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With ticket sales slipping and cancellations climbing with the surging rate of COVID cases, Southwest Airlines no longer expects to make a profit in this year’s third quarter, despite turning a profit in July, the airline said in a statement.
The revised outlook is a dramatic change from earlier this summer, when several airlines reported expanding their schedules and routes. (See “Vacationers Taking to the Skies,” Trends Journal, 8 June 2021.)
In late July, United Airlines CEO Scott Kirby said in an analysts’ call that the COVID virus’s Delta variant was not affecting sales and that “the most likely outcome is that the recovery in demand continues largely unabated,” The Wall Street Journal noted.
Airlines have begun adding fights to business centers after seeing an uptick in corporate travel plans (“Business Travel Rebound?” Trends Journal, 8 June 2021).
However, ticket sales have leveled off in recent weeks, hovering at about 80 percent of 2019’s volume, according to the Transportation Security Administration.
TREND FORECAST: The new round of Delta variant fears will not only slow the economic recovery in the travel industry, but also strengthen corporations’ habit of swapping road trips for Zoom calls. And in a fight to win COVID War 2.0, today Reuters reported that sources told them President Joe Biden’s administration will extend mask requirements for travelers on airplanes, trains and buses and at airports and train stations through 18 January. Thus, the more fear, the lower the number of travelers.
As we have noted, softening ticket sales also spell long-term harm to hotels, airport retailers, and shops surrounding hotels and convention centers, particularly in urban cores.
That loss of revenue will ripple through city budgets, forcing municipalities to cut services such as police patrols and trash collection, making them even less desirable places to visit.