Issue No. 783

Mountain Market Muscle

Pushing Back: Inside This Issue

On Sept. 11, 2001, the French newspaper Le Monde, expressing solidarity with the American people, famously wrote “We’re all Americans now.” Last week, on the 19th anniversary of the 9/11 attacks on New York and Washington, U.S. airlines face a new and even graver assault on their industry, albeit one they’re in much better financial shape to endure. As they seek near-term recovery by chasing price-sensitive leisure and family-visit demand, even the Uniteds, Americans, and Deltas of the world are chanting: “We’re all low-cost carriers now.”

As all U.S. carriers adopt tactics pioneered by the likes of Southwest and Allegiant, demand is mercifully getting a bit better. Everyone’s cautious to be sure, after deflated hopes that followed earlier green shoots this spring. But U.S. domestic and even shorthaul international bookings are in fact showing signs of life again. Even so, the next six to nine months will in all likelihood be rough. It’s just a question of how rough, in the remaining period before vaccinations hopefully end the crisis once and for all.

Some U.S. carriers are nevertheless using this period of darkness to light new strategic fires. United surprisingly announced a bevy of new overseas routes launching in 2021, all targeted toward family-visit demand (with cargo also top of mind). JetBlue, perhaps the most strategically active U.S. airline during the crisis, itself announced another onslaught of new routes, several targeting at United’s Newark hub.

As U.S. shorthaul demand shows some upward momentum, Europe’s airlines by contrast, saw bookings slow as summer turned to fall. Quarantines are the key driver, imposed abruptly and inconsistently, airlines say. In recent weeks, the U.S. has seen Covid infections slow from extremely high levels, while Europe has seen cases rise from more moderate levels. Spain, the Florida of Europe in terms of tourist demand, is Europe’s leading hotspot. France and the U.K. are likewise seeing outbreaks.  

Throughout much of East Asia, the virus has been better contained. But that’s little consolation to Singapore Airlines, whose all-international network remains largely shuttered. Inevitably, the carrier last week announced major job cuts.

Verbulence

“The customers will be back very, very fast, especially in the VFR and leisure market… And we know by experience, going through all those crises, that as soon as the people feel comfortable, they will start to travel a lot.”

Transat Chairman and CEO Jean-Marie Eustache, referring to "visiting friends and relatives" travel.

Earnings

April-June (3 Months)

  • Nok Air: -$25m; -66%

*Net result in USD/*Net result excluding special items/ Operating margin

Airline Weekly Lounge Live

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Weekly Skies

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Around the World

A look at the world’s airlines, including end-of-week equity prices