Private rail operator Brightline will open long-awaited passenger service between Miami and Orlando on September 22, three weeks later than previously planned.
25.08.2023 - 13:49 / skift.com / Scott Kirby / United Airlines / Andrew Nocella
When the pandemic first struck in 2020, airline executives were quick to say there was no crystal ball to predict the future of the industry. Now, three years after the pandemic began and as it reaches its natural ebb, United Airlines says that future is coming into focus, with this year setting the path for the airline industry’s post-pandemic future.
Or at least that’s how they explained the carrier’s -0.4 percent operating margin in the quarter. The first quarter historically has been tough for Northern Hemisphere airlines, as the industry enters the trough after holiday demand and before the summer peak season. But United’s leaders say they are seeing something different now, and although they say it’s too early to tell if this is the post-pandemic future, they feel confident they have spotted a trend.
“You can’t run your airline like it’s 2019,” CEO Scott Kirby said. “It’s different and harder now.”
Business travel, which historically is strong in January and February has not returned to its 2019 level, especially in United’s domestic network, Kirby told analysts during the airline’s first-quarter earnings call on Wednesday. “There is a clear change in seasonality,” he said, partially driven by the decline in traditional business travel and the rise in remote work and its blending of leisure and business travel. Instead, the airline expects both business and leisure demand to peak between March and October and will flex its capacity up during that period.
Macroeconomic issues have not yet affected business travel. Domestic business demand fell by about 8 percent immediately after the collapses of Silicon Valley Bank and Signature Bank in March but rebounded within two weeks. The banking crisis did not affect domestic leisure or international business and leisure demand.
Softening business demand was offset by strong leisure demand as consumers continued spending, Kirby said, adding that he believes the economy is headed for a “soft landing” rather than a full-blown recession. If, however, the economy weakens further, United is prepared, able to adjust capacity down to reflect a drop in demand.
Hopes Lie Abroad
United’s domestic first-quarter revenues were weaker than the competition’s, due in large measure to United’s relative weakness in Florida, Chief Commercial Officer Andrew Nocella said. But the carrier is banking on its international network, which was responsible for 46 percent of the carrier’s first-quarter revenue, compared with 43 percent in 2019.
The Chicago-based airline this week announced new flights to Christchurch, New Zealand, adding to other recently announced new routes in the region, including more capacity to Brisbane, Australia, and Auckland, New Zealand. The South Pacific
Private rail operator Brightline will open long-awaited passenger service between Miami and Orlando on September 22, three weeks later than previously planned.
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