While the industry is not expecting to recover fully until at least 2024, some airlines are more optimistic about the near future than others. Not so United Airlines, if scheduled capacity is anything to go by. In the face of a wobbly vaccine rollout, the airline has reportedly cut its transatlantic capacity by 30% for the third quarter of 2021.
It has now been over one year since Donald Trump first suspended travel from 26 European countries to the United States. The decision was soon reciprocated and then expanded to include all of Europe. At the time, no one, other than the most dystopian of minds, could have fathomed that we would still be in a similar situation over 12 months later.
While some areas have seen an uptick in demand, be that instantaneous as German holidaymakers flock to Spain over Easter or a slow-burner rebound as in Russia, airlines are still on the fence for the summer season.
Over a year since United’s first capacity cuts
On March 17th, 2020, United Airlines said in a statement that it was ‘aggressively managing’ the impact of the COVID-19 outbreak. The carrier announced a 60% overall capacity reduction; 40% accounted for by US and Canada traffic, and 85% by international.
Despite a medical engineering miracle that saw the fastest vaccine development in history, travel restrictions still abound. The formerly so lucrative and congested transatlantic market has shrunk to a trickle of flights, carrying only ‘essential’ passengers and cargo.
Some carriers are, thus far, more pessimistic about is recovery than others. According to air traffic data specialist and consultancy OAG, United Airlines has cut as much as 30% of its third-quarter transatlantic capacity.
This corresponds to the majority of capacity cuts for transatlantic traffic. Meanwhile, this past year has shown us that nothing is certain, especially not airline capacity plans. Thus, anything planned for Q3 in Q1 could still be highly subject to change.
Positive cash flow expected for March
At the same time, a new spike in infections caused United’s bookings to slow down in February. However, Florida-bound spring-breakers and other Easter-related travel have conspired to, in all probability, bring the airline’s cash flow for March into the green. According to Routesonline, United also expects to maintain a positive core cash flow moving forward, despite higher fuel prices.
A spokesperson for United Airlines said the airline had no further information to share regarding Q3 transatlantic schedules at this time, but that they would provide an update as soon as more details were available.
Market fell apart
Transatlantic routes bring in less revenue for US carriers than domestic services. However, under normal circumstances, they are some of the more profitable ones.
“It’s not quite a license to print money, but you have strong corporate demand, you have strong leisure demand, you have diaspora going back and forth all the time. It had been, until very recently, a very nice market. Then it all fell apart,” John Grant, executive vice-president at OAG, told the Financial Times as airlines announced their transatlantic capacity for Q3 last year.
Do you think a 30% transatlantic capacity cut is too optimistic, too pessimistic, or spot on? Tell us why in the comments.