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Delta likely to pull flights as number of US coronavirus cases rises

June 25, 2020
7 min read
Delta likely to pull flights as number of US coronavirus cases rises
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Delta Air Lines is likely to pull some of its planned flights in August amid a surge in COVID-19 cases in U.S., a rise that comes even as other hard-hit nations in Asia and Europe show continued declines in new infections.

Ed Bastian, CEO of the Atlanta-based carrier, acknowledged the rise in coronavirus cases to staff and warned that the planned August schedule was "probably going to come down a little bit” during a virtual town hall on Thursday viewed by TPG. Delta had planned to fly as many as 2,000 daily flights by August, about double what it plans to fly next month.

"We don’t [want to] put more flying into a market than either what customer demand is or what our health advocates suggest in terms of keeping people at home as best we can," he said.

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The rise in coronavirus cases is a cause for concern both for airlines and the broader economy as localities begin to reopen after months of shutdowns. Many of the new cases are in southern and western states, including Arizona, Florida and Texas, where state government's were among the first to begin reopening after coronavirus closures.

As Cowen analyst Helane Becker put it in a report on Thursday, the recovery in air travel is "tenuous" at best as COVID-19 case numbers surge.

Traveler numbers have yet to reflect the rising case count. Transportation Security Administration (TSA) screenings continue to rise with 607,540 people passing through airport checkpoints on Monday, June 22. That's the first time above 600,000 since the virus hit flying hard in March, but still jut 22% of last year's numbers.

Cowen expects TSA screenings to remain above 600,000 over the upcoming July 4 holiday travel period.

Related: Visitors from states with high coronavirus rates must quarantine for 14 days in New York, New Jersey and Connecticut

But, heading into July, there are new warning signs about how the coronavirus might cause new problems for U.S. airlines.

Take for example the tri-state region of Connecticut, New Jersey and New York. The area was among the hardest hit in the pandemic's early days, causing restrictions to be placed on those leaving the region. Airlines drastically cut flight numbers there amid low demand.

Now, those states are seeing sustained declines in new cases following months of lockdowns. But, in a move to protect their residents from infection, they have implemented a mandatory 14-day quarantine for anyone traveling from nine states seeing a surge in cases.

Related: Delta Air Lines ‘committed’ to new Boston hub; Austin, Raleigh focus cities

Airlines, however, have not commensurately cut flights between those nine states and the New York City region as they did before. But the latest surge in cases has Cowen and other analysts warning of a potential new downdraft on demand for travel.

For now, representatives of American Airlines and United Airlines said the carriers are evaluating the quarantines but have made no schedule changes. In April, though, American slashed New York-area flights to as few as 13 a day and United to 17 flights a day.

Delta did not cut its schedules as much, flying as many as 50 flights a day to the region's three airports.

Related: US airlines may face a tough fall after that summer uptick

Elsewhere, Hawaii has extended its mandatory 14-day quarantine for arriving travelers through July 31. People arriving in Alaska must provide proof of a negative COVID test taken within the last three days or quarantine for 14 days.

Airlines are not taking the nascent recovery for granted. Executives acknowledge that planes are almost entirely filled with leisure travelers and not the lucrative business flyers that are needed to fill planes after summer holidays end over Labor Day weekend. Without a return in corporate travel, carriers may need to pull back schedules more than they normally do in the fall.

“It really is [that] there is just so much unknown,” Raymond James analyst Savanthi Syth said on the recovery earlier in June. “Airlines are putting the cash cushion in and hoping for the best.”

Related: State-by-state guide to coronavirus reopening

True to form, American just priced a new $2.5 billion bond at a whooping 11.75% interest rate — more than three-times what it paid on certain aircraft-backed bonds last year — in the name of raising cash. In addition, United has leveraged its MileagePlus loyalty program to raise as much as $5 billion to weather the crisis.

In a memo to Delta staff on Thursday, Bastian told them that wearing a mask onboard an airplane is "one of the most effective measures we have" against the virus. He has previously said that wearing a mask is a matter of "respect" for other people.

"Customers who choose not to comply with this or any other safety requirement risk losing their future flight privileges with Delta," said Bastian. "We have already banned some passengers from future travel on Delta for refusing to wear masks on board."

Related: Frontier bucks pandemic trend with growth, but says masks are a must

While a few cases of travelers refusing to wear masks has attracted media attention, airline executives say most flyers comply with the rules. Frontier Airlines CEO Barry Biffle told TPG in an exclusive interview this week that the carrier's bookings nearly doubled when they announced their mask rules.

Airlines and analysts are waiting with bated breath to see how the uptick in COVID-19 cases affects travel. Allegiant Air, American, Spirit Airlines and Southwest Airlines have the most exposure — or above 40% of what they flew in 2019 — to the states where the coronavirus is spreading, according to Becker.

But travelers may not stay home with this surge in coronavirus infections. As The Air Current noted in a report this week, Americans may be feeling fatigue from the constant coronavirus threat and may be willing to accept the possibility of exposure for some modicum of normality. That could mean that, barring a second government-mandated lock down, some might continue to fly even as case numbers mount.

Related: Which US airlines are blocking middle seats and requiring masks?

Featured image by Alberto Riva

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