Category Archives for Airlines.
Four years ago American shared on an earnings call that 50% of its revenue was coming from once a year flyers who made up 87% of its customers, with more frequent customers representing just 13% of flyers and the other half of revenue.
Now once a year customers are contributing an even greater share of American’s revenue – even as people fly more often.
Airlines are facing an existential crisis in their business, as bookings dry up and customers stay home. Other businesses, often smaller businesses, are facing a crisis too. People aren’t going out to local restaurants. Other businesses are closing down, and not all of their employees are being paid.
But airlines are politically well-connected. Delta, United, and American have all spent time lobbying for government handouts this week. Here’s the form subsidies are most likely to take.
United Airlines has to be the one of the most remote work-averse employers in the country, at least based on this e-mail from Kate Gebo, Executive Vice President Human Resources and Labor Relations at United Airlines, that was sent at the end of the week.
American Airlines will accelerate the retirement of its Boeing 757 and 767 fleets (and won’t have reason to extend service of their Embraer E-190s). They’re cutting flights, including much of Europe and even some service to London. And they’re promising that actual quarantined employees won’t be fired for taking sick time.
Norwegian Air says they may run out of cash in a matter of weeks. Their long haul business is between several European countries and the U.S., but Europeans largely cannot travel to the U.S. for the next month. Bookings are down anyway in the current environment, and this was a troubled airline to begin with.
At the beginning of the week airlines knew the novel coronavirus impact on their business could be large, but no one was taking this as seriously as United. That’s changed. Delta has sent a memo to employees outlining unprecedented changes to their business in light of drying up revenue.
Delta’s CEO Ed Bastian says that they’re receiving more cancellations than new bookings, and that “the demand fall-off is unlike anything we’ve seen” as a result they are “moving quickly to preserve cash and protect” the airline.
Effective today United Airlines plans to stop offering some seats that used to be available for upgrade to members of their MileagePlus program, holding those back to sell to infrequent customers at check-in instead. This helps the airline generate extra short term cash now as they prepare for a drop in revenue of as much as 70%.
American is extending their AA20 program – 20% off paid travel for employees – to web special awards. If there was any doubt that these web specials were revenue-based redemption, this change should offer insight into how American thinks about them.
In light of the U.S. government’s limits on travel by non-U.S. citizens that have been to Europe within the past 14 days, in addition to reduction in travel broadly in reaction to the novel coronavirus, United has announced that it will only fly it’s current schedule through Thursday, March 19. That gives people time to get home, and to bring employees home.
Here’s what Europe should look like after that for United.
The President of the United States is said to be considering travel restrictions between California, Washington, and the rest of the country. I’ve heard rumors of this prior to this reporting and it is certainly not confirmed and not at this point certain to happen.
Meanwhile it appears that travel restrictions haven’t been effective in stopping the spread of this virus.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
