Delta, JetBlue: Corp. Travel Ramping Up, No Cracks in Demand

Delta Air Lines and JetBlue Airways each have seen business travel ramp up again in September, with no discernible “cracks” in total demand, according to executives from each carrier, who spoke last week at a Morgan Stanley conference. 

“I think everybody is looking for cracks, and what I’d say is that we haven’t seen any cracks in our demand set yet,” Delta president Glen Hauenstein said. “We continue to see on the leisure side very, very strong demand through even what’s traditionally more of an off-peak period in the fall and into the early winter. There was a step-up in business [travel] post-Labor Day, which we were hopeful for, but didn’t know if it would actually materialize.”

Corporate contracted volume for Delta was about 65 percent restored during the summer months, with revenue about 10 percentage points above that, Hauenstein said. As of last week’s conference, that figure was 10 to 12 percentage points higher, with revenue recovery “going from the mid-70s up into the mid-to-high 80s,” he added. 

When asked to address pandemic-era prognostications on the demise of business travel, Hauenstein said infamous predictions that 50 percent of business travel would never return were “just wrong. We’re sitting here today and corporate revenues [are] restored to 85 percent. People need to connect; they want to connect. The more people haven’t connected, the more the desire is to connect again in the future.”

Hauenstein did acknowledge that business travel “may never go back to what it was in ’19, but it will be bigger in different ways,” noting that with remote workers living outside bigger cities now, there is an increased need to bring them into the office “many times a year.”

JetBlue CFO Ursula Hurley echoed Hauenstein’s comments on overall demand. “There’s been no slowdown in demand yet,” she said, adding that “everyone is waiting for the shoe to drop.” However, she noted that some leisure travelers who were priced out in the summer have continued to travel into September, and given flexible work arrangements, the carrier is seeing some take longer weekend trips.

Based on that continued overall “strong demand environment,” JetBlue on Friday issued improved guidance for the third quarter. The carrier now expects third-quarter capacity to be roughly flat compared with 2019 numbers versus a prior estimate of a flat to a 3 percent decrease. The revenue growth range estimate also increased, from 22 percent to 24 percent instead of the prior range of 19 percent to 23 percent.

The New York-based carrier also saw a sequential 10-percentage-point improvement in business travel from Q1 to Q2, Hurley said, with business traffic about 80 percent recovered. 

“Business travel took a hiatus during the summer, but we are seeing it ramp up again,” she said, adding that especially in places like New York, there are more organizations bringing staff back into the office, “and hopefully it’s real this time. The position of JetBlue with the Northeast Alliance in Boston and New York [with American Airlines] is really going to help us further catapult our business traffic.”

Historically, JetBlue has seen an 80-20 split between leisure and business travel, Hurley said, but “we are trying to evolve that with the combination with American.” 

The Northeast Alliance has come under scrutiny since its launch, and the pending antitrust suit against it goes to court in the last week of September. 

“We feel extremely confident in our case, and have brought consumer benefits to the Northeast,” Hurley said. “Data points show and prove that. … We hope to have a resolution on that trial by the end of the year.”

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