Skift Travel News Blog

United Airlines is taking a subtle dig at rival Southwest Airlines’ massive number of holiday season cancellations in an ad it’s airing during the Super Bowl on Sunday.

United’s ad features a family from Denver gathering, with the on-screen text saying at the end of the 30-second spot, “United got more families in and out of Denver this holiday than any other airline. Despite the weather.” The Chicago-based carrier said it would run the ad in the Denver and Colorado Springs TV markets.

Southwest’s massive end-of-the year meltdown resulted in the company canceling roughly 15,000 flights. More than 27 percent of its scheduled seats on flights out of Denver were cancelled between December 18 and January, compared to 5 percent of United’s scheduled seats. Severe winter storms — as well as Southwest’s outdated technology — were considered to be major causes of Southwest’s large number of flight cancellations.

Just half of companies located in North America are seeing international bookings recover to their pre-pandemic levels, according to a new poll.

This latest data from the Global Business Travel Association delivers a dose of reality for the travel industry. Most travel agencies are predicting an eventual 70 percent recovery.

The picture is a little better in Europe, where six in 10 companies report a return to 2019 booking levels. Asia Pacific and Latin America are ahead with 65 percent and 77 percent respectively.

The survey polled 217 travel manager members, and they tend to represent bigger corporations. In some ways the association’s State of Global Business Travel report, published Tuesday, backs up reports that it’s the smaller enterprises driving the recovery (explaining why the world’s biggest corporate travel agency, American Express Global Business Travel, has restructured to hone in further on the segment.)

The report also follows bullish airline outlooks, including Delta Air Lines which said corporate travel business was now flatlining at around 80 percent of 2019 levels. There’s a clear discrepancy with the association poll here, but again this could be linked to smaller firms that do not have a managed corporate travel program that are among the carrier’s top international bookers.

However, Southwest Airlines said its managed corporate travel was expected to hit 2019 levels by March. That full recovery is still far off association’s poll results for domestic U.S travel: it found 69 percent of corporations had recovered to pre-pandemic domestic booking numbers, leading both Europe and Asia Pacific by three percentage points. Again this suggests it’s perhaps those smaller companies racing ahead to meet clients face-to-face or attend conferences.

The Global Business Travel Association poll was conducted between Jan. 16 and Jan. 23.

Spain’s Iberia has been hit by a computer glitch, affecting its booking and boarding system.

“Due to a connectivity issue with our systems, today’s flights are experiencing delays,” it said on social media on Saturday. “We apologize to our customers and thank you for your understanding. Everyone at Iberia is working to solve it as soon as possible.”

The weekend disruption hit dozens of services across Spain and Europe, according to reports.

The software malfunction at Iberia, which is part of International Consolidated Airlines Group, is the latest in a series of computer blunders to strike the aviation industry.

The U.S. experienced a widespread shutdown of flights earlier this month, due to problems with the Federal Aviation Administration’s systems. It was forced to restore its Notice to Air Missions (NOTAM) system, which alerts pilots of potential hazards.

Southwest Airlines has taken a considerable financial hit owing to issues assigning crew to flights during the Christmas vacation caused by outdated optimization technology. The airlines has pledged to spend $1 billion on technology upgrades.

Old technology is increasingly contributing to mass flight cancellations, as travel returns. In Spain, passenger numbers are also rapidly returning to pre-pandemic levels. Passenger numbers through Spanish airport operator Aena’s 46 airports in December were at 98 percent of three years earlier.

Iberia reported that it had fixed the problem on Sunday. “Our systems have regained connectivity. Online billing and check-in are back to normal. We apologize to all customers for the inconvenience caused and appreciate your understanding,” it said.

The CEO of Southwest Airlines issued a statement to customers with new details about actions the company is taking following the debacle in the last week of December. 

The most notable new information that CEO Bob Jordan shared is that the company has created a board committee to review the company’s response during that time, and consultancy Oliver Wyman has been hired to assess the airline’s systems.

The actions are in response to several issues that led to nearly 16,000 cancellations, caused primarily by a lack of investment in back-end technology. Southwest said the incident could cost the company up to $825 million. 

