Airline passengers are booking their tickets earlier in 2023 than they were from late 2020 through late 2022. For much of the pandemic people were booking at the last minute, unsure what their plans would be.
That’s part of why major carriers eliminated change fees on non-basic economy fares, to give customers confidence they wouldn’t lose out if they had to change their plans. That’s shifted, with people making earlier bookings.
The indispensable Airline Observer (subscription) covers Delta’s earnings call where the airline said it’s trying to sell seats earlier and not hold back as much last minute inventory – since people aren’t waiting to book for leisure, and not as many people are booking for business.
Without change fees on most tickets, though, people are changing plans at the last minute. Delta sells close to a full flight, but fewer people are on board because of cancellations when it’s too late to stimulate more demand. Their load factor dropped from 85% in the fourth quarter of 2021 to 81% in the fourth quarter of 2022 (though change fees were gone in 2021, and some of this effect is due to bringing more seat capacity back).
According to Delta President Glen Hauenstein, cancellation rates vary far more than they did before the pandemic so Delta plans to increase overbooking and ‘see what happens’.
If you were at 103 percent, on average, and you have two extra points, you just go to 105, in terms of what you’re willing to take. There’s a little bit of risk in that, so we probably won’t go to 105 right away. We’d go to 104 and see how that works. And then to 104 and a half. That’s why you have to retrain yourself and see what actual events happen.
By selling more seats on each flight, in a time where they can’t really bet on how many people will show up, they’re willing to risk having to ‘bump’ more passengers off of flights. That could make them a less reliable way to get to your destination. However Delta has been better than other airlines generally at offering significant compensation to get passengers to voluntarily give up their seats and avoid involuntarily denying anyone boarding.
Meanwhile both United and American have significantly tightened how much they’re willing to offer passengers to give up their seats when they overbook flights. Of course airlines don’t overbook nearly as much as they used to.
Delta is also trying other ways to generate more revenue out of each flights. They’re trying to restore the way they’ve been able to charge price-insensitive business travelers more.
- Airlines used to separate out business travelers from leisure travelers (and avoid charging lower prices to business travelers, while still filling up planes with low fares) with Saturday night stay and advance purchase requirements.
- Business travelers wouldn’t stay the weekend, and made their purchases last minute. But low cost carriers filed cheap one way fares and blew this up.
- More recently, United, American and Delta used basic economy fares for this purpose.
Delta wants to try minimum stay requirements as part of roundtrip fares, but not Saturday stays.
Meanwhile corporate business travel is back to 85% of revenue and 75% of traffic – this difference, of course, is inflation. Put another way, managed travel has continued to stagnate down 25% compared to before the pandemic. Unsurprisingly financial services has recovered far more than tech. Premium cabins still face strong demand, though, with premium leisure subbing in for corporate travel. Whether those passengers will actually be able to get on their next Delta flight – or will walk away with $4,000 in ‘bump vouchers’ – remains to be seen.