Airline industry soaring back to life

Domestic air travel is picking up after almost three months of severe cutbacks spurred by the coronavirus pandemic.

The number of passengers in the U.S. has nearly doubled since early May, airlines are adding more flights and major carriers are seeing their stock prices bounce back.

The surge in consumer demand comes after the industry secured billions in federal bailout funds early on in the pandemic and as more states reopen their economies.

President Trump celebrated the rising stock prices at a White House event Friday.

“The airline stocks went through the roof today and others did too. The whole market went through the roof,” Trump said.

“People are traveling and you know what? They’re traveling within the United States.”

The Transportation Security Administration screened nearly 949,000 passengers last weekend, almost double the amount from just a month ago.

On Wall Street, Delta Air Lines stock gained nearly 35 percent this week, while American Airlines was more than double that amount, at 72 percent.

The airline industry, which aggressively lobbied for relief aid, received billions from the record $2.2 trillion coronavirus relief package signed into law on March 27. Passenger airlines received a total of $25 billion in loans and loan guarantees and $25 billion in direct grants.

Companies also secured a suspension of the 7.5 percent airline excise tax in return for accepting restrictions on stock buybacks and issuing dividends if they took government money.

Those changes and the cash infusion helped many in the industry weather the storm, but they couldn’t prevent job losses.

Air transportation lost 50,000 jobs last month after losing 79,000 jobs in April, according to the Labor Department.

But the overall economy added 2.5 million jobs in May and the unemployment dipped to 13.3 percent. Industry leaders see that as a turning point.

“We think that travel goes hand in hand with economic recovery. The more that people start to move and travel, the more demand there will be for these jobs,” Tori Emerson Barnes, U.S. Travel Association executive vice president of public affairs and policy, told The Hill.

Some airlines are already responding to that increased demand.

American Airlines announced on Thursday it is planning to add more domestic and international flights in July. The company had just over 32,000 daily passengers on domestic flights in April but more than 110,000 by the end of May.

“Travel’s coming back. Slowly, but it’s coming back,” CEO Doug Parker told CNBC on Thursday.

Delta has added 200 flights for June and is aiming to ramp that up to another 300 in July, Delta CEO Ed Bastian said in a recent interview with Fox Business.

“I do think we’ve seen the worst. Mid-April, while everyone was under stay-at-home orders and international restrictions were up in terms of travel for every country around the world, we really were at the bottom,” Bastian said. “So the optimist in me says we’ve doubled in the last four to six weeks as we’ve started to reopen our economy, still very much on the domestic side as compared to international.”

Southwest Airlines announced last month it would offer more flights to cities like Denver, Las Vegas, Nashville, Tenn., and Phoenix. Its stock gained 18 percent this past week.

A company spokesman told The Hill that the airline is seeing “some uptick in demand as cities and regions begin to reopen across the nation.”

Jonathan Kletzel, an aviation expert at PWC, attributed the uptick in travel to a pent-up demand following stay-at-home orders during the peak of the coronavirus pandemic.

“The summer vacation is a big component of this. School is out, if it’s not already out, it’s letting but, and people want to go on summer vacation. There’s also cabin fever and there’s cheap tickets,” he said.

Still, airlines have a deep hole to climb out of. Passenger volumes are down nearly 90 percent compared to this time last year, a slight increase from the 96 percent decline in April, according to Airlines for America. Nearly 3,000 aircraft are still idled.

The coronavirus is also still playing a big role as well. A recent PWC survey found that 60 percent of respondents said a vaccine would inspire the most confidence for traveling, with 36 percent saying easy access to public COVID-19 tests at the destination would also make them more likely to travel.

Those numbers don’t bode well for overseas flights.

“International travel is probably not going to come back until there is a vaccine,” Kletzel said.

Southwest’s international travel is scheduled to resume July 1, while American announced it will resume flights to Europe and Latin America in August, though flights to Brazil will pick back up again next month.

But once overseas flights are back to approaching normalcy, the industry could look different and maybe even smaller, according to Kletzel.

“The experience of travel, it’s probably going to continue to evolve over the past six months,” he said, adding that “you will see some of the existing players not here in the next six months.”