US full service airlines on the brink as business demand drops

Just as US airlines thought they saw the light at the end of the tunnel, the Delta train is staring down a recovery.

The fairly successful return of summer leisure traffic - although at low yields - peaked in Jul-2021, and the nation's full service carriers had been optimistic about a post-Labor Day return of business flying. This is the time when yields are supposed to rise, as companies get back to work in what is usually a busy four months leading up to year end.

But this year it's not going to happen. As the Delta variant wreaks havoc among the unvaccinated, many major US companies are delaying any return to office working until 2022, and signs are clearly showing that travel plans are following suit. While international markets still remain either closed or at best difficult, that means domestic business traffic too is going to be heavily diluted at least until the new year.

Previously optimistic noises from the airlines are now becoming more muted. The obvious correlation between infections and business hesitancy means any recovery will be delayed until there is greater certainty about the safety of travelling.

With the Delta variant rampant, and now the Mu variant, uncertainty is the order of the day. This has significant implications in the short term for airline revenues and jobs; it also raises the question of whether government will still be prepared to step in with a further round of support, if business doesn't improve.