In the short term, the company is working on updating the crew recovery system, enhancing the crew communications tools, and establishing supplemental operational staffing

As Southwest has said, the company plans to spend about $1 billion on tech upgrades. The recent disruption will accelerate those plans, Jordan stated. 

He also stated that, as of the end of last week, nearly all bags have been returned and nearly all refunds and reimbursements have been processed. 

“We fell short of your expectations and the high standards we have of ourselves, and for that we are deeply sorry. It is our steadfast commitment to make the necessary changes to address the issues we faced and to regain your trust and confidence,” Jordan said in the statement.

The company is holding its quarterly earnings call next week, during which executives will likely further discuss the issue.

The U.S. Department of Transportation has said it is investigating the issue, and a group of U.S. senators sent a letter Friday demanding that Jordan answer questions about the incident.

Southwest Airlines has put an initial number to the losses incurred during its holiday meltdown: a $725-825 million hit to its pre-tax income in the fourth quarter. That number includes both $400-425 million in lost revenue and added costs, for example reimbursing people for alternative travel costs.

As a result of the meltdown that the Dallas-based airline said Friday resulted in the cancellation of 16,700 flights over the Christmas and New Year holidays, Southwest now expects a net loss in the final quarter of 2022. That’s an about-face from the forecast CEO Bob Jordan provided in October, when he said the carrier expected “to generate strong profits and margins in fourth quarter.”

Southwest is expected to face additional costs from the meltdown in coming quarters. Many vouchers and points given to travelers affected by the cancellations will not be recorded as costs until they are redeemed. In addition, the airline continues to process reimbursements as they are submitted.

Jordan said Thursday that Southwest continues to process “tens of thousands of refunds and reimbursements a day.” It has also offered all affected travelers 25,000 Rapid Rewards points each, which are equal to roughly a $300 value.

Despite the carrier’s moves to reimburse and apologize to passengers, Congressional leaders are beginning to push for stronger consumer protections as a result of the incident. A group of 26 House Democrats sent a letter Thursday to Transportation Secretary Pete Buttigieg calling on him to improve passenger protections and set standards for airlines to “maintain a reasonable level of operational capabilities” during severe weather.

And U.S. Senate Commerce Committee chair Maria Cantwell said Wednesday that the committee will hold hearings on Southwest’s meltdown.

The Congressional response comes amid a growing view that the Southwest holiday meltdown could spur additional regulation on the airline industry.

Southwest Airlines will pay a dividend to its shareholders of record as of January 10, 2023. This may not seem like a notable move for a carrier that has paid dividends for most of 50-plus year existence but it is: Southwest will be the first U.S. airline to resume shareholder returns since the pandemic.

Shareholder returns, including dividends and stock buybacks, were barred at any airline that took federal aid under the U.S. CARES Act until this September. Most carriers have also returned to profitability on the back of strong travel demand. Dallas-based Southwest made a $277 million net profit in the third quarter.

Other U.S. carriers may not be far behind Southwest. Alaska Airlines Chief Financial Officer Shane Tackett said in October that the carrier’s management would discuss the possibility of resuming “potential shareholder returns” with Alaska’s board in November. There is no word yet on any decision from the Seattle-based carrier.

U.S. airlines, including Southwest and Alaska, are seeing strong travel demand into the new year. Delta Air Lines CEO Ed Bastian in October went as far as to claim that travel is “countercyclical” to the macroeconomic trends of high inflation and a potential U.S. recession.

Airlines practice of giving some cash back to shareholders was in the spotlight when the industry was pushing for federal relief in the CARES Act. Some noted that, had the industry not paid dividends our bought back shares in the years prior to the crisis, they may not need the government hand out. Airlines pushed back on this claim, rightly arguing that such returns were standard practice across businesses and not just airlines.

Southwest will pay its investors an $0.18 per share dividend for the fourth quarter on January 31, it said Tuesday. The carrier estimates the dividends will total roughly $428 million.

In a securities filing on Thursday, Southwest Airlines said Bob Jordan would succeed to the position of President of the company on January 1, 2023, while also retaining the role of CEO he has had since earlier this year.

Jordan, a 34-year-old veteran of the company, will step into a role being vacated by Michael G. Van de Ven, president and chief operating officer, who submitted his resignation.

