United Airlines has moved quickly to trim its flights to Europe following yesterday’s announcement from the White House.
A “lifesaving move” hits airlines hard
Donald Trump unilaterally banned travel from Schengen zone countries for 30 days calling it a “lifesaving move.” The travel ban takes effect from midnight tonight. The ban, which does not apply to US citizens, permanent residents and travelers from the United Kingdom and Ireland is set to hit transatlantic flights hard.
United Airlines handles 13% of all transatlantic traffic. Schengen zone flights make up 11% of all international flights in and out of the United States. The majority of these flights are heading into either Germany, France or the Netherlands.
According to the US Travel Association, approximately 850,000 passengers traveled to the United States from Schengen zone countries in March 2019. They spent USD$3.4 billion and accounted for approximately 30% of international arrivals.
Nicholas Calio, president of Airlines for America, told CNBC that;
“This action will hit U.S. airlines, their employees, travelers and the shipping public extremely hard.”
United Airlines moves fast to further trim schedules
Having already trimmed schedules, canceled flights and reduced capacity, United Airlines has moved swiftly to reduce its exposure to Schengen zone markets.
According to a report in View From The Wing, United is making the following changes effective 19 March 2020.
- Daily flights will be maintained to Zurich, Brussels, Paris, Amsterdam, Manchester and Edinburgh;
- Flights will be maintained to Frankfurt and Munich from various US airports;
- There will be several flights a week to Lisbon; and
- London and Dublin will be serviced by 18 and three flights a day respectively.
The report notes that United isn’t bringing the changes into effect immediately. It is giving travelers a week to get home.
United Airlines waiving changes fees
Like most airlines, United is waiving change and cancellation conditions on its tickets. According to United’s information page, when you book a ticket this month for travel you can change it for free for the next 12 months.
The airline is also waiving change fees for tickets purchased before 2 March 2020 for travel in March 2020.
It is a bitter pill for United Airlines (and other US carriers). After a couple of years of bumper profits, they should be preparing for the busy northern summer season, the peak time of the year for transatlantic travel.
Instead, they are busy cutting costs and hunkering down for a sparse summer.
Lost revenue and a travel-adverse public
The problem for airlines like United is not only the foregone revenue from a flight that is canceled today, it is that this revenue is lost forever. Unlike a physical item, say a dress, United Airlines can never resell that seat and will never recapture the lost revenue.
The problem is further exacerbated by a growing reluctance to make forward bookings. This further erodes revenue. What was just some black humor a few weeks ago about COVID-19 and the possibility of ruined travel plans is now a very real threat.
No-one wants to pay for flights and have those flights canceled. No-one wants to travel somewhere and risk been stuck there as borders are closed.
This fear, which is growing more concrete by the day, is going to have a huge impact on airlines and the travel industry in general.
A financially strong airline like United will probably ride this out. They can keep trimming their schedules and reallocating aircraft and capacity elsewhere.
United’s latest cuts are just the beginning of what could be a long summer.