Europe reopening may come too late to save the summer for airlines and travelers

With the European Union poised to reopen to Americans and an eventual travel corridor between the U.S. and U.K. remaining likely, airlines are cautiously excited over the possibility of summer travel to Europe boosting their bottom lines.

But just how big of a boost remains to be seen, with the window to capitalize on the usually busy summer travel season starting to close — partly thanks to the strong resurgence of domestic travel demand.

While demand certainly exists for travel to Europe, many Americans who are willing to travel now have already committed to their summer vacation plans, say some industry insiders. And those plans have had a decidedly domestic feel , since most long-haul international destinations remain closed or subject to uncertainty around shifting rules.

American families with one shot at taking a summer vacation — for many of them, their first real vacation in a year-and-a-half — may be unlikely to risk booking Europe at this point, given so many unknowns at this point.

Several countries, including Iceland, Croatia, and Greece, have already announced reopenings, and did so early enough to capture summer demand — airlines have acted accordingly by throwing capacity towards those countries.

But if the EU were to open today, by the time airlines could begin service, the season would be well underway before new flight schedules could hit their peak.

Ticket sales for the international market are "much different than the domestic, where so much of the bookings occur within 30, 60 days," American Airlines president Robert Isom told investors during a conference call in April. "For some of these long-haul markets, even for business-related travel, the booking curve is much more extended."

"So even if markets were to reopen, so much of the actual window for purchasing for the summer has actually passed us by," he added.

Airlines are also unlikely to overcommit capacity to Europe once it opens, given the fact that most leisure-traveling Americans will have already booked something else, and a prolonged lack of business travel means it will be hard to make additional long-haul flights profitable.

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More: Americans' hopes for visiting UK just hit with a major setback

Vasu Raja, American's chief revenue officer, who oversees route and network planning, added that many of those passengers who would have potentially booked European vacations are already planning to go elsewhere.

"Even if so much of Europe opens up right now, the reality is we're, let's call it, 60% to 65% of the way through a historical booking curve for Europe, and a lot of the customers that would have gone there have already booked trips to Hawaii or Florida anyway," Raja said.

Jamie Baker, an airline analyst at JP Morgan Chase, agreed with this assessment in a research note published this week, and noted that the airline would have to pull capacity from other markets to cover more Europe flying, which might not make financial sense.

"Bookings would have to start from scratch and profitability would suffer" if planes were shifted to European routes. "While the Big Three could quickly redeploy capacity across the Atlantic should the EU reopen, that doesn't necessarily mean they should, save for markets like Greece and Iceland which announced their intention to reopen to the vaccinated with greater lead time for bookings to muster."

Even so, pent-up demand for Europe means plenty of passengers for the airlines whenever they do begin flying across the ocean again, said Henry Harteveldt, a travel analyst and founder of travel industry marketing research firm Atmosphere Research.

"They are trying to figure out how to put the pieces together to be ready to respond when governments say that borders will be reopened and travel will be permitted."

Although a short booking curve remains on the table, a prolonged delay in reopening borders this spring — at least, without providing a clear date and forward-looking guidance — means the summer travel season may largely slip away by the time an announcement is made.

There's one possible mitigating factor, Harteveldt added: the fact that the big three US airlines have eliminated change fees for all tickets aside from basic economy.

"With change fees eliminated, someone who booked a flight to Hawaii can rebook more easily to London," he said. "Obviously there may be a fare difference, although the flight from NYC to Hawaii may cost more than NYC to London."

Speaking of London...

Travel demand to the UK could be a different story

As discussion of a U.S.-U.K. travel corridor has continued — despite the lack of inclusion as part of the U.K.'s "green light" announcement on Friday — it remains possible that airlines will shift more resources to that market than to the broader European one.

Historically, bookings to the U.K. tend to have more passengers booking closer in compared to continental European destinations, industry insiders tell TPG, partly driven by more business travel on U.S.-U.K. routes. Despite the sluggish return of business travel, that past insight could still apply to travel this summer.

Aside from pent-up demand from leisure travelers and those visiting friends and family, the close business ties between the U.S. and U.K., combined with the relatively high rates of vaccination in both countries, means that the market could be the first to see a degree of long-haul business travel resume.

That's something that airlines are desperate for, as long-haul business travel offers significantly higher yields than domestic business travel, or any leisure purchases.

United Airlines appeared to be particularly bullish on a U.K. reopening, with chief operating officer Andrew Nocella telling analysts that "we anticipate operating between eight and 10 daily flights to London Heathrow this summer, if and when a travel corridor is permitted to open."

"We have the aircraft standing by, ready to fly this summer," he added.

Right now, United is only flying up to three daily departures to London — one each from New York-Newark (EWR), Washington Dulles (IAD), and Chicago O'Hare (ORD), according to data provided by Cirium.

While American Airlines executives did not commit as forcefully to the U.K. market as soon as it reopens, they nevertheless described U.K. travel as providing plenty of opportunities for the airline.

"We're certainly hopeful, and we encourage our government to engage with the U.K.," airline president Isom said. "And we know, as I said, that there's tremendous demand, both from a corporate and from a leisure perspective, to take advantage, but we're going to have to make sure that we're coordinated with all parties, governments and government agencies to make sure that we're doing it in an appropriate manner."

Delta Air Lines, which owns part of Virgin Atlantic and has a joint venture with the British long-haul carrier, is also particularly bullish on the U.K., and sees a distinction from Europe more broadly.

"We are focused on trying to get the U.S.-U.K travel corridor open. I think that's the most logical and adds the greatest value to us, and I think those are the markets where we'll start to see demand grow quickly when we can get that open," Delta CEO Ed Bastian said during the airline's early-April earnings call.

"When you think about other parts of Europe, there may be some occasional markets open this summer...but I don't think you're going to see continental Europe open in any meaningful way until later this year. We'll probably, unfortunately, miss much of the summer for most of continental Europe."

"If the U.K. were to open, we'd be able to satisfy as many seats as people needed to fill the demand," Bastian added. "Americans want to travel, and they want to travel abroad."

Notably, Delta just announced a new service to Croatia, beginning July 2.

More: 5 tips for booking flights to Europe this summer when the EU reopens to vaccinated Americans

Then, of course, there's JetBlue, which is preparing to introduce its first trans-Atlantic service with flights from New York-JFK and Boston to London's Heathrow airport.

The airline plans to announce the launch soon, with service starting by later in the summer, CEO Robin Hayes said last month. While that's slightly outside the booking curve being discussed, the airline affirmed that it remained optimistic for summer demand across the Atlantic.

Regardless, one thing is undoubtedly clear: as the vaccine campaign continues in the U.S., Americans are ready to get back in the skies and travel again.

Are you an airline employee or industry insider? Message this reporter with tips, feedback, or opinions at david.slotnick@thepointsguy.com.