Slow Vaccine Rollout Threatens Summer Air Travel Demand

Jessica Wong

With no vaccines available for most until the summer, travel will be limited and this could mean … [+] another tough year for airlines. getty In 2020, most families canceled vacations due to the pandemic. This has created pent-up demand so that most airlines are hoping for a rebound in […]

In 2020, most families canceled vacations due to the pandemic. This has created pent-up demand so that most airlines are hoping for a rebound in vacation traffic for summer 2021. Late last year, when two vaccines were approved and all efforts seemed focused on a quick and equitable rollout, this furthered the view that by this summer, traveling would be the norm again.

Yet like the pandemic itself, nothing seems to happen quickly and the slower-than- expected rollout of the vaccines means that summer 2021 may be another weak travel period and foretell another weak year for airlines overall.

Airlines manage revenue based on a “booking curve”. This means that, with some predictability, airlines know how far in advance different types of travel tend to book their flights. By tracking current bookings and comparing with past years or seasons, airlines can determine how demand is shaping up versus capacity and this can drive both capacity and pricing decisions. During the pandemic, airline booking curves have shrunk considerably, meaning that the people still flying are tending to buy closer to departure date than usual. This is not unexpected, as with things changing almost daily it makes sense to not commit too soon.

This creates a challenge for airlines as planning for future capacity often relies on forecasts of how normally-big demand seasons, like the summer, will turn out. This early in the year with little discretionary demand choosing to fly and everyone booking closer to departure, airlines have nothing but speculation as to what this summer will be like. Now take this airline reality and pair it with the vaccine rollout reality, and it seems likely that at least the early part of summer will be lost and the later parts of summer are also uncertain.

Vacations by air typically require some planning, including not just where to go but where to stay and how to get around. Certainly some people could travel on a short-term whim, but the willingness to get on an airplane must be paired with an opportunity to do something when you land. Until the vaccine rollout results in more normal openings and removal of quarantine requirements, the ability to take a vacation — even if willing to do so on short notice — will be quite limited.

I live in Virginia and am part of a categorization that is actively being vaccinated now. Yet, my expected date for a first dose is still sometime in April. I temporarily was excited to get a note from Walgreen’s
WBA
, saying that eligible groups could schedule their vaccine now. When I filled in my information, the website replied “no vaccines are are available within 25 miles of your location.” So, I tried many other locations, including every zip code I have ever lived in, and I got the same “no vaccines yet” message. This made me think that Walgreen’s is gearing up but not yet ready to start offering vaccine appointments yet.

This implies that it will take through the summer to get most people vaccinated, even recognizing that there are still some people who will choose not to do this. Elected officials are not likely to pull back from safety measures currently in effect until transmission rates fall, and this isn’t likely to happen until a large percentage of the population is vaccinated by shot or by living through a virus infection. This suggests that families may choose to get out of the house, but are more likely to stay close to home rather than take an air trip to a beach, a resort, or anywhere where they could normally have some family fun.

Airlines today are managing from period to period in terms of demand. How will this President’s Day weekend travel look compared to a current weekend, and how does this compare to prior non-Covid periods? Once this is over, there are occasional periods of typically greater demand but not a lot until the summer rush happens. This year, that rush may be to a car to go to a local theme park rather than to the airport to fly for a week long vacation. If this happens, airlines will have a hard time moving to a cash neutral operation and this means that current airline liquidity will need to last for at least 12 more months. This puts pressure on every airline’s balance sheet, and therefore the best thing for the airline industry would be a faster vaccine rollout so that summer can be summer again. So, let’s get moving!

Next Post

The Latest: Austria warns against travel to Tyrol province | World News

Croatia has recently seen a drop in new COVID-19 cases that has been attributed to partial lockdown measures, leading to the reopening of some schools for students on Monday. BRUSSELS — Belgium’s strategy to counter the coronavirus pandemic continues to bear fruit as the number of patients in intensive care […]