Executives from most of the major carriers said the recovery in domestic leisure travel is already here. That means yields, which measure how much passengers pay for every mile traveled, are up more than the airlines had been forecasting.
”Domestic leisure travel will be 100% restored by June, with … bookings ahead of 2019 levels and yields essentially recovered” said Glen Hauenstein, president of Delta Air Lines (DAL), speaking at the Wolfe Research conference.
The airlines are being cautions about bringing back to much supply of flights too quickly, especially since the leisure fares booked well in advance of travel are not as lucrative as the business travel booked at the last minutes.
It’s tough to be profitable with just domestic leisure travelers, said Philip Baggaley, chief credit analyst covering airlines for Standard& Poor’s. Yet getting this part of their business back is still important.
“There certainly has been a surge in domestic leisure bookings, and the yields they’ve been able to achieve,” he said. “They ‘re not filling up as much of the planes, but in a very large and important part of their business, they’re doing just fine.”
The airlines expect business travel will start to return once offices that had employees working remotely begin to reopen. It didn’t make sense, of course, to schedule business trips if the customer whom a business traveler wants to meet with hasn’t yet returned to an office.
That’s why airlines won’t be back to the same number of flights this summer as they offered in the summer of 2019 before the pandemic. But they’re seeing strong demand for the seats they are offering, thanks to vacation traveler’s pent-up demand.
The bad news for the vacation travelers is good news for the airlines and their investors. Shares of American (AAL), Delta, United and most other US airlines were up between 2% and 3% in midday trading.