It may be years until passenger demand returns to 2019 levels for US airlines
By all estimates the airline industry is in for a lengthy downturn as economies dip quickly into recession, companies lay off staff and unemployment rolls grow amid the novel coronavirus outbreak. The question is: how long of a downturn?
Several new forecasts see travelers beginning to return to the sky in considerable numbers as soon as June but as late as the fourth quarter that begins in October. However, those same estimates put a return to 2019 traffic levels, when around 926 million people flew in the U.S. alone, at at least a few years off.
"We anticipate that traffic growth will improve beginning in [the fourth quarter of 2020], but not reach 2019 levels until 2022 at the earliest," wrote Cowen analyst Helane Becker in a report on March 27.
Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.
Raymond James analyst Savanthi Syth told TPG she does not expect passenger numbers to hit the previous peak until around 2023. She expects something of a "new normal" with passenger demand, at least in the U.S., holding at around 10-15% lower than 2019 levels by the end of 2020.
"In past pandemics we've seen this V-shape in the travel profile with a sharp recovery in about six months, but this time is different because we've got a deep recession," said Brian Peace, chief economist at industry body the International Air Transport Association (IATA), during a briefing on Tuesday. "It won't be until 2021 that we would expect a significant recovery."
Airlines are already preparing to come back smaller than they were before. Delta Air Lines executives told employees as much on March 19. United Airlines executives followed with the added warning of likely furloughs a week later. Similar prognoses are expected from other carriers.
Related: United Airlines CEO warns of a smaller carrier post-coronavirus
U.S. carriers have received something of a lifeline in the form of $50 billion in government aid. If taken, the funds require airlines to keep staff on the payroll at current wage rates through Sept. 30, as well as maintain air service to all of the domestic cities they served on March 1.
Airlines in other countries are not as lucky. Many have to go individually to their respective government for support, a scenario that IATA director general Alexandre de Juniac warns could see many carriers "die," or close their doors or consolidate with another airline.
In the U.S., once the restrictions in the aid package sunset, airlines will have to adjust both their schedules and staffing to whatever level of demand exists on Oct. 1.
"It could be that it takes us much longer to get through the issues of the virus, it could be the virus comes back," said Pearce emphasizing that IATA's forecast is just that, a forecast. "We're looking at various scenarios."
Related: What you need to know about the $50B coronavirus aid package to airlines
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.