Behemoth airline and Hawaii newcomer Southwest Airlines was the first to announce what we here at BOH have known for several weeks was happening. There is a slowdown in forward bookings and an increase in cancellations for Hawaii travel and in fact for the entire travel industry.
The airline confirmed that the decrease in demand is as a result of “the recent rise in COVID-19 cases associated with the Delta variant.” Thus, Southwest Airlines reduced its third-quarter earnings guidance.
This all has changed very quickly.
As recently as July 22, July 22, SW CEO Gary Kelly said they were “not detecting any impact at all” related to the latest COVID variant. On that earnings call, others at SWA confirmed that belief. Now, just three weeks later, everything has shifted.
SWA said it now expects August revenue to be off 15% to 17% compared with 2019, which is significantly worse than the prior estimation. Passenger load factors are also expected to drop to 80%, down 7% since last month.
TSA also announced that the number of passengers screened daily is now trending down about 20% compared with 2019. September may be even worse in terms of air traffic.
Hawaii travel has been flying high.
Mainland visitors have been desperate to travel to Hawaii this summer and fall after canceling travel plans for 2020 and early 2021. Airlines and all of Hawaii have been experiencing an unexpectedly strong recovery.
Hawaii vacation-bound travelers have returned to the skies in huge numbers over the past several months, straining Hawaii’s capacity. Hawaii travel demand has done better than most other places, due to its being an exotic yet domestic destination, and given the ongoing complexities associated with international travel.
Hawaii travel availability may be increasing across the board.
The downward trend, albeit perhaps temporary, could mean that more cars are available, and more accommodations as well. If you didn’t find a Hawaii car rental when looking before, keep looking. You are more likely to find one now and in the coming weeks. The same goes for restaurant reservations. But it isn’t that simple. Read on for what may be about to happen.
Pricing ahead should be more advantageous for Hawaii visitors.
We have been sharing $99 airfares for the past couple of weeks, and there will be more of those and perhaps even lower prices ahead as airlines scramble to fill seats on a plethora of recently expanded Hawaii routes. Better pricing should be available on accommodations too, at least for now. If you have any reservations for ground activities and cars, keep checking for a possible price decrease. Stay tuned for more pricing updates.
Hawaii travel demand is closely tied to Delta variant peak.
This is the key factor to keep an eye on. It remains unclear when the current spiking COVID cases will trend down, both nationally and in Hawaii. Some predictions say that could even begin later this month. Whenever that happens, we are likely to see a reversal of the deceleration that is now in process.
Thus, there is a bottom line. There may be a sweet spot in the days and weeks ahead just before travel demand resurging once again. Stay tuned, as we’ll be staying on top of that with you.
We welcome your thoughts.