© 2022 WYSO
Our Community. Our Nation. Our World.
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

With high gas prices and a war in Ukraine, airlines face a bumpy ride ahead

A MARTINEZ, HOST:

It's spring break season. And the number of people who are boarding planes is just about back to pre-pandemic levels. But domestic vacation trips don't make airlines the same kind of money that business and international travel does. Those are still lagging and adding to concerns about the war in Ukraine, which is also driving up fuel prices for airlines. NPR's David Schaper reports.

DAVID SCHAPER, BYLINE: Many airports again are packed with long lines at check-in counters, TSA checkpoints and around gate before people pack onto planes like sardines. And that has airline executives smiling.

(SOUNDBITE OF ARCHIVED RECORDING)

DOUG PARKER: The demand is higher than it has ever been.

SCHAPER: That's American Airlines CEO Doug Parker, who told investors at a recent conference that the industry hit a one-day record high for revenues booked earlier this month.

(SOUNDBITE OF ARCHIVED RECORDING)

PARKER: I can tell you that at American, we didn't just have our record day, we had three days that were the best, highest days ever. Two of them were 15% higher than any day we've ever had.

SCHAPER: And this red-hot demand is mostly for domestic leisure travel, with business and international travel still lagging. Vivek Pandya is lead analyst for Adobe Analytics, which has been tracking airline booking data since before the pandemic began.

VIVEK PANDYA: The second week of February, we saw flight bookings return to pre-pandemic norms and kind of cross that threshold, which was a pretty massive milestone.

SCHAPER: And Pandya says the surge in air travel demand is continuing despite higher airfares.

PANDYA: At the moment, we've seen prices increase. But it hasn't really dulled the momentum of airline travel. What we're finding is bookings are up 26%. And then airline and air booking spend, the revenues, are up 42% relative to certain periods in 2019.

SCHAPER: Economist Hayley Berg of the mobile travel app Hopper sees similar trends. And she says since airlines still have diminished capacity, higher demand is part of what's driving airfares higher.

HAYLEY BERG: But also jet fuel prices. So even before the crisis in Ukraine began, jet fuel prices were about double what they were at the beginning of this year.

SCHAPER: She says higher jet fuel prices will likely continue to drive up fares into the summer months. But that may not weaken demand now that many COVID travel restrictions are being dropped.

BERG: I expect that if we do continue to see higher prices, we will likely probably still continue to see higher demand, as, you know, travelers have been waiting to go on some of these bucket-list trips since, you know, summer of 2019 and 2020.

SCHAPER: As for travel overseas, and in particular to Europe...

BERG: We had been seeing a huge surge in demand similar to what we're seeing for domestic travel since January. And that's flattened sense about mid-February.

SCHAPER: Not coincidentally, that's when Russia invaded Ukraine. Vivek Pandya of Adobe Analytics says a prolonged war in Ukraine could further delay the stronger return of international travel that airlines need to bolster their bottom lines.

PANDYA: It's definitely a concern when the sort of global, political situations and war and these factors are driving decision-making, especially around international travel.

SCHAPER: But as the travel industry gets heartburn over the international travel drop-off, domestic travel demand is expected to remain strong through the summer, as more people feel comfortable taking the vacations that they put off during the height of the pandemic.

David Schaper, NPR News. Transcript provided by NPR, Copyright NPR.