NEW VERNACULAR TO EMERGE?
COUNTERCYCLICAL
One thing about #EdBastien, #DeltaAirLines CEO, he has been bullish on a demand rebound for some time albeit with some fits and starts as we worked through the final variants of COVID.
He concluded his prepared remarks on Delta's earnings call with the following: "In closing, while we are mindful of macroeconomic headwinds, the travel industry is experiencing a countercyclical recovery. Global demand is continuing to ramp as consumers shift spend to experiences, businesses return to travel and international markets continue to reopen. Demand has not come close to being quenched by a hectic summer travel season".
Delta is being rewarded with its patience in rebuilding its network. It is less exposed to the regional sector than either American or United. It is easier to fill B717s and A220s than large 737s. Delta's hubs, especially DTW and MSP, were dependent on small jet feed traffic.
I, and likely anyone who might read this, wants Bastien to be right on calling the recovery countercyclical. International markets opening are contributing to the demand uptick. International service is critical to the network carriers building out parts of their domestic network. The dollar sure is not hurting either.
BLEISURE TRAFFIC
A lot has been said about the fact that business travel is likely combining with leisure travel over the past year. It is time to create a fourth segment of traffic: international, business, leisure, #bleisure. I have seen this word before.
Yesterday, #KyleArnold wrote in the #DallasMorningNews about how Southwest is building up a team to attract the many small and medium sized businesses that do not use traditional business channels to book tickets.
Throughout the Pandemic, one of my favorite data points to watch was monthly business applications. The numbers were astounding. Not every application would ultimately become a sustainable business. But many would and will. This segment of business travel is a target rich environment.
LABOR HOARDING
It was talked about a bit in the summer across many industries. Yesterday's New York Times had an article talking to businesses holding on to less productive workers.
In the airline industry, might #laborhoarding be more about a skilled work force necessary for any airline to grow? DOT and DOJ are spending a lot of time and energy thinking about consumer-related policies that will only increase airline costs. Schumer wants there to be fewer seats and/or larger seats. This goes to the heart of the ULCC model enabling lower fares.
For the largest carriers, it is likely an intended consequence to pay regional pilots ULCC rates in order to retain them and keep them out of the hands of lower cost competitor. Shouldn't the government want to get in the game of training skilled workers? This might ensure that competition is maximized as well as the number of airports receiving commercial service??
Watch this space.
#swelbar