Andrew M. Watterson will rise to the position of chief operating officer as of October 1. 

Air travelers in the U.S. now have a one-stop shop when it comes to knowing what airlines will provide them with in the event of a lengthy flight delay or cancellation.

The new Airline Customer Service Dashboard by the Department of Transportation is designed to “ensure the traveling public has easy access” to airline commitments in the event of a disrupted trip, the regulator said Thursday. The commitments, which are largely a list of existing airline policies compiled together in one place, only apply to “controllable” events, or one where the airline is at fault, for example staff shortages.

“Passengers deserve transparency and clarity on what to expect from an airline when there is a cancelation or disruption,” U.S. Transportation Secretary Pete Buttigieg said. “This dashboard collects that information in one place so travelers can easily understand their rights, compare airline practices, and make informed decisions.”

For example, if a travelers flight is delayed more than three hours due to a mechanical problem with the aircraft, the dashboard shows that they are guaranteed a meal voucher on almost all major airlines except Allegiant Air. However, if their flight is cancelled, only American Airlines, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, and United Airlines will rebook them on another carrier.

“Carriers welcome opportunities to simplify travel policies, clarify existing practices and increase transparency for travelers,” a spokesperson for trade group Airlines for America said.

The new dashboard follows a spike in flight delays and cancellations earlier this year that resulted in a blame game between airlines and authorities. While acknowledging their own staffing issues, airlines have claimed that air traffic control staffing has exacerbated the situation while the DOT has argued that the situation is primarily the fault airlines and weather. Whatever the reason, the regulator has moved to improve airline passenger protections, including a new rule that would guarantee cash refunds.

Google Travel’s flight and hotel offerings gained the most desktop traffic market share in the U.S. during the pandemic while Tripadvisor lost the most on a percentage basis, according to Similarweb’s June data.

“Google Travel now owns one-fourth of all (U.S.) desktop visits to top travel sites,” Similarweb said.

In its earnings call about second quarter financials Tuesday, Google said travel and retail were the drivers of its advertising revenue during the period.

The following chart shows Google Travel’s U.S. desktop market share increased 6 percentage points to 24 percent in the first half of 2022 compared to the first half of pre-pandemic 2019.

U.S. Desktop Market Share Traffic Gains/Losses H1 2019 Versus H1 2022

Source: Simillarweb

“Booking has also gained 2 percentage points of share in the U.S., and only Kayak (-1 percentage point), Delta (-4 percentage points), and TripAdvisor (-5 percentage points) have lost share,” Similarweb said.

There are two points to keep in mind: These numbers don’t include traffic from mobile devices, and traffic to Google Travel often gets sent along to online travel agency advertisers.

Spirit Airlines’ two-and-a-half year saga to expand at Newark Liberty International Airport has a happy ending. Late on Tuesday, the U.S. Department of Transportation awarded the discounter 16 peak “runway timings” — in short, rights to takeoff and land at an airport during a given hour — that Spirit sued for in December 2019.

The DOT said the award of the timings, which were only available to budget airlines, would boost “low-cost service options” and improve competition at the New York City-area airport. Alaska Airlines and JetBlue Airways also sought the takeoff and landing rights, according to the regulator.

Newark is a major hub for United Airlines, which operates more than 70 percent of all flights at the airport. The timings were previously used by Southwest Airlines until the carrier ended flights to Newark in 2019. And Southwest acquired them in 2010 as a condition of United’s merger with Continental Airlines.

The award comes amid a three-way war of words between JetBlue, Spirit, and United over congestion at Newark. JetBlue and Spirit blame United, and the Federal Aviation Administration, for over scheduling the already congested airport, whereas United has repeatedly made the argument that its much smaller competitors were the problem. In June, United cut its schedule at Newark by roughly 50 daily flights from July 1 through the end of the summer to combat delays.

In an interesting twist, the DOT may need to re-award the timings if JetBlue wins its hostile bid for Spirit. The former carrier has pledged to divest all of Spirit’s assets in Boston and New York — including Newark — if shareholders approve its plan over a competing proposal from Frontier Airlines. Spirit shareholders vote on the Frontier proposal Friday.