Airlines Optimistic Despite High Ticket Prices

Airline executives are optimistic about demand for travel this year, even as ticket prices climb.

A Wednesday (March 15) report by The Wall Street Journal quotes the CEOs of United Airlines and Delta, both of whom anticipate consumers will get the travel bug this year.

The report notes that their remarks — given at a JPMorgan Chase investor conference — came one day after United projected a loss for the quarter. Nevertheless, United CEO Scott Kirby said he was still optimistic about the year to come.

“It’s the first time we’ve gone through a January and February since COVID, and so we got it wrong,” Kirby said. “But our March numbers are good … April, May, June, all look better.”

And although corporate travel demand has leveled off, executives at the conference said the boundaries between leisure travel and business aren’t as defined as they once were.

“As I tell many of my CEO friends across the industry and outside of the industry, I know where your employees are. They may not be in the office, but you can find them on my airplanes,” said Ed Bastian, Delta’s chief executive. “That’s because of the new way of work, the new hybrid, new mobility.”

PYMNTS noted the continued demand for vacations last month, finding that consumers were continuing to indulge the desires to travel even as they cut back in other areas.

“In an otherwise endless barrage of bad economic news coming out of Q4 2022 and continuing into the first quarter of 2023, travel is one of the few bright spots,” PYMNTS wrote.

That report went on to say that “it depends on where one lands in terms of earnings that’s deciding whether ‘travel’ translates to a Sunday drive with drive-thru grub, or jetting off in getaways to exotic locales, eateries and experiences.”

Recent earnings reports from online travel agencies Booking Holdings and Expedia Group, which command a massive segment of travel booking activity, show this trend.

Booking Holdings CEO Glenn Fogel said during the company’s Q4 2022 earnings call last month that “for the first time, we saw room nights across all of our major regions above 2019 levels for the quarter.”

Fogel added that Q4 activity led to “an all-time high” of close to 900 million room nights reserved on its platforms for full-year 2022, up 52% from a year ago.

And despite the price of airline tickets, some consumers say they plan to travel no matter their economic circumstances. According to the January 2023 study “New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook and Sentiment Edition,” a PYMNTS and LendingClub collaboration, 30% of paycheck-to-paycheck consumers, regardless of whether they struggle to pay their bills, plan to spend on leisure travel.