.S. borders are still banned for passengers from crucial countries for the region, such as the European Union, China, Brazil, and South Africa. Due to the lack of international flights, the White House is under pressure to slacken anti-Covid measures (Kelly and Alden, 2021).
In the confusion generated by the pandemic that, in one way or another, forced U.S. legacy airlines to retreat, two new low-cost carriers found their place: Avelo Airlines and Breeze Airways.
The first one, based in Hollywood Burbank, flies 3 Boeing 737-800NGs to tourist destinations on the West Coast, but it plans to extend its operations from a new base in New Haven (Connecticut).
However, the budget airline has already trimmed some destinations initially announced due to “insufficient demand” and promised to reassess them in the summer of 2022 (Wolfsteller, 2021).
The second one, which operates a dozen of Embraer E-Jets, is positioned on the East Coast with focus cities Charleston, Tampa, and Norfolk. Breeze has placed an order for 80 Airbus A220-300s expected to be delivered from October 2021 (Snow, 2021).
But the two new players on the U.S. scene are only the tip of the iceberg of a process that began decades ago.
The entry of ultra-low-cost airlines, which have as their sole aim the lowering of air ticket prices, such as Allegiant, Frontier, and Spirit, had already curbed the expansion of legacy firms.
Now, the gripe of the battle between budget and full-service carriers is not strictly related to the price – that is still a key value for leisure – but product differentiation.
It’s often difficult to distinguish a premium experience from a low-cost one (Pallini, 2020), and it’s on this point that solid prospects must be built for American carriers, especially considering today’s situation where aviation has been weakened by an unexpected phenomenon.
Earlier this month, United revealed its “Next” plan dictating the line for a post-pandemic growth. The Chicago-based airline announced the single largest order in its history, including 50 Boeing 737 MAX 8s, 150 737 MAX 10s, and 50 Airbus A321neos (Hemmerdinger, 2021).
From the carrier’s perspective, the return to a profit with business customers is only feasible by offering services instantly identifiable as premium. United’s watchwords are larger aircraft – which will replace 50-seat regional jets -, more spacious seats and a new inflight entertainment (Josephs, 2021).
“Our United Next vision will revolutionize the experience of flying United as we accelerate our business to meet a resurgence in air travel,” said United CEO Scott Kirby. “By adding and upgrading this many aircraft so quickly with our new signature interiors, we’ll combine friendly, helpful service with the best experience in the sky, all across our premier global network” (United, 2021).
In the end, the very high competition in the United States must be accompanied by a strong differentiation of products where, if underestimated, would lead to a risky homogenization for the survival of all airlines, legacy ones in particular. It’s up to them to change the tide.
- Alden, E. (2021). As Europe Reopens for Travel, North America Is Staying Shut. Foreign Policy. https://foreignpolicy.com/2021/06/26/travel-borders-covid-pandemic-europe-north-america-us-canada-mexico-tourism-vaccinations/
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- Bouwer, J., Saxon, S., and Wittkamp, N. (2021). Back to the future? Airline sector poised for change post-COVID-19. McKinsey & Company. https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/back-to-the-future-airline-sector-poised-for-change-post-covid-19#
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- Pallini, T. (2020). I flew on 6 US airlines during the pandemic from the largest to the cheapest and found paying more doesn’t guarantee a better, safer flight. Business Insider. https://www.businessinsider.com/flying-on-american-and-spirit-during-the-pandemic-comparison-2020-8?r=US&IR=T
- Snow, J. (2021). The new low-cost airlines taking off this summer. Fortune. https://fortune.com/2021/05/21/brainstorm-reinvent-low-cost-airlines-breeze-airways/
- United. (2021). https://hub.united.com/united-adds-270-boeing-and-airbus-aircraft-to-fleet-largest-order-in-airline-s-history-and-biggest-by-a-single-carrier-in-a-decade-2653586391.html
- Walt, V. (2021). Business travel may never fully recover from COVID-19, analysts warn. Fortune. https://fortune.com/2021/04/20/business-travel-covid-19-aviation-travel/
- Wolfsteller, P. (2021). Two months after launch, Avelo cuts destination cities, raises prices. FlightGlobal. https://www.flightglobal.com/strategy/two-months-after-launch-avelo-cuts-destination-cities-raises-prices/144501.article