During the American Airlines first quarter earnings call, the airline’s Chief Revenue Officer Vasu Raja dropped a hint about finding the best airfares. The landscape booking airline tickets is changing rapidly and they’re afraid of selling future flights too cheap. They’re keeping prices high for late 2021 holiday travel on purpose so that people don’t buy their travel yet.
In response to a question by CNBC journalist Leslie Josephs, Raju explained that ticket sales are up in the near term but looking further out where bookings are falling, it’s because of a conscious decision by the airline “so that we don’t sell out Thanksgiving too soon” – they are keeping prices high so they don’t fill up planes too cheaply.
Domestic leisure destinations that are largely open, and nearby international destinations, have seen a real spike in travel demand. There are more Florida arrivals than there were in 2019, and Cancun has fully recovered.
There were absolutely amazing deals a couple of months ago. I flew to Florida for $31. The deals aren’t gone but they are changing.
- Travel is ramping up, and that started happening before the CDC changed its guidance that vaccinated people can travel safely. Once people begin to get vaccinated many go out and book travel. That travel has focused on domestic leisure destinations without restrictions (because you need to be able to do things at your destination).
- The U.S. requires a negative Covid-19 test within 3 days of travel to return by air when leaving the country but hotels with tourism as their lifeblood have made this easy.
- On the other hand not all destinations are feeling the surge in travel equally. Business destinations and cities that have retained restrictions aren’t seeing us much demand, and so the increase in prices doesn’t appear as significant. Business travel isn’t likely to pick up in earnest until the fall.
- International travel still has great deals, especially if you book in advance of a destination announcing their opening to vaccinated Americans. Once opening announcements happen people start buying tickets in large numbers. United Airlines, during its earnings call on Tuesday, shared that they sold 4000 tickets to Athens in a day after announcing a new flight for Greece’s re-opening.
- The price of air travel is a function of available seats and passenger demand. Airline desires to make up for losses during the pandemic won’t drive changes in price. Airlines are adding seats for the summer, in anticipation of continued travel growth. International carriers are bringing back U.S. flights as well. Where you’ll find deals depends on booking where other people aren’t (yet) booking. If you’re traveling where everyone else is already planning to go prices will be higher.
What Raja knows is that American can sell holiday travel now, but they’re likely to sell the seats for less now than if they wait – provided travel continues to recover. And if it doesn’t, if virus mutations become a problem and cases spike seasonally, they can sell tickets inexpensively later or operate fewer flights.
What all of this means is that the best deals – as in normal times – are ‘flying where and when other people aren’t going’. However the advice to book holiday travel even earlier than usual to get the best fares doesn’t quite hold. Advance prices are generally high for the end of 2021 holidays now. You may not save money by waiting, but the deals aren’t good enough to force you to lock things in early.
On the other hand, with no change fees (except for basic economy tickets that cannot be changed, and American not currently offering basic economy on domestic routes), you can buy a ticket now and if the price drops, rebooked and get a credit for the difference later.
@ Gary — I seriously doubt that business travel will pick up very much in the fall. I don’t think you will see the usual year-end planning meetings occurring in person like in pre-COVID days. Why should businesses waste their money sending people on trips? Ultimately, business travel will never recover. As you’ve said before, more leisure travel will help to offset the reduction in business travel, which was mostly company-funded leisure travel in disguise anyways.
OPM is not coming back in the fall.
Corporate overlords will not be sending their minions out to present their powerpoints just yet.
The end of change fees is the crucial difference. Without change fees you are buying an option to travel without promising to travel. There isn’t much benefit to the airline in that bargain. Basic economics says that, all else being equal, an option for delivery in the distant future should cost more than an option for delivery in the near future.
“United Airlines, during its earnings call on Tuesday, shared that they sold 4000 tickets to Athens in a day after announcing a new flight for Greece’s re-opening”
That’s actually not what Scott said. The transcript of the earnings call reads:
“We took over 3000 bookings yesterday for our new services that we launched to Greece, Iceland and Croatia”
4000 bookings to Greece is very different than 3000+ bookings to Greece, Iceland, and Croatia combined.
a) as business owner, we’re already getting travel locked and loaded for summer. Fall international travel will start up for our company tool
b) I’ve personally got a heap of international flights booked, every month of the year through to February 2022.
Not sure what everyone is waiting for. (I’m non vaccinated, and don’t plan to bother, don’t see any reason).
Get out there, the world is waiting!
@George – being a discount influencer begging random Eastern European hotels to comp you free stays for posts to your dozens of followers…doesn’t count as owning a company and traveling int’l for business
George the did you read the recent article about people who have had covid even with mild symptoms have a 60% greater chance of dying in the 6 months following their infection with covid from all reasons.