Delta's US-China flights signal recovery

Demand for global air travel is showing encouraging growth as COVID-19 vaccination rates rise and travel restrictions ease in different countries, boosting traveler confidence, industry experts said.

Delta Air Lines, a major Atlanta-based carrier, said its cash burn that averaged $11 million per day earlier started to turn positive in March with cash generation of $4 million daily.

This marks a critical milestone in the recovery since the start of the COVID-19 pandemic, according to its latest quarterly earnings report.

In the first quarter, Delta reported a loss of $1.5 billion. It said it expects significant sequential improvement in revenue in the second quarter as leisure demand accelerates in the run-up to the peak summer period.

"A year after the onset of the pandemic, travelers are gaining confidence and beginning to reclaim their lives. If recovery trends hold, we expect positive cash generation for the second quarter and see a path to return to profitability in the third quarter as the demand recovery progresses," said Ed Bastian, Delta's chief executive officer.

Starting Saturday, Delta will add significant capacity with renewed seating allowed in its pandemic-era blocked middle seats, a practice that started last year to maintain social distancing.

For US-China flights operated by Delta, making middle seats available again for passengers will increase the total capacity of US-China flights operated by Delta by 19 percent, it said.

In the 61-day period spanning May and June, Delta will operate four US-China weekly flights. Two flights will originate in Seattle, travel via Seoul and terminate at Shanghai Pudong Airport. The other two flights will originate in Detroit and take the same route to Shanghai.

"Demand has generally been high on the US-China direction since we restarted services last June. There is pent-up demand being held back due to reduced capacity and border restrictions, and we are confident that travel will resume once travel policies begin to relax," said Wong Hong, Delta Air Lines' president in China.

"Currently, our customers are essential travelers, like students, families, and limited corporate customers who need to return home to China."

In June last year, Delta became the first US airline to reconnect the United States and China since the temporary suspension of flights in February 2020 due to the COVID-19 pandemic.

"Delta's improving cash flow and its decision to no longer block the middle seats have been direct and inevitable results of increasingly positive prospects for effective pandemic control and prevention," said Zou Jianjun, a professor at the Civil Aviation Management Institute of China.

Meanwhile, more than 20 major foreign carriers have announced plans to make international travel more convenient. In the pipeline are trials for using the travel pass app of the International Air Transport Association. Emirates and Swiss International Airlines have already begun the trials on select flights.

The app helps passengers manage their travels digitally, in line with government requirements for COVID-19 testing results.

It has an integrated registry of travel requirements to enable passengers to find accurate information on travel and entry requirements at all destinations.

From Saturday, passengers traveling to Singapore will be able to use IATA travel pass to share their pre-departure COVID-19 test results upon check-in with their airlines, as well as on-arrival results at the immigration checkpoints at Singapore Changi Airport.

In the near future, travelers will be able to share vaccination certificates with authorities and airlines to facilitate travel, according to the IATA.

"An increase in vaccination rates globally has fueled air travel demand and economic growth, although there still exist some challenges like the need to establish mechanisms to recognize health certificates issued by different countries," Zou said.

"The IATA travel pass serves as an effective way to solve the recognition problems at the moment, and it will help propel the growth of the international air travel market," he said.

Globally, the IATA expects net airline industry losses of $47.7 billion this year, an improvement on the estimated net industry loss of $126.4 billion last year, according to its new report.

"Losses will be reduced from 2020, but the pain of the crisis increases. There is optimism in domestic markets where aviation's hallmark resilience is demonstrated by rebound in markets without internal travel restrictions. Despite an estimated 2.4 billion people traveling by air this year, airlines will burn through a further $81 billion of cash," said Willie Walsh, the IATA's director-general.