US ULCC Frontier Airlines said the emergence of the Delta variant of COVID-19 has dampened demand for air travel in the 2021 third quarter, marking a setback in the recovery from the pandemic after a surge in domestic demand.
Within the last week, Denver-based Frontier said that it noticed a “softening in the level of bookings over seasonal norms” that it considers directly related to the recent spike in COVID-19 case counts associated with the Delta variant.
Despite the worsening outlook, however, management believes the impact from the Delta variant will be transitory, with forward bookings quickly set to quickly rebound as infection rates begin to decline.
“Looking forward, we're closely monitoring the impact of the Delta variant. We expect any impact to be short-term in nature, given the availability of vaccines and the likely increase in vaccination rates,” Frontier CEO Barry Biffle said on a conference call. “We, therefore, expect