Airline executives told the U.S. Chamber of Commerce 2021 Aviation Summit last week that standardized methods for digital health passports and the ongoing rollout of vaccines will help restore business and international travel demand.
The month of March saw a rebound in domestic and leisure U.S. air travel, but airline executives are hopeful that the ongoing rollout of vaccines and a more standardized process for digital COVID-19 test verification methods will restore the two segments that remain historically low due to pandemic related factors beyond their control: business and international flying.
As more vaccines have been distributed, U.S air travel demand saw a significant uptick in March, with airlines collectively restoring 53 percent of the number of flights they were operating in March 2019. For example, on Sunday, April 4, a total of 1,543,474 passengers traveled through U.S. airports, compared to just 122,029 on the same day a year ago.
“It's incredible to think back to a year ago where the country had just gone into lockdown, and we at United Airlines were burning $100 million per day,” United Airlines CEO Kirby said during the U.S. Chamber of Commerce’s remotely hosted 2021 Aviation Summit. “In March, it's going to be the first month since all of this started that our core cash burn is actually back into the positive category.”
But the overwhelming majority of passengers on United aircraft and those operated by their competitors are flying domestic and leisure routes, a trend that is sustainable in the short-term, but certainly not one that airlines want to become permanent.
“Domestic leisure demand has almost entirely recovered, that tells you something about the pent up desire for travel and pent up desire to remake those connections, business demand is still down over 80 percent and of course international borders, particularly long haul, are largely closed, so there's still chunks of our business that are still almost at zero,” Kirby said.
Based on some of the stronger domestic travel numbers experienced by the region’s airlines and comparisons to similar events such as 9/11 and the 2008 Financial Recession, an April 5 report published by global management consulting firm Oliver Wyman is predicting leisure travel demand in the region will push the U.S. domestic air travel market to reach a full domestic recovery to pre-pandemic levels by early next year. While acknowledging the loss of business travel is major considering business travelers are the most profitable market segment for U.S. air carriers, the report outlines how the combination of several economic stimulus packages and the ongoing successful rollout of vaccines will help restore confidence in travel significantly.
However, the Oliver Wyman report’s authors admit that their projection hinges on the majority of eligible U.S. citizens becoming vaccinated by the fourth quarter of 2021. Their report also assumes there will be no major emergence of COVID variants in the U.S. that resist the vaccines or “a short-lived immunity from the vaccines, which could cause COVID-19 to linger,” the report says.
United Airlines added a "Travel Ready" center to its website and mobile help to let passengers know what travel restrictions or policies they face when flying to various destinations. (United Airlines)
One aspect of the air travel process that will help restore demand for business and international travel is the use of digital health passports or apps that airlines, airports, and border agencies can use as a means of confirming a traveler’s negative COVID-19 status prior to boarding their flight. As airlines take their own individual approaches to deploy new apps that allow their passengers to digitally prove their COVID-19 status airports, there are a number of challenges to be addressed.
“I think the concern some folks have around the digital passport is it has a lot of complexity. Number one is really establishing a global standard so that this passport can be used across any country you fly around the world,” Alaska Airlines CEO Ben Minicucci said during an Aviation Summit panel.
Minicucci believes individual privacy associated with a passenger’s medical information is another concern. In February, Alaska rolled out its new VeriFLY app, to give travelers a digital method of providing proof of a negative COVID test. American Airlines is also using VeriFLY, while United and Delta have both added new features to their existing airline mobile applications that provide similar COVID-19 test verification capabilities.
“How do you transfer private medical records into a health app, whatever health app we end up agreeing to? There are these complexities, I think if it unlocks international travel I think it's something that we should pursue collaboratively, but it's going to take collaboration from different stakeholders,” Minicucci said.
Outside of the U.S. however, airlines are facing challenges that vary on a region-by-region basis. U.S. airlines on average operate 60 percent of their flights domestically, while Chinese airlines are dependent on international travel for 45 percent of their total passenger demand, according to the Oliver Wyman report. The majority of airlines in the Asia Pacific region face the same situation, waiting on international travel regulations to allow for less uncertainty and quarantine requirements.
European carriers are similarly more dependent on more cross-border travel due to the region’s geographical structure. Inter-European travel is still suffering from a rise in cases in the region that occurred throughout the first three months of the year.
French President Emmanuel Macron announced a third national lockdown last week forced by a new wave of COVID cases. Most of Italy entered their own three-day national lockdown last week, and U.K. Prime Minister Boris Johnson said during an April 5 press conference that he is hopeful the country can be re-opened to international travel by May 17.
Lufthansa CEO Carsten Spohr also addressed the Aviation Summit audience remotely from Germany, outlining some of the key factors he believes could help re-open international flying.
"Three factors will have a significant impact on global air traffic. The first is the ongoing development of the coronavirus pandemic and the unfortunate reality of global travel restrictions. Second is video conferencing, and the potential decline in business travel, and last, our joint efforts toward environmental sustainability,” Spohr said. “I would like to appeal to politicians, we need international digital tests and vaccination certificates to enable our customers to travel again.”