What you need to know

The airline industry has suffered significant losses throughout the COVID-19 pandemic, earning just an estimated $78.8 billion in 2020, a 60% drop from the previous year. Moreover, full recovery will be years away, even after a vaccine is widely available. While airlines have their work cut out for them in getting back to profitability, they also have to prepare for the next normal in airline travel. This includes an even bigger focus on streamlining the whole flight process from booking to leaving the destination airport, as well as providing the convenience and exclusivity that passengers desire. Fortunately, these new demands also come with areas for carriers to upsell to willing passengers.

Key issues covered in this Report

  • The impact of COVID-19 on consumer behavior and the airline industry.

  • How economic conditions, particularly unemployment both inside and outside of the airline industry, affect airline recovery.

  • Airline amenities that travelers are interested in and will pay more for.

  • The airline policies that impact brand affinity.

Definition

This Report focuses on US-based air carriers operating both domestically and internationally. Cargo/freight airlines and unscheduled/chartered passenger flights are not included in the scope of this Report, except where specifically called out.

The market size included in this Report covers domestic air carriers with prepandemic annual operating revenues of at least $20 million. Operating revenues considered include:

  • Airfares

  • Baggage fees

  • Reservation change and cancellation fees

  • Transport-related revenue – revenues from incidental services, including in-flight onboard sales (eg food, liquor, pillows); codeshare revenues; revenues from associated businesses, such as aircraft maintenance, fuel sales, restaurants; fees for pet transportation; standby passenger fees and public service subsidy.

The Report categorizes airline passengers based on the number of flights taken in the last 12 months. These definitions are as follows:

  • Light: 1 flight

  • Medium: 2-4 flights

  • High: 5-9 flights

  • Ultra: 10+ flights

The Report labels flight times for commercial flights taken, measured by total flight time, per the following:

  • Short: Less than 1 hour

  • Medium: 1-3 hours

  • Long: 3+ hours

The Report references time frames related to the pandemic, using the following terms:

Before the COVID-19 lockdown period: September 2019-March 2020

During the COVID-19 lockdown period: April 2020-June 2020

After the COVID-19 lockdown period: June 2020-September 2020

COVID-19: market context

This Report was written between November 1 and December 3. The first COVID-19 case was confirmed in the US in January 2020. On March 11, the World Health Organization declared COVID-19 a global health pandemic, and on March 13, President Trump declared a national emergency in the US.

Across the US, state-level stay-at-home orders rolled out throughout the months of March and April, and nonessential businesses and school districts across the nation closed or shifted to remote operations. At the time of writing, all 50 states have relaxed restrictions, allowing businesses to operate with varying levels of social distancing measures in place. However, a resurgence of COVID-19 infections has driven some states to slow down or reverse course on reopening plans.

While there has been activity in the travel sector over the summer, much of this was relegated to getaways to remote areas and road trips. Consumers are persistently worried about prepandemic-style travel, vexing airlines and depressing hotel revenues. They are, however, eager to travel once they feel safe and able to do so.

Economic and other assumptions

The analysis provided reflects an estimated range of the market’s prospects in light of the upheaval caused by the COVID-19 crisis. This is driven by Mintel analysts’ understanding of consumer behavior in this market, alongside an evaluation of how exposed this sector is to the crisis and how quickly demand will return to previous levels once a degree of normality returns to the market. Mintel’s economic assumptions are based on the updated forecasts released by the CBO on July 2, 2020. The CBO expects US GDP to fall by 5.8% in 2020 and recover to 4.0% growth in 2021. The CBO projects the unemployment rate to average 10.6% for the year, with an 8.4% rate for 2021.

Back to top