NEW YORK, April 5, 2021 /PRNewswire/ -- Leisure
travel in America will push the US domestic airline industry to a
COVID recovery by early 2022 according to a new report from
consulting firm Oliver Wyman.
"A year ago, we would have thought that a full domestic recovery
in this timeframe for the US was almost impossible, but the
combination of pent-up demand, economic stimulus, and access to
vaccines is making a difference," said Tom Stalnaker, a partner and global aviation
practice leader at Oliver Wyman. "We are still far from a full
recovery for the overall industry, but we expect some of the
airlines to start turning cashflow positive in a matter of months,
particularly in the US."
The rapidly increasing availability of vaccines and economic
stimulus from the $1.9 trillion
American Rescue Plan Act are two reasons for the increase in
domestic leisure travel in the US. Both factors also happened to
coincide with the timing of spring break across many states, which
caused a spike in demand. Consumers are also looking forward to
summer travel, and Oliver Wyman's Pandemic Navigator is now
predicting that the US will reach herd immunity by mid-June to
early July — three to six weeks ahead of earlier forecasts.
Additional findings:
- In mid-March, US travel demand rose to more than 50 percent of
2019 levels, which is the highest it has been on a sustained basis
since the start of the pandemic.
- The opposite is true with corporate and international travel,
which is still down more than 80 percent from 2019. These segments
of the market will not recover before 2023.
- The loss of business travel is a real challenge for some
full-service airlines, because they depend on high-yielding
customers to provide more than half of their profits and a third of
revenues in major economies such as the US. To compensate for the
loss of business and international travelers, full-service carriers
are starting to sell more services a la carte, aimed at a broader
customer base with different needs and less willingness to pay.
- Our analysis of US Department of Transportation data reveals
revenue per available seat mile (RASM) for full-service airlines
fell 50 percent year-over-year in the second quarter of 2020,
making it one of the darkest periods for US carriers. Meanwhile,
the RASM for low-cost airlines fell 23 percent in the same three
months. The third quarter of 2020 brought the performance of the
two airline groups closer together, with full-service carriers
declining 45 percent and low-cost carriers down 38 percent.
"The overall comeback of travel will depend on how fast nations
get their populations vaccinated and standardize their health
passport travel protocols and testing regulations." Stalnaker said.
"But make no mistake, the demand to travel is here and we don't see
it going away anytime soon."
About the Airline Economics Analysis
This year's in-depth report covers a range of aviation
industry-specific economic and performance data as well as global
capacity during the pandemic. For our 2020-2021 edition, we
expanded our report to be more global in nature, reflecting the
worldwide impact of COVID-19. This edition includes forward looking
commentary about the industry recovery. The analysis outlines the
varied pace at which different regions were affected by the virus
and will ultimately recover from it.
About Oliver Wyman
Oliver Wyman is a global leader in
management consulting. With offices in 60 cities across 29
countries, Oliver Wyman combines deep industry knowledge with
specialized expertise in strategy, operations, risk management, and
organization transformation. The firm has more than 5,000
professionals around the world who work with clients to optimize
their business, improve their operations and risk profile, and
accelerate their organizational performance to seize the most
attractive opportunities. Oliver Wyman is a business of Marsh
McLennan [NYSE: MMC]. For more information,
visit www.oliverwyman.com. Follow Oliver Wyman on Twitter
@OliverWyman.
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SOURCE Oliver Wyman