I wrote last week that coronavirus was taking a large and uncertain toll on the travel industry. While the biggest hits to the airline sector had been reductions in travel to and within Asia, we’re starting to see falling demand for air travel and service cutbacks at airlines around the world. British Airways announced Monday it is reducing its frequency of service between London and New York — two places not yet hit especially hard by the epidemic. And United Airlines announced Wednesday that it is cutting its U.S. and Canada schedule by 10 percent for the month of April, and its international schedule (excluding Canada) by 20 percent, compared to its pre-coronavirus plans.
“We’ve already begun planning similar reductions for May,” the airline said in a letter to employees.
United attributes the schedule cuts to falling demand. And because the airline won’t need as many labor hours to operate fewer flights, it’s asking employees to take voluntary leaves of absence or schedule reductions. It has also imposed a hiring freeze and delayed salary increases for nonunion employees. Some Asian carriers have had to take much more drastic measures to reduce labor costs, and those measures could come to the U.S. if air travel demand falls further.
Demand for air travel is falling in part because many non-airline companies are telling employees to cancel or postpone travel plans. Google, Twitter, Amazon, Salesforce, Nestle, L’Oreal, Cargill, Ford, General Motors, Fiat Chrysler, and many others have imposed restrictions on business trips. Company and industry conferences are being canceled. It will take longer to learn how the crisis has been affecting leisure travel — individuals don’t announce in the newspaper when they’re not traveling — but business travelers are especially important to airline profitability because they tend to buy expensive tickets in premium cabins and often book close to the date of travel. With fewer of these these high-paying customers — check out this Delta flight from Minneapolis to Tokyo next month with hardly any seats sold in first class — it’s no surprise airlines would feel compelled to reduce costs by flying fewer flights.
Another sign that both business and leisure bookings are soft is that all major U.S. airlines have greatly increased flexibility for customers to change and postpone travel plans without paying fees, even if the tickets are for travel to places not particularly impacted by coronavirus. (The one exception is Southwest, which isn’t granting new flexibility because its ticketing policies have always been unusually flexible, allowing passengers to change their tickets with no penalty beyond paying the difference between the old and new fare.) These are the sorts of moves you would expect from airlines that think they’re losing customers who are nervous about whether they will really want to travel.
If you want to take advantage of this added flexibility, you should review the policy of the specific carrier you’re buying a ticket on. For example, Delta will waive the fee for one change on any flight itinerary you book in the month of March (your planned travel doesn’t have to be this month, you just have to buy the ticket this month). United’s policy is more flexible: You not only have the option to change your itinerary without a fee; you can also cancel it and receive a credit that you can use toward any booking within a year of when you originally bought the ticket. That’s a better deal if you’re unsure exactly when you’ll want to reschedule your trip at the time of cancellation. American, on the other hand, is more restrictive than Delta: They will allow fee-free changes only up to 14 days prior to travel, which may not help you very much if you are concerned that COVID-19 may lead you to want to cancel close to your travel date. American’s announced policy also applies so far only to tickets sold through March 16, not the entire month, though they could extend it later. Points blogger Gary Leff attributes this restrictiveness to American’s desire to ensure that business travelers, whose schedules change frequently, can’t take advantage of cheap advance-purchase tickets.
Offering more flexible terms to passengers (a step that JetBlue took first before the larger carriers copied them) is a plausible strategy to boost ticket sales at a time when customers are concerned that coronavirus might become a really big deal, but they remain willing to fly as of today. It won’t do much for the airlines if and when we come to a point in the epidemic where social-distancing measures make reducing air travel a necessity in the U.S. — as then customers can be expected to extensively take the airlines up on the option to postpone and cancel. If that happens, you can expect even more schedule reductions. But for now, the airlines’ change in pricing strategies provides an option for you to plan upcoming travel with an option to cancel later, if you get nervous.
