Delta CEO Ed Bastian warned travelers this week not to expect a rapid return to travel as normal, saying it could take years before travel fully recovers from coronavirus.
“We believe that it could be up to three years before we see a sustainable recovery,” Bastian said during a Wednesday earnings call. “Our recovery will be dictated by our customers feeling safe, both physically and financially.”
Delta and airlines around the globe were in the midst of a decade of unbelievable growth, launching new nonstop routes to exciting places while piling up profits. And travelers benefited from with what we called the golden era of flight deals, as full planes, cheap fuel, and competition from low-cost carriers drove airfare down to record lows.
Then coronavirus hit. And it flipped the airline industry and the entire world of travel upside-down almost overnight.
Even after shrinking into survival mode by cutting flights, grounding planes, and taking voluntary furloughs from nearly 40,000 employees, Delta lost more than $500 million in the first three months of 2020. It's the Atlanta-based airline's first quarterly loss in nearly a decade. And the next quarter is poised to be much, much worse.
Why? The number of travelers in the U.S. has dropped by nearly 96%, according to data from the TSA. No one is traveling.
“Demand for near-term air travel dropped to almost zero in a matter of weeks,” Bastian said.
When Will Travel Start to Rebound? And What Will it Look Like?
Bastian's grim prognosis doesn't mean travel won't resume for another three years. Instead, airlines and travel companies are settling in for a long, slow recovery.
After more than a month of cratering numbers, airlines believe they've hit the bottom of the coronavirus crisis. For the first time in weeks, Bastian said Delta is finally selling more in new tickets than it's shelling out in refunds.
Still, Delta and other airlines are flying just a fraction of their normal schedules as they wait for travelers to be ready to fly again. The patchwork of different travel bans and restrictions across the globe means that international flights won't return to normal anytime soon. Spain and Italy are considering banning foreign tourists until at least 2021.
“Our expectation is that domestic will come back faster than international,” Bastian said.
In the meantime, Delta is blocking all middle seats to increase social distancing onboard its flights. Bastian said that may continue for the foreseeable future. He made clear that resuming travel is about more than just lifting the stay-at-home orders in place around the country. It's about convincing travelers that it's safe to fly.
“We have to inspire the confidence they have to start traveling again,” Bastian said.
As workers across the nation have moved from their workplaces and travel to Zoom meetings, it's caused concern that the business travel that airlines rely upon may never return. Bastian downplayed those concerns.
“I think there will be some behavioral patterns that will change, no question about it,” he said in an interview earlier Wednesday on CNBC. “I don't think that we’re turning into a telecommuting workforce.”
Bottom Line
Travel has almost evaporated. But it will return.
That rebound may be slower than any of us would like. And when it returns, it will almost certainly look different.
Lead photo courtesy of Chris Lundberg via Flickr
Here’s a question I have. With the loan/grants/bailout from the government, I thought the airlines had to maintain their flight loads pre-bailout? Am I wrong? Delta used to have 3-4 non-stop flights from MKE to DTW daily. As of May 2nd, they have removed all of these flights. I am two trips away from getting my silver status (I know it’s not much, but had the coronavirus not been here, I would be about 2 trips away from gold at the end of April), and if I want to fly Delta to Detroit (without 2 layovers…one being in Iron Mountain Michigan)I would have to go to ORD to fly direct. I’m done with United and AA, due to the garbage they are constantly pulling). I understand certain flights being cancelled, but they got loans and grants to keep flying (while they continue to tack on fees to the flyers). I would think they would at least have to maintain a once a day flight….
Great question, Mark. The strings attached to the bailout money do require airlines to continue a minimum number of flights, but they don’t approach it on a route-by-route basis – rather, by a market-by-market basis. That means Delta can remove some daily flights in and out of MKE so long as it retains some service. It looks as though Delta is doing this by flying MKE-MSP rather than MKE-DTW, at least for now.
For what it’s worth, it looks like Delta’s schedule show MKE-DTW returning later in May. But that, too, may change as this continues to unfold.
If travel will not be back to normal for 3 years, why doesn’t Delta refund my money, vs a voucher that will expire before things are normal once again ?
I have my daughter living in Sweden and can’t comprehend that the airline industry can not or will not have limited flights for families to other countries. Do you see any flights international returning this year? Is there not a way that different airlines cannot join together and offer limited flights?
Thank you