While the travel industry has certainly been challenged due to the recent pandemic, humans, since we could walk, love to travel. Perhaps it’s summed up in this great quote: ‘The gladdest moment in human life, methinks, is a departure into unknown lands.’ – Sir Richard Burton. Post pandemic, we can see that some things have changed, perhaps forever. The pandemic has made us think about how and why we want to travel. In future, journeys, especially long-distance travel, will be better prepared and perhaps take us to lands we have not yet visited.
We will rely more on travel concierges and service technologies to help us be better prepared in our journeys. To get an additional perspective on the near future of travel, we sat down with one of the founders of Scott’s Cheap Flights, a company that uses intelligent software technology to find and deliver cheap flight information to their subscriber base. In talking to Scott Keyes, Co-Founder & Chief Flight Expert at Scott’s Cheap Flights, he provided the following travel industry insights supported by industry data from Airlines.org:
– While passenger volume is still down 5% compared to pre-pandemic, planes are more full today than in 2019, and have been so since March 2022. The cause: flight volume (or the actual number of flights) is down 15%.
– The travel rebound is disproportionate among leisure travelers which has given budget airlines home field advantage. Spirit is flying 28% more, Allegiant 26% more, Frontier 14%, while the big three full-service airlines who rely more on business and international travelers—American, United, and Delta—are all down 8-12%.
– Travel between the USA and China—a route that saw millions of passengers in 2019—is currently down 98%. With China’s current Covid policy, there will be no quick rebound.
– Despite recent increases, we’re still living in the Golden Age of Cheap Flights. While inflation-adjusted fares are up 23% over the past year, fares are still down 11% over the past five years and 28% over the past decade. Fares like $177 roundtrip to Hawaii and $286 roundtrip to Iceland, unthinkable a decade ago, are now monthly occurrences.
In delving further into the rebound of the travel industry, we asked Scott to provide his thoughts on the questions listed below:
Will business travel fully rebound? This is the million-dollar question for airlines, especially full-service carriers who’ve built their business models on catering to business travelers and their expense accounts. Currently, business travel volume is still down 25% compared to pre-pandemic, and has hit a stubborn ceiling over the past few months. My educated prediction is that while we may see incremental gains, a significant amount of business travel will never return as more meetings move to Zoom and fewer offices reopen to host business meetings in the first place. Conference travel will be back, but more sales and consulting work will happen remotely.
Will Asia travel rebound? Travel between the USA and China grew rapidly for the past two decades, and drove transpacific fares down as low as $280 roundtrip in 2019. That was thanks in large part to subsidized Chinese airlines flooding the market with flights, putting downward pressure on fares across the board. But with travel between the USA and China down 98% amidst China’s Covid zero policy, flights to Asia have remained stubbornly expensive. It seems likely that at some point in the next year or two China will abandon its Covid zero policy and reopen for tourism. Coupled with the reopening in Japan, Hong Kong, and Taiwan, I’d expect to see a major rebound in USA-Asia travel, though likely still less than 2019 given the decline of business travel.
When will the pilot shortage end? The pilot shortage has been the root cause of much of air travel’s current troubles, from fewer flights to more disruptions to higher fares than 2021. Right now, there is a shortage of between 5,500 and 8,000 pilots nationwide. Being a pilot is, of course, not an entry level job, and so there is no overnight remedy. But between airlines investing in flight schools and major pay increases at regional airlines (in some cases doubling the previous wage), I’d expect this to resolve itself in the next year or so.
Is increased premium seating a blip or a trend? Airlines have been increasingly refurbishing planes with larger premium sections, more seats in business class and new premium economy sections that didn’t exist a decade ago. I wholeheartedly expect this trend to continue. One reason we’re living in the Golden Age of Cheap Flights is that airlines have diversified their business models from one that relied exclusively on economy airfare decades ago to one today that relies on a broad array of revenue streams, from credit cards and bank contracts to corporate sales to cargo to ancillary fees to hotel commissions to, especially, an increased reliance on selling premium seats. In 2011, just 9% of Delta’s seats were premium; by 2019 that grew to 24%. And in 2011, just 13% of first-class seats were sold rather than given away or left empty; by 2019, it was 60%. Those figures have only grown in 2022. Premium is becoming more important for airlines and, in effect, further subsidizing economy fares.