It has been a busy summer both domestically in the USA and around the world, but as we approach the end of the summer travel seasons it appears that more Americans are choosing to travel to Europe than in years past, with domestic travel actually declining.
US Domestic Travel Declines As Americans Choose European Travel
Alison Sider of the Wall Street Journal notes that compared to baseline pre-pandemic 2019 numbers, two interesting trends have emerged:
- The total number of domestic travelers slid 2% in July 2023 compared to July 2019
- Domestic fares are down 11% versus 2022
- The total number of transatlantic passengers rose 14% in July 2023 compared to July 2019
- International fares are up 28% versus 2019
Is this simply one final summer of pent-up demand from the lost years of 2020 and 2021 or is there something totally different going on?
Spirit Airlines’ CEO Ted Christie told the WSJ, “The current setup is simply not favorable to a domestic-focused airline.” Spirit reported weaker earnings than expected last week.
And Spirit is not alone. JetBlue has warned it may report a quarterly loss in what traditionally has been the most profitable quarter of the year and Alaska Airlines and Frontier have also warned of lower demand than forecast.
Frontier Airlines CEO Barry Biffle summed up the problem:
“When we lose 5% of our people to go to Europe, that’s a lot of customers.”
As the first full summer without onerous testing or masking requirements, the demand for European travel is understandable. Interestingly, Delta reported that 3/4 of its summer international bookings were already completed by April 2023.
The slow return of business travel is not helping, with many companies either reluctant to send road warriors back on the road or having shifted to communication via screens. It was traditionally those high last-minute or premium fares paid by business travelers that pushed domestic revenue up, but airlines are having to address a new model of hybrid work and declining business travel.
Practically, we saw Southwest Airlines recently announce it would slash service on key business routes on weekdays, citing low demand. This sort of pattern shows no signs of slowing down, though this winter will be an important test case.
CONCLUSION
Americans are shunning domestic travel for Europe. But is it this summer–the first real summer of hassle-free travel between Europe and the United States–an outlier or the new norm? And will domestic travel spring back? That remains to be seen. But as Biffle said:
“We have not made an assumption that this environment changes before we get into the heart of winter. Although I do know that once we get to January, February, it’s a heck of a lot better to be in Florida than it is in most parts of Europe.”
That’s one safe assumption…
