There’s ‘a lot of pent-up demand’ for travel: Hawaiian Airlines CEO

Peter Ingram, Hawaiian Airlines CEO, joined Yahoo Finance Live to discuss how COVID-19 has impact the travel industry over the past year and his outlook for 2021.

Video Transcript

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- 25 minutes to the closing bell. And this day on which a year ago, they declared a global pandemic, the WHO markets are recovering. So is the airline industry. Let's bring into the stream our next guest, the CEO of Hawaiian Airlines, Peter Ingram. It's good to have you here. And it's a first for us to talk to you. And what's interesting to me is everything is going right. The new American relief plan has more assistance for the airline industry, short interest in your airline is at a level-- it's below 5%. It's below what it was before the pandemic.

Your stock has been going up, although today I don't understand why they might be selling off. And you've just launched more service from the mainland to Hawaii. So what do you want people to know? Because we know you're ready to travel.

PETER INGRAM: Well, good to be with you. And certainly we're feeling a lot better about things right now than we have throughout much of 2020. I think we still have a lot of road to travel to get back to something that resembles the pre pandemic normal. But we see some very positive trends. We've had bookings improving over the last several weeks. We feel with vaccines more broadly in distribution that people are more optimistic about travel for the summer. And we are excited to launch the new routes.

We started a Long Beach to Maui route a couple of days ago. And this afternoon, I'm going to be over at Honolulu Airport with our first flight departing for Orlando. So we're very excited about a year of recovery after a very, very difficult 12 months.

- And Peter, as you look at it now, you talk about how the last 12 months has been so difficult. You're feeling much better. But we still have a ways to go. How much longer, if you could try to estimate at this point from the trends that you're seeing in your business, do you think it's going to take to get back to those pre pandemic levels?

PETER INGRAM: Well, I think it varies for certain parts of our network. What we communicated to investors on our last quarterly earnings call is that we expected for this summer for our North America to Hawaii business, which is a little over half of our revenue that we expected to be up to between 80% and 100% of capacity by summer. We're actually on track to be in that range with our April schedule now.

So we're feeling good about how that has recovered. Certainly not back to normal load factors that used to average, 85% to 90%, but bookings have been improving. And we see some encouraging results there.

Our international business is going to take a little longer. And that really depends on the pace of vaccine distribution and how the virus progresses in some of the key international markets. And for us, particularly, that's Japan, which is such a big part of Hawaii tourism.

- We should point out to people who are watching that prior to the pandemic in calendar year 2019, you flew almost 12 million passengers. So do you think the stimulus checks that are going to be going out to people, some who need them because they're unemployed, but others who will qualify for them, might help encourage people to, I need a break. It's been a year, and now I'm going to use that money for that?

PETER INGRAM: We see a lot of indication that there's pent up demand for travel particularly on the leisure end, which is the core of our business. I think people have been-- the biggest impediment is probably not financial, although that varies because the financial impact of the virus has been so different. Certain people have been affected not very much at all. They've kept their jobs. They've been able to continue working remotely. Other people have had much more catastrophic financial impacts.

So I don't know that it's all about financial as much as it is about, are there activities to do when I get to a destination? Will I be able to go out and enjoy the vacation? I think as soon as people have confidence that those factors are going to be in place, I think they are going to say, gosh. I haven't had an opportunity to travel for a while. And I want to go and do something different and take advantage of the freedom to be able to do that.

- I would love to go to Hawaii. I got to ask, I think you were among the first airlines to offer the pre-flight testing to make it easier for people to get there. Should that be something that's required going forward? And just lastly, among the monies that were given and lent to airlines like yours, I believe you had drawn down about $45 million from the original $622 from Treasury? Will you keep drawing down from that? Or will that not be necessary?

PETER INGRAM: So let me start by talking about the testing. So we were largely constrained from having many people travel on our airline through the second and third quarter of last year when Hawaii had a very strict quarantine in place. And that deterred almost all travel. Starting in mid-September, on September 15, there was a program initiated called Safe Travels Hawaii, which allowed people to avoid quarantine by getting a pre travel PCR test within 72 hours of travel.

And one of the needs we recognized for our airline is we know that that cost is going to be an impediment for people. But we don't want the availability of tests to be an impediment to travel. And so we set about identifying partners that provide testing. And we actually worked with a company called worksite labs to set up testing locations near some of our key origination airports in Los Angeles and San Francisco and Los Vegas so that people could have access to a test and know that we were supporting having those results get back to them within the 72 hour window.

And it really has opened things up and given people an opportunity to travel. As far as how long that should continue, I think we've got to continue to evolve these policies based on the science and data of how the virus is progressing.

And so as vaccinations help to bring the case rate down and hopefully get us to a point of herd immunity, I would hope that we can remove some of the restrictions, remove quarantine restrictions, remove testing requirements when they're no longer necessary so we're not putting up impediments to travel that are no longer necessary for the situation.

The second part of your question was about-- I was going to answer the second part with regards to the federal support. So we have accepted payroll support. We had initially drawn a loan under the CARES Act of $45 million. But we chose to refinance that loan in the private markets, and have now exited that loan facility as of February of this year.

- We wish everybody at Hawaiian Airlines the best. Peter Ingram is the CEO. Thank you for joining us and we'll be right--