United Upbeat: CEO Predicts Best Holiday Travel Season in Decades
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Record Holiday Bookings Forecasted
United Airlines is gearing up for what CEO Scott Kirby calls "the best holiday season since before the pandemic." According to Kirby, the airline is already seeing record-breaking demand and bookings for November and December travel.
This optimistic outlook comes after several tumultuous years for the airline industry. The COVID-19 pandemic brought travel to a screeching halt in 2020. Air travel in the U.S. plummeted 96% in April 2020 compared to the previous year. United and other airlines were forced to slash flight schedules and enact layoffs.
Now, United sees holiday travel rapidly recovering from the pandemic slump. The airline reported a 27% increase in bookings over the last four weeks compared to 2019 levels. Business travel bookings were up 9% while international bookings jumped 51%.
Several factors are driving this holiday travel rebound. Many people delayed vacations and visits to loved ones during the height of the pandemic. Now there is significant pent-up demand for air travel as COVID restrictions ease. Consumers have more discretionary income with savings accumulated during lockdowns and pandemic stimulus measures.
United's data shows leisure fares for the holiday period down 2% compared to 2019 while average domestic fares are only up 2% over three years ago. Competitive airfares are enticing travelers to take to the skies this holiday season.
Chicago-based United is not the only airline predicting a blockbuster end of 2022. Delta and American Airlines also report strong advanced bookings for Thanksgiving and Christmas travel. Flight reservations for late December already eclipse 2019 levels.
While holiday demand looks robust, airlines face potential headwinds like high fuel costs and airport congestion. Staffing shortages plagued air travel this past summer, resulting in thousands of cancellations. United hopes expanding its flight schedule and hiring more employees will accommodate the expected surge in holiday customers.
What else is in this post?
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Record Holiday Bookings Forecasted
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - United Boosts Staffing to Handle Expected Demand
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Pent-Up Travel Demand Drives Ticket Sales
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - International Travel Rebound Contributes to Optimism
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Ancillary Revenue Growth Aids Bottom Line
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Fuel Costs Remain a Concern amid High Jet Fuel Prices
- United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Expanded Flight Schedule Accommodates Customer Demand
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - United Boosts Staffing to Handle Expected Demand
United Airlines is taking proactive steps to avoid operational meltdowns this holiday season. The carrier aims to handle the anticipated surge in holiday travel demand by hiring thousands of new employees.
Airlines faced severe staffing shortages this past summer as travel demand rebounded faster than carriers could ramp up hiring. Thousands of pilots, flight attendants, gate agents and other employees accepted buyouts or took early retirement during the pandemic. Replacing them hasn't been easy or fast.
United hopes that getting out in front of holiday hiring will prevent the type of large-scale cancellations that disrupted summer travel. "We've invested in our operation to make sure we have the people, planes and resources to serve our customers," said a United spokesperson.
The airline has announced plans to hire 15,000 employees before the end of 2022. Over 12,000 of these new hires will be airport customer service and gate agents. United is also recruiting hundreds of new flight attendants and pilots.
Job fairs and interview events are taking place across United's hub airports. The company is touting $15 minimum hourly wages and $10,000 in bonus opportunities to attract applicants. College students home for the holidays are being targeted for temporary roles.
It takes time to hire and train new staff, especially pilots. That's why United began ramping up hiring early this fall. Newly hired pilots and flight attendants need to complete federally-mandated training programs that can take months.
United believes it now has enough lead time to adequately staff up for the holiday rush. Operations should run more smoothly than this past summer if the airline succeeds in onboarding thousands of new employees.
Having extra staff also allows United to expand its holiday flight schedule. The airline is adding over 200 daily flights systemwide in November and December. This includes more flights from hub airports like Chicago, Houston and Denver.
New routes added for the holidays include Denver to Nashville, Washington to Phoenix and Chicago to Fort Myers. Larger aircraft will be deployed on popular routes such as Los Angeles to Honolulu.
With new staff and more flights, United hopes to avoid the long lines, delayed flights and lost baggage that plagued air travel this summer. The airline is trying to reassure customers that holiday trips won't be disrupted by operational issues.
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Pent-Up Travel Demand Drives Ticket Sales
The COVID-19 pandemic put travel plans on hold for millions of people worldwide. As countries closed borders, airlines slashed flights, and stay-at-home orders confined people to their homes, wanderlust was stifled on an unprecedented scale. Now, after two years of lockdowns and restrictions, pent-up travel demand is finally being unleashed. This rebound in travel sentiment is driving a surge in ticket sales as people indulge in delayed vacations and long-overdue visits with distant loved ones.
According to United CEO Scott Kirby, there is "a lot of pent-up demand after two years of the pandemic" that is contributing to strong holiday bookings. People who canceled trips during 2020 and 2021 are now eagerly rescheduling. Beach destinations like Hawaii and Mexico have been top sellers as folks plan warm-weather getaways after being cooped up for winter. Visits to national parks and other outdoor destinations are also on the rise as travelers seek COVID-safe activities.
International travel has seen a particularly pronounced rebound after border restrictions eased. Overseas destinations like London, Dublin and Rome top the list of popular holiday bookings. Travelers who postponed European vacations and bucket-list trips are splurging on long-haul flights. United has added new nonstop routes from U.S. hub cities to capitalize on this demand.
VFR travel (visiting friends and relatives) is also booming. The inability to visit loved ones has taken an emotional toll over the past two years. Kirby said reconnecting with family and friends is driving bookings as people "go home for the holidays" this year in a big way. Travelers are shelling out for flights home for Thanksgiving, Christmas and New Year's after missing holidays in 2020 and 2021.
Pent-up demand is not limited to leisure travel. Business travel is also rebounding according to United's data. Companies stalled corporate travel for two years. With restrictions lifted, businesses are again booking employee trips to conferences, trainings, and client meetings. Holiday parties that went virtual in 2020 are back on for 2022.
After delaying vacations and missing milestones, people are resolute about traveling this holiday season while they can. Having the flexibility to work and learn remotely has also enabled more holiday travel. Consumers still conscious of COVID risks feel safer knowing they can quarantine and work from "home" if needed.
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - International Travel Rebound Contributes to Optimism
The return of international travel is fueling optimism for a blockbuster holiday season according to United Airlines. As global border restrictions ease, overseas bookings are surging. This appetite for international trips provides a major boost to United's bottom line.
During the pandemic, international travel slowed to a trickle as countries closed borders. Overseas demand plunged as nations imposed quarantines, testing requirements and blanket travel bans. Now as these restrictions are rolled back, many travelers feel it’s safe to venture abroad again. United is seeing massive growth in bookings to Europe, Mexico, the Caribbean and other global destinations as cabin fever gives way to wanderlust.
Europe tops the list of popular international destinations. Searches for flights to London jumped 52% on United.com following the U.K.’s decision to end pre-travel testing rules. Dublin and Rome are also seeing heightened demand. Beach locales like Cancun, Cabo San Lucas and Montego Bay make up three of the airline’s five fastest-growing international routes.
This global rebound benefits United in multiple ways. International fares are generally higher than domestic prices, boosting the airline’s revenue. Long-haul routes also command a revenue premium. And with many carriers slow to restore international service, United gains a competitive advantage by having more flights to choose from.
United is capitalizing on this international demand by expanding its global route network. The airline recently announced seven new European routes for summer 2023 including Berlin, Nice and Malaga. Seasonal flights to Jordan and Canada were added for 2022. United is deploying its largest-ever transatlantic schedule this winter with 46 daily flights to Europe.
For many travelers, overseas trips delayed by the pandemic have become almost mythical quests. United customer Molly described her emotion when finally boarding a flight to Portugal after two years of postponements: “I got teary-eyed as soon as I stepped on the plane. It seemed like this trip might never happen.” Now that more borders are open, United is helping travelers’ long-delayed international journeys finally take flight.
Restore confidence is key to reviving international demand. Travelers need to feel safe boarding long flights and entering foreign countries before the industry can fully rebound. United is working to provide reassurance by enforcing mask mandates and enhancing aircraft ventilation. The airline also offers free COVID testing for international travelers headed to destinations with testing requirements.
Partnerships with global health organizations like Safe Travels by the World Travel & Tourism Council boost consumer confidence as well. United also provides up-to-date travel restriction information on its website so customers can book trips with clarity around testing rules.
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Ancillary Revenue Growth Aids Bottom Line
Ancillary revenue has become a crucial profit driver for United Airlines and other carriers. As the airline industry claws its way back from the ravages of the pandemic, maximizing these non-ticket revenue streams is key to rebuilding financial health.
Ancillary fees encompass everything from baggage charges to seat upgrades to in-flight WiFi. They're sometimes derided by customers as "nickeling and diming." But to airlines, they can mean the difference between profitability and loss.
United raked in $5.3 billion from ancillary fees in 2019. That figure plunged to $2.9 billion in 2020 as the pandemic decimated travel demand. Now the airline expects to generate over $5 billion again in ancillary revenue for 2022.
Checked baggage fees are United's single biggest ancillary earner. Economy passengers fork over $35 for the first checked bag, providing a tidy windfall. Changing or canceling a ticket brings in another $200 per person - that really adds up with over 300 million passengers annually! Even snacks aren't free anymore, with United earning $27 million from food and beverage sales last quarter.
Ancillary revenue helps United offer cheaper base fares that stimulate demand. ”People are more price-sensitive post-pandemic,” said CEO Kirby. Without ancillary fees padding the bottom line, average airfares would need to be higher.
United aims to drive more ancillary purchases by incentivizing customers. Ordering food via the airline app provides bonus miles. Free checked bags are perks for elite and credit card members. Flight extras are bundled into subscription plans targeted to frequent travelers.
The airline is also expanding premium seating. New Economy Plus rows with extra legroom carry premiums up to $159. Selecting seats toward the front now costs extra too - up to $59 for United's "Economy Preferred" rows.
Travelers hoping to offset the hassles of holiday travel are prime targets for ancillary spending. United offers trip insurance starting at $49 to ease worries about cancellations or delays. In-flight WiFi enables customers to stay productive and entertained while flying.
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Fuel Costs Remain a Concern amid High Jet Fuel Prices
One major headwind facing United and other carriers this holiday season is ballooning fuel costs. Jet fuel prices have surged over 50% in 2022 as the airline industry’s demand for fuel rebounds faster than supply can keep up.
Airlines got a free pass on fuel costs the last two years as flight volumes cratered. Now capacity is nearing 2019 levels while fuel remains the airlines’ largest cost outside of labor. Every cent increase in jet fuel tacks on tens of millions in expenses for United.
CEO Scott Kirby acknowledges that “fuel prices are high” but said United can still turn a profit due to strong demand. Yet persistently high jet fuel costs will pressure United’s bottom line and could diminish holiday bookings if airfares rise.
Fuel accounted for over 20% of United’s operating costs in recent years. The airline burns through around 4 billion gallons annually. A mere 1 cent per gallon increase in jet fuel adds $40 million to United’s annual fuel bill.
Unlike budget carriers, United has not imposed fuel surcharges despite prices doubling year-over-year. Delta, Air France and Lufthansa have adopted fuel fees to offset higher costs. United is betting holiday bookings won’t be dampened by slightly higher fares.
According to aviation analyst Helane Becker at Cowen, holiday airfares probably need to increase around 10% for United to completely offset fuel cost hikes. Whether travelers will stomach double-digit fare increases remains uncertain.
United took major steps to cut fuel consumption amid previous oil price shocks. The airline invested billions in new aircraft like the 787 Dreamliner that burn 15-20% less fuel. United’s current fleet is over 15% more fuel efficient than a decade ago.
United’s best defense is keeping planes full. The airline estimates every percentage point improvement in load factor saves $25 million in annual fuel outlays. Discounted holiday fares will ensure every seat is filled. Ancillary purchases like premium seating also boost revenue without burning extra fuel.
Aside from financial impacts, United must also consider fuel’s environmental footprint. Aviation emissions account for 2-3% of global carbon output and United is aiming to cut its greenhouse gas emissions 50% by 2035.
United and other airlines will likely continue lobbying for more sustainable aviation fuel (SAF) production to diversify beyond petroleum-based jet fuel. But SAF currently comprises less than 1% of United’s usage as costs remain prohibitive.
United Upbeat: CEO Predicts Best Holiday Travel Season in Decades - Expanded Flight Schedule Accommodates Customer Demand
To handle the anticipated holiday travel rush, United is significantly expanding its flight schedule for November and December. This capacity boost aims to meet surging customer demand and prevent the mammoth delays and cancellations that plagued summer travel.
According to CEO Scott Kirby, United is “adding flights where customers want to go this holiday season.” The airline will operate over 3,500 daily domestic flights in December - a 7% increase compared to 2021. New nonstop routes like Fort Myers to Chicago and Phoenix to Washington, D.C. make holiday travel more convenient. Bigger jets will fly popular leisure routes to Hawaii, Florida and mountain destinations.
United is also expanding international service for the holidays. Transatlantic capacity jumps 25% in December with new flights to Berlin, Nice and other European hotspots. United will operate its largest-ever Mexico schedule this winter as sun-seekers flock south. Even Asia sees a boost, with nonstop San Francisco-Melbourne service restored.
This expanded schedule gives holiday travelers far more flight options.savvy consumers often spend hours searching sites like United.com to find the perfect outbound and return combination. Now there are more nonstops and direct flights to mix and match. Search with flexible dates using Google Flights or Mighty Travels and you’ll likely spot deals.
What compelled United to grow its holiday schedule so dramatically when staffing remains tight? Consumers expect choices and the airline aims to oblige. After two years of lockdowns, travelers are extra motivated to reunite with distant loved ones over the holidays. United wants to make visiting Grandma or that long-lost college buddy easier than ever.
New flight routes also drive revenue by matching capacity to customer demand. United can tap into that pent-up wanderlust by offering more ways to reach global hotspots and tropical retreats long-off-limits. And an expanded schedule brings competitive advantages. With more options for holiday trips to places like Miami and London, United is well-poised to capture bookings compared to airline rivals.
Yet this flight expansion is not without risk. United struggled mightily to operate its full schedule this summer amid severe staffing shortages. Expanding too fast sparked a cascade of delays and cancelations as the airline outstripped its resources. Will the holidays see an operational meltdown redux with 15,000 new employees still in training?