Delta Air Lines is looking forward to summer on the back of a $1.2 billion net loss for the first quarter of 2020. Hoping to become profitable in the third quarter, the airline is encouraged by recent trends, especially regarding vaccinations in the US. Knowing that the return of international travel will help improve Delta's revenue and catalyze further profitability, the airline's executives on Thursday pushed hard for a European reopening.
A focus on reopening Europe
Buoyed by expectations that the US should reach some level of herd immunity, at least amongst adults, sometime this summer, Delta is targeting a third-quarter reopening of travel to Europe.
The most important market that Delta's executives pushed the hardest for was for a corridor between the US and the UK. CEO Ed Bastian stated the following:
"We're working on reopening international corridors. I think the one that is most likely to be open for the third quarter, hopefully, is the US – UK travel corridor. We're spending a lot of time with the authorities, both here in the US as well as the UK, as to what's going to be required to get that done. Hopefully in early summer we'll see the corridor open, which will then bring some pressure, I'm sure, on other markets to follow similar suit and protocol."
There are obviously many details left to work out on the reopening of this corridor. While there was some chatter about a reopening happening at the end of 2020, that did not materialize, and the UK entered a crucial lockdown period after starting vaccinations due to the presence of a more contagious variant.
He further stated on the US-UK corridor versus continental Europe:
"We are focused on trying to get the US – UK travel corridor open. I think that's the most logical. It has the greatest value to us, and I think those are the markets where we'll start to see demand grow quickly when we can get that open.
“We're working with our partners at Virgin from the UK standpoint, as well as across not just the airline industry, but within the broader travel and hospitality sector, to figure out how we can get it open for summer. We're making progress in that regard.
“When you think about other parts of Europe, there may be some occasional markets open this summer based on Southern Mediterranean leisure traffic that people will be interested in, but I don't think you're going to see continental Europe open in any meaningful way until later in the year, [and] probably, unfortunately, we’ll miss much of the summer."
Virgin Atlantic was one airline that has pushed for fewer restrictions and quarantines for travel between the US and UK.
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Passengers want to travel
In prepared remarks, Delta's President, Glen Hauenstein, stated the following:
"International travel remains muted, with long haul international booking volumes at only 15 to 25% recovered. We're seeing some early signs of life in Europe, with Iceland opening to travel to vaccinated US citizens, and increased demand for Israel and leisure destinations this fall. That said, Europe lags the US."
After Iceland announced it would open up for vaccinated travelers, Delta was the first US airline to add capacity to the market. It will serve the country from three points in the US: Boston, New York, and Minneapolis.
As progress on combating the pandemic accelerated in March due to increased vaccinations, Delta saw improvements in bookings, including a lengthening of the booking curve. Using this data and industry expectations for a summer surge in domestic leisure travel, the airline announced expanded services to places people want to go, ranging from destinations in the warm southeastern US to mountain and outdoor destinations in the west.
When could Europe reopen?
Border reopenings are mostly decided based on the state of the pandemic in a specific country. For example, with Australia maintaining barely any cases, the country is not planning on reopening until it can ensure that its citizens will not face growing case counts that could strain the healthcare system, like Brazil and the US have faced.
Europe is, unfortunately, in a difficult state of affairs. France, Germany, and Italy are just some of the many countries that have either gone into lockdown again or are facing a resurgence of case numbers.
As Iceland has evidenced, vaccines are going to be the primary driver for reopening countries for tourists. Greece, which previously expected a May date for reopening to international travel, could open as soon as next week for some travelers.
Not in Europe but in a similar state is Israel, which is conducting a limited reopening of tourism for vaccinated people. Seychelles, a popular island vacation destination, has also announced reopening for tourists after making significant progress on vaccinating its population.
The UK is the most likely country to open up next. Government officials have cautiously signaled the potential for summer vacations this year, and vaccinations are rolling out impressively there as continental Europe struggles.
Ultimately, Delta's primary focus is on opening a US-UK travel corridor, a traditionally higher-yield route with heavy corporate and leisure demand. However, whether that corridor will be open by the third quarter is mostly out of Delta's control.
Do you think Delta is doing the right thing in pushing for a US-UK corridor? Will you be planning a summer vacation to Europe? Let us know in the comments!