American Travelers Are Shunning the U.S. for Europe
Domestic ticket fares fall as tourists favor longer trips abroad
Globe-trotting Americans have packed international flights this summer, leaving behind some domestic-focused airlines.
Americans are flocking to Europe. The allure of international travel has travelers swapping out shorter trips within the U.S. or to some nearby destinations in favor of longer journeys.
The number of passengers on domestic flights slid 2% in July from the same month in 2019, while the number of passengers on trans-Atlantic routes increased 14%, according to Airlines for America, a trade group that represents several major airlines.
Airline ticket prices reflect the shift. Domestic fares are down 11% from last year and tracking below 2019 levels, while international fares have risen 11% from a year ago and are up 28% from 2019, according to Hopper, a booking app.
The pivot is cutting into revenue for some U.S.-focused airlines that haven’t seen demand build to the heights it reached last summer, according to airline executives. To cope, carriers are rejiggering schedules and trying out new routes to better match the emerging patterns.
“The current setup is simply not favorable to a domestic-focused airline,” Spirit Airlines SAVE -7.14%decrease; red down pointing triangle Chief Executive Officer Ted Christie said Thursday as the carrier reported weaker-than-expected earnings.
Dan Plotinsky and his family usually fly to New England to visit relatives over the summer. With his oldest daughter graduating from high school, they instead took a family trip to Europe. Plotinsky’s wife and daughters started in France, and he met them in London.
“I think we just decided, let’s try something new,” he said.
JetBlue Airways JBLU -3.62%decrease; red down pointing triangle cautioned this week that it might see a loss in the third quarter and pared its guidance for the full year. Executives at Spirit, Frontier and Alaska Air have said in recent weeks that U.S. airfares have cooled as more of their customers have spent their vacation budgets on trips abroad.
“When we lose 5% of our people to go to Europe, that’s a lot of customers,” Frontier Chief Executive Barry Biffle said Tuesday.
Hotels are seeing a similar switch. Marriott International MAR -1.31%decrease; red down pointing triangle said this week that per room international revenue is expected to climb as much as 30% this year, fueling growth while the U.S. and Canada increase more moderately. Hyatt Hotels said 27% of second-quarter rooms revenue at its hotels in Europe was from U.S. travelers, up from 21% in the same period in 2019.
“We’re seeing Americans broaden where they’re going,” Hyatt CEO Mark Hoplamazian said Thursday.
Travel has been on a two-year upswing as easing Covid-19 restrictions unleashed a torrent of demand that has been stronger and more resilient than many industry observers expected. This summer’s domestic slowdown is one of the first indications that the frenzied pace of the rebound could be moderating.
Some airline executives and industry observers said the international travel surge is a delayed echo of the domestic boom that played out last year.
Months after travel within the U.S. had started to pick up, trips abroad were still hemmed in by lingering rules requiring testing or vaccination records that made some travelers uneasy about planning expensive, complicated trips to far-flung locales while the rules were still in flux. The U.S. government dropped rules requiring air travelers to take Covid-19 tests before flying to the U.S. in June 2022, after some consumers had already set travel plans for that summer.
“That’s really late in the game,” said Mike Daher, who leads Deloitte’s U.S. Transportation, Hospitality and Services practice. “Obviously, this summer, that wasn’t the case.”
Travelers snapped up seats on international flights months in advance this year. Delta Air Lines DAL -1.36%decrease; red down pointing triangle said in April that it had already received three-quarters of its summer international bookings. Delta and United Airlines both bulked up their European schedules ahead of the summer rush.
Domestic demand is still decent, but it is tough to live up to last summer, said Vik Krishnan, an aviation consultant at McKinsey. “2022 was pretty much the high watermark one might argue, for what people would seem to be willing to pay for air travel domestically,” he said.
The change played out abruptly this spring. Cancún, in Mexico, was one of the most popular destinations throughout the pandemic. As recently as April, flights were sold out almost every day and fares were high, Spirit Chief Commercial Officer Matt Klein said Thursday. Less than two months later, that reversed.
“The demand just fell off,” he said.
With many business travelers still sidelined, airlines are increasingly subject to the whims of fickle vacationers, and they are still trying to figure out how to adjust. Carriers are culling flights on off-peak days such as Tuesday and Wednesday, and shifting their networks to cater to leisure fliers. Southwest Airlines LUV -3.33%decrease; red down pointing triangle said recently that it will pull flights from business-heavy markets—think Chicago to Columbus, Ohio—and add service to destinations such as Sarasota, Fla., Tampa and Phoenix.
JetBlue said recently that it plans to try different routes in an effort to tap into new veins of demand. The airline in 2021 started flying across the Atlantic, but service is still limited. “Other airlines have talked about how strong Europe is. We’re seeing that too. We just don’t have very much of it,” CEO Robin Hayes said.
Airline executives are debating how long consumers will give priority to European vacations over domestic travel. Delta and United both said they are expecting demand, at least for destinations in southern Europe, to extend into fall, longer than usual. Other carriers, including Spirit, said they expect patterns to snap back to normal in the coming months as summer wanes.
Biffle said: “We have not made an assumption that this environment changes before we get into the heart of winter. Although I do know that once we get to January, February, it’s a heck of a lot better to be in Florida than it is in most parts of Europe.”