Virus variant batters airline bookings for Labor Day weekend

Mary Schlangenstein
Bloomberg

After a surge in bookings early this summer, U.S. airline passengers are planning fewer trips as the spread of the coronavirus delta variant continues to discourage travel.

Spending for the Labor Day holiday was down 16% from 2019 as of Aug. 21, while bookings were off 15%, according to the Adobe Digital Economy Index. The weekend typically marks the end of stepped-up summer travel for U.S. carriers and demand often rises as families seek to squeeze in a last trip before school resumes.

Adobe's findings line up with recent warnings from airlines saying that increased illnesses tied to the variant are slowing sales and prompting customers to cancel reservations, threatening to derail a recovery from last year's collapse in demand. Southwest Airlines Co. has said the weakness may make it difficult to turn a third-quarter profit. American Airlines Group Inc. said August revenue is coming in below its expectations.

Travelers check in at the McNamara Terminal at Detroit Metro Airport.
Detroit Metro Airport as tourism returns as COVID eases in Romulus, Michigan on June 15, 2021.

"We expect spend in the month of August to be significantly under July," Vivek Pandya, Adobe Digital Insights lead analyst, said in a statement Monday. "These two months historically have similar spend levels."

U.S. airlines fell Monday after Reuters reported that the European Union may reinstate coronavirus-related travel restrictions on unvaccinated U.S. citizens and travelers from five other countries. A Standard & Poor's Index of nine U.S. carriers dropped 2.3% at 11:06 a.m. in New York, led by a 3.5% slide for SkyWest Inc. Other travel industry shares also dropped.

Online spending for flights dropped to $2.9 billion through the first three weeks of this month, down 33% from the same period in 2019. That was about double the change for July. The number of bookings fell 22% from the beginning of August. The index tracks direct flight bookings for 6 of the top 10 U.S. carriers.

July domestic bookings were $5.26 billion, down 16% from 2019 and off 13% from June. July was the first month since the pandemic began in which fares reached 2019 levels. They were 1% below in June and 8% lower in May.

The number of travelers passing through U.S. airport security checkpoints has hovered around 77% in recent weeks, down from an average of 79% in mid-July, according to the Transportation Security Administration.

Ticket prices were 28% below 2019 levels at the start of this year, according to Adobe. Consumers spent $34 billion online for air travel this year through July, down 28% from the 2019 level.

In further bad news for U.S. carriers on both sides of the Atlantic, European Union countries voted Monday to subject the U.S. to fresh restrictions on nonessential travel amid a surge in new coronavirus cases, dealing a fresh blow to the tourism industry.

A qualified majority of ambassadors voted to reintroduce the curbs, which had been lifted in June, according to an EU statement on Monday. The change appears most likely to affect unvaccinated Americans.

The U.S. had 588 new COVID-19 cases per 100,000 inhabitants in the two weeks ending Aug. 22, according to the European Centre for Disease Prevention and Control, well above the limit of 75 set out in the EU guidelines.

The guidance from the bloc is a recommendation and any decision on who to let in, and what restrictions to impose, ultimately rests with the governments of each member state. Countries can also choose to accept proof of vaccination to waive travel restrictions.