More people are receiving the COVID-19 vaccine in the U.S. and around the world. Leisure travelers in the U.S. are venturing out again, but business and international travel demand is still uncertain. George Ferguson, senior analyst aerospace/defense and airlines for Bloomberg Intelligence, joined Walker Jaroch, AviationPros' assistant editor, for a discussion focusing on aviation's recovery in a recent edition of the AviationPros podcast.

Leisure Travel

Ferguson said there’s a “reawakening” of leisure air travel demand.

“Demand is rising — it rose right around spring break pretty nicely and we’re hearing the airlines say their bookings in the summer season are looking good,” he said, noting some airlines might get back to domestic capacity levels that rival 2019 standards.

Business Travel

Business travel will be slower to return to “normal” levels than leisure demand, but it could start to rebound before 2021 is over.

“What we haven’t seen yet is international and business demand come back,” Ferguson continued. “International still struggles from controls in different countries and different countries are lifting controls or looking for different types of controls at the border to keep from being reinfected. And that’s really affecting the ability for airlines to conduct long-haul operations.”

Ferguson said leisure travel corridors will open, but will remain small for summer, which will hurt airlines' ability to make a profit.

“We’re seeing business demand continue to lag,” he noted. “A lot of businesses are still work from home. They’re still getting their head around getting employees to travel again. We think it probably takes getting past summer flying season — summer vacation season — before you see business demand start to bounce back right at the end of the year.”

International Travel

International travel demand is unpredictable because of the differing travel restrictions each country has at the border.

“This is going to be very interesting because you’re seeing vaccine passports be suggested," Ferguson said. "In the U.S. I think we struggle with the whole idea that we would force anybody to get a vaccine to travel so there’s personal rights groups that are complaining about that. I think it’s going to be hard to turn the U.S. into sort of a vaccine passport kind of country. But, at the same time, I think there will be other countries that will absolutely require the vaccine to travel. I see a real hodge-podge going forward. The problem is the hodge-podge put-back-together of requirements internationally. I think that’s going to keep international travel subdued through the end of the year. I really don’t think you’re going to see anything like 2019 levels of international travel until well into maybe 2022.”

How are the Airlines Faring?

Ferguson said domestic airlines might see break-even cash flow in the second quarter — maybe even some profitability — but because of reduced travel and business demand, cash flow won’t return to 2019 levels. He noted airlines likely won’t receive another stimulus package unless a new COVID variant arises because they are “at the cusp of turning cash positive.”

Click the link to listen to the full podcast: AviationPros.com/21220627