- United Airlines and American Airlines have confirmed in statements that the new government aid package would prevent the need to furlough staff in April.
- The government aid package is worth a massive $1.9 trillion with $14 million set aside for airlines, including the Payroll Support Program (PSP), to allow airlines to continue to pay employees.
- “Thousands of frontline workers will now receive paychecks and healthcare through September, which is especially critical while vaccine distribution continues to ramp up.”
- “For our 13,000 colleagues who received Worker Adjustment and Retraining Notification (WARN) notices last month, those are happily canceled – you can tear them up!”
- Both airlines also placed a strong focus on the continued effort to vaccinate as many Americans as possible. American recently offered an incentive package to encourage American Airlines employees to get vaccinated, and United’s statement also encourages workers to get vaccinated at Chicago O’Hare airport.
- The new government support package runs until September 30th giving airlines a few months to position for recovery. With vaccine roll-outs continue across the US and globally, the summer months are looking promising for airlines. The focus on vaccines in both statements shows that US airlines are placing a lot of hope that vaccines will allow airlines to recover.
- Having survived the most turbulent year ever in the global aviation industry, Denver-based Frontier Group Holdings, parent of Frontier Airlines, is making plans again to go public, heading full throttle into what it expects will be a strong rebound in leisure travel in the months ahead.
- The Denver-based carrier registered to go public in March 2017, but despite a robust economy and mostly favorable stock market, it never pulled the trigger on what was supposed to be a $700 million stock offering. In late July last year, the struggling carrier yanked its registration with the SEC.
- The airline has refiled. The offering lists a placeholder amount of $100 million, with the final ask likely to be much larger. And the offering date is still to be determined. The ticker will be FRNT.
- The on-again and off-again IPO raises a question: If Frontier Airlines couldn’t successfully launch a stock offering during the good times, what makes it think it can find investor interest after such a difficult period for air travel and tourism in general?
- But it goes on to state that it has managed its finances and operations much more nimbly than rivals during the pandemic and that its low-fare strategy has appealed to those brave enough to hop on a plane. Customers have kept coming, despite numerous complaints from irate passengers about the airline’s policies on refunds and credits when flights were canceled during the early months of the pandemic. A $25 roundtrip fare can buy a lot of forgiveness it seems.
- Heading into the pandemic, about nine out of 10 passengers on Frontier Airlines were leisure travelers, and that is the segment that has started coming back first and strongest, which is typical coming out of downturns, Frontier said. International and business travel, by contrast, remain moribund.
- By running a tight ship, Frontier said it was able to keep the amount of money it had to borrow to get through the pandemic to $1 per passenger versus an average among U.S. airlines of $17 per passenger. But it did borrow, and that means future stock investors won’t see a dividend until a year out, or whenever it pays back the federal loans it took out.
- With fewer passenger planes in the air, there’s less room for freight that’s normally transported in their holds. That’s driven up demand for dedicated cargo jets to help handle the boom driven by online shopping, vaccine distribution and just-in-time supply chains.
- Pre-pandemic, 60% of all international air-cargo capacity was in the bellies of passenger aircraft, according to industry group IATA, and 2020 capacity shrank by almost a quarter. That shortage meant rates surged to all-time highs, based on a report by Sanford C. Bernstein.
- It’s unclear whether the boomlet for dedicated freighters will last when belly capacity will return with passenger jet frequencies. But Bernstein expects demand to remain strong as airlines only gradually restore full services while battling to repair their balance sheets.
- United Parcel Service Inc. expects 2021 to be another strong 12 months after posting record sales last year. Amazon.com Inc. is rapidly expanding its fleet of planes, and recently announced it would buy 11 used Boeing 767-300 jets, the first time the online retail giant has purchased, rather than leased, aircraft for its fast-growing air cargo operation
- Through most of 2020, Spirit Airlines took a conservative approach to route network expansion. While it did start last year with growth plans, the airline delayed those plans after the airline’s network came to a near-halt in the spring. From that point onwards, the first priority was for the airline to rebuild its core network.
- However, in recent months, the airline started to expand and has been on a bit of a bold expansion spree recently. To get some more color on Spirit’s method behind the expansions, Simple Flying spoke with John Kirby, Vice President of Network Planning at Spirit.
- According to Mr. Kirby, Spirit has had its eye on Milwaukee for some time. In fact, the airline even planned to announce new Milwaukee service last year, but the pandemic delayed it. So, some of these expansions are focused on enacting previously-made plans.
- “We already have pretty good frequencies to Florida from most of our markets. So, it’s really about adding more service to Florida from incremental destinations, and new revenue streams that we’re not participating in today.”
- “We’re also anticipating Las Vegas, by the time we get to the late spring and summer, we think that that’s going to be fairly open as well. As you remember last year, it was also used as a gateway the national park system. We think that’s going to be a trend that will continue this year as well. And then we’re making a bet that LA will be opened up by the summer as well.”
- Spirit is going after the demand for nonstop flights that do not currently exist. For example, Spirit will be the only passenger carrier that flies nonstop from Louisville and Milwaukee to Los Angeles.
- “A lot of carriers introduced new, and particularly certain markets got hot – Palm Springs, Bozeman, Jackson Hole, the [Florida] panhandle was also one of those places. We really didn’t participate in that and it’s because our business model is focused on leisure and VFR traffic, and so chasing some of those demand spots where we don’t really have a presence and being maybe the fifth or sixth or seventh carrier in really didn’t make a lot of sense for us. So, we focus really on bringing back our network that we had first and foremost.”
- This is not to say that Spirit Airlines will not be entering these markets ever. Rather, the airline is just choosing not to do it right now. If demand is still high for point-to-point travel from a strong Spirit market to some of these cities, then it would not be surprising to see the airline use any of its over one hundred aircraft on order to expand.
- Wheels Up’s Kenny Dichter says he thinks “when business travel and traditional vacation come back online, you may see 125%, 150% sort of demand levels.”
- The rebound, however, was non-traditional. “When we began to see demand come back,” Dichter told Yahoo, continuing, “By the summertime, we were seeing 70%, 80% of normalized demand happening. What was interesting about it, it was all people moving around (between their homes). There wasn’t any traditional vacation travel or business travel.”
- Dichter also noted a common misperception is that private aviation users only fly privately. He said, while Wheels Up members often use the airlines to fly to Europe, Asia, and even coast-to-coast, the sweet spot for “democratization” is short-haul flights.
- “When you think about it by the seat, If you’re flying from New York City to Nantucket and you think about eight people on a King Air 350i, you’re talking about $700, $800 per seat, depending upon when and where. That’s affordable for many people,” he noted.
- He says the next frontier is applying technology. “Nobody’s ever put together a digital marketplace where you’re going to have real-time assets and real-time availability. I think about companies like Booking.com or HotelTonight, which really have become incredible efficiency tools for the operators. And when you have a software like that, that you can– think about OpenTable, that you can give to the restaurants to allow people to see when a table is available for reservation. We’re just doing that for private aviation. It’s about a two-sided marketplace connecting millions of people and tens of thousands of aircraft in real-time.”