The forecast for the airline industry continues to look grim as the U.S. heads toward another coronavirus spike. Still, some CEOs are feeling somewhat sanguine.
Peter Ingram, CEO of Hawaiian Airlines (HA), told Yahoo Finance that the company was positive about the “direction of demand at this point.”
Hawaii has had quarantine restrictions since March, but recently began allowing visitors to come if they have a negative COVID-19 test before traveling. "We've seen booking start to improve gradually," Ingram told Yahoo Finance. "For November and December, things are starting to pick up."
The U.S. travel industry reached a coronavirus milestone this week, as the Transportation Security Administration said it screened over 1 million passengers Sunday, the highest number of passengers screened at TSA checkpoints since March 17, at the beginning of the pandemic.
Hawaiian Airlines may be optimistic, noting that it is “moving in a good direction,” but Ingram was keen to point out that things will take time.
"A normal day for us would be around 25,000 to 30,000 visitors coming," Ingram said. "So 8,000 is good from where we've been over the last six months, but it's still a long way to go."
The company expects Thanksgiving and Christmas pickup, though with the rise in coronavirus cases, nothing is certain.
“I think we’re well beyond next summer before we’re back to where we were in 2019,” Ingram said. “But you know, my crystal ball hasn’t been so good over the last six or seven months so I don’t want to try to make too many predictions.”
So far capacity is still dramatically down, and the company reduced its workforce to contain costs. Ingram said more payroll support from the government would prevent further layoffs, though there hasn’t been a “legislative vehicle” to attach support measures to, Ingram said.
Attempts at both a standalone stimulus bill for additional airline aid and larger, more comprehensive legislation to help individuals and businesses weather the pandemic have been caught in a White House-Congress stalemate, though some stakeholders are optimistic.
Meanwhile, major U.S. airlines, including Delta, American and United, have laid off or furloughed thousands of workers. In July the International Air Transport Association said global passenger traffic will not return to pre-COVID-19 levels until 2024, a year later than previously projected.
Key market elements are missing
For Hawaiian, two elements are key to success. The biggest driver is the domestic market from the western U.S. Ingram said capacity is around 10%-15% of pre-COVID capacity.
“I think here over the next couple months we'll ramp that up quickly to about 50% of where we were before,” the CEO said, noting that the company does have the capacity to expand to those levels.
On the international front, Japan represents the biggest driver for Hawaiian tourism.
“Japan is, by far, the biggest international source of visitors and we look forward to having Japan come back online — hopefully by the end of the year,” said Ingram, though he noted there isn’t a time frame yet, only discussions about how to extend pre-flight testing to Korea and Japan.
This forecast is subject to serious change as the virus will determine consumer appetite for travel. Getting back to pre-pandemic levels will depend "on the prevalence of the disease not only here in Hawaii but also in the source markets we serve,” said Ingram.
“A lot of people have said it's not until we have a vaccine. I'm not sure about that because I think if we can get the disease under control and testing becomes more available, and the market develops lower cost options for testing, maybe we can prove this is a model that can get us back close to that,” he added