After 2 years of empty airports, the demand for travel is at a high. So are airfares
It's spring break season, and airports are jampacked again as the number of people flying is just about back to pre-pandemic levels.
An analysis of the Transportation Security Administration's daily throughput data shows that an average of more than 2.1 million travelers have been going through airport security checkpoints each day over the past two weeks. That's only about 9% fewer people than over the same two-week period in 2019.
In fact, those who are traveling now may find it hard to believe these very same crowded airport terminals with long lines at check-in counters and TSA checkpoints were just about empty at this time two years ago; and now-jammed planes were flying with hardly any passengers on board.
The vast majority of the people crowding in airports these days are traveling domestically, on vacations. Business and international travel, which are more lucrative for airlines, are still lagging.
Passengers may cringe at the crowded airports, but airline executives are smiling at record revenues
While the return of the crowds may make some passengers cringe and long for those empty airplane days, airline executives are smiling. "The demand (for domestic leisure travel) is higher than it's ever been," exclaimed American Airlines CEO Doug Parker at the J.P. Morgan Industrials Conference on March 15. The retiring CEO (his last day was Thursday) told investors that the week before, the airline industry hit a one-day, record high for revenues booked.
"And I can tell you that at American, we didn't just have our record day, we had three days that were the best, highest days ever," Parker said. "Two of them were 15% higher than any day we've ever had."
"There's a huge amount of growth here," Parker added.
And that claim is borne out by booking data from across the industry.
"We're seeing an overall enthusiasm level that's driving bookings and that's resulting in this recovery hitting new milestones," says Vivek Pandya, lead analyst for Adobe Analytics, who has been tracking airline booking data since before the pandemic began.
Adobe measured direct consumer transactions from six of the top 10 U.S. airlines and more than 150 billion web visits and found that American consumers spent $6.6 billion in February booking airline tickets. The consumer spend is 6% higher than in February 2019, and up 18% from January of this year.
Bookings began to pick up when the surge in COVID-19 cases caused by omicron started to wane
Pandya says bookings really began to pick up when the big surge in COVID-19 cases caused by the omicron variant over the holidays began to wane. He says in late January and early February, "we were starting to see bookings increase pretty sizably, and the second week of February, we saw flight bookings return to pre-pandemic norms and kind of cross that threshold (above 2019 levels), which was a pretty massive milestone for us to track."
Pandya says the sharp increase in travelers booking flights continues, even though air fares are rising.
"At the moment, we've seen prices increase, but it hasn't really dulled the momentum of airline travel," Pandya says. "What we're finding is bookings are up 26% and then airline and air bookings spend, the revenues are up 42% relative to certain periods in 2019."
Pandya says airlines are seeing strong sales even though booking for business and international travel is still lagging.
"So what we're really seeing is a huge increase in leisure travel and consumers wanting to essentially return to the sort of holiday traveling they did prior to the pandemic," Pandya says.
Consumers continue to book travel, driving the high price of fares while airlines still have limited capacity
Economist Hayley Berg of the mobile travel app Hopper sees similar trends.
"Demand for air travel both domestically and internationally is significantly higher this year than it was in 2021," Berg says. "We've seen a continued surge in demand for air travel since really January, since the beginning of the year, and it's continued through these spring months."
Berg says consumers are continuing to book travel even as air fares continue to rise, and that increased demand, at a time when airlines still have somewhat limited capacity, is part of what is driving air fares higher.
"But also (rising) jet fuel prices" are driving air fares up substantially, Berg says, noting that between Dec. 1 and March 8, the per gallon price of jet fuel more than doubled from $1.88 to over $4.10, and fluctuated quite a bit since.
She says the higher jet fuel prices will likely continue to drive up fares, at a rate of 7% per month, into the busy summer travel season. But Berg says with many COVID-19 travel restrictions being dropped, people are eager to get out and fly again.
"I expect that if we do continue to see higher prices, we will likely probably still continue to see higher demand," Berg says, "as travelers have been waiting to go on some of these bucket list trips since, you know, summer of 2019 and 2020."
As for travel overseas, and in particular, to Europe, Berg says as the omicron surge of COVID-19 infections subsided and more European destinations dropped COVID-related travel restrictions, bookings for international travel increased sharply, but she adds those searches and bookings have since tapered off.
"We had been seeing a huge surge in demand similar to what we're seeing for domestic travel since January, and that's flattened since about mid-February," Berg says.
Not coincidently, that's when Russia invaded Ukraine.
Vivek Pandya of Adobe Analytics says a prolonged war in Ukraine could further delay the stronger return of international travel that airlines need to bolster their bottom lines.
"It's definitely a concern when the sort of global political situations and war and these, these factors are driving decision-making, especially around international travel," Pandya says.
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