Airlines pivot from business travelers to infrequent flyers seeking sunshine

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United is adding 17 routes from the Northeast and Midwest to Florida, none of which involves a hub -- a notable departure for the airline.
United is adding 17 routes from the Northeast and Midwest to Florida, none of which involves a hub -- a notable departure for the airline.

Airlines, practically turning over the seat cushions in search of revenue, have made a major strategic shift away from lavishing attention on business travelers with elite frequent-flyer status and instead are adjusting route networks to place more focus on leisure flyers.

The moves come as business traffic remains down approximately 95%, at least at American Airlines, executives there said earlier this month.

Over the past several weeks, United and JetBlue in particular have emphasized launch dates for new sunseeker destinations. A group of 17 new routes that United will fly from the Northeast and Midwest to Florida during the late fall and early winter is particularly noteworthy because none of them will involve a hub -- a major strategic departure for the carrier. 

Instead, flights will connect a variety of northern markets, such as Boston and Cleveland, to destinations including Fort Lauderdale, Fort Myers, Tampa and Orlando. 

JetBlue, meanwhile, will launch 24 routes in November and December, all to warm locales and selected to cater to leisure demand. Among the new routes will be seven between Newark and the Caribbean or Mexico, three between Los Angeles and the Caribbean or Mexico as well as flights connecting Fort Lauderdale to Palm Springs, Calif., and Bozeman, Mont. 

Scott Laurence, JetBlue's head of revenue and planning, said that interest in leisure travel is growing, albeit off the low baseline from earlier in the Covid-19 pandemic. JetBlue, he said, has the extra aircraft to try a series of creative ideas, as long as variable operating costs can be covered.

"We're taking on a new strategy to pivot to unserved and underserved leisure routes, as business travel will be slow to bounce back," Laurence said. "Since the pandemic unfolded we have been focused on addressing changing trends, staying nimble and taking actions in regards to our network strategy."

To be sure, flying of all sorts remains significantly down at JetBlue and other carriers. For the month of September, the six mainland U.S.-based full service carriers -- American, Delta, United, Southwest, JetBlue and Alaska -- were scheduled to fly just 49% of the seats they flew last September, according to the flight data provider OAG. But United and JetBlue aren't alone in shifting share toward routes focused on leisure flyers.

American is currently flying 55% to 60% of its traffic through its two primary hubs of Charlotte and Dallas, up from approximately 40% pre-Covid, chief revenue officer Vasu Raja said at the recent Cowen Global Transportation & Sustainability Mobility Conference, which was conducted virtually. The shift has been made to preserve as much connectivity as possible, especially to leisure destinations in the South.

Raja explained that American's network has historically been built around high-yielding business travelers. But a key going forward is to recognize that the customer is changing.

"The more we can understand the customer, the more the airline's network will change," Raja said.

Meanwhile, although domestic capacity for Delta is scheduled to be down 40% to 45% year over year systemwide in October, it will be down just 15% at its Salt Lake City hub, said Eric Phillips, the carrier's senior vice president of airport customer service.

Salt Lake City's relative strength is likely due, at least in part, to its location serving the Mountain West, where tourism has been strong this summer. For example, the carrier was slated to offer 42 frequencies between Salt Lake City and Jackson Hole, Wyo., during the week of Sept. 14, according to OAG, the same as last year.

By comparison, many of Delta's high frequency business-focused routes from Atlanta have seen large frequency reductions. The carrier was to fly Atlanta-New York LaGuardia, for example, 106 times during the week of Sept. 14, compared with 206 times a year earlier. And, as another example, OAG analyst John Grant noted that Delta will drop its twice-daily service between Seattle and Washington Dulles entirely for five weeks beginning Oct. 5. Other major airlines show similar frequency drops on traditional business routes. 

The need to shift route networks toward leisure flyers, of course, isn't exclusive to U.S. carriers. European airlines chased demand during the summer months, especially by ferrying Northern Europeans to traditional vacation spots in the Mediterranean, said Rob Walker a London-based aviation analyst for the consulting firm ICF. But the end of summer, coupled with Covid-19 spikes in key markets like Spain, are leading to a new decline in European seat capacity.

Meanwhile, the complications of crossing borders makes it a challenge for major European legacy carriers to be nimble. That's especially the case because those airlines tend to have more widebodies as a share of their fleets than U.S. carriers. Redeploying widebodies in a profitable fashion is more challenging than shifting around narrowbody aircraft, Walker said.

Still, he said that the Lufthansa Group is pushing a higher capacity share toward its discount unit Eurowings, while IAG, the parent of British Airways and Iberia, is shifting share toward its discount Spanish unit, Vueling.

Beyond adjusting route networks, airline can look to their loyalty programs as levers for drawing in new flyers.

At the Cowen conference, Raja said that American's current customers are less likely than in the past to have AAdvantage status or even be AAdvantage members. The carrier, he said, needs to find ways to draw in new customers and work them gradually to higher status tiers. 

Gary Leff, author of the View From the Wing blog and a close follower of loyalty programs, said that lip service aside, he's yet to see airlines take substantial new steps to orient loyalty programs toward leisure flyers.

For example, he said that American should automatically enroll new customers in AAdvantage or at the very least reach out to new customers who book through a direct American channel.

"Airlines need to be more aggressive in getting people to join their program," Leff said. "That gives them the opportunity to market to them through their primary marketing vehicle." 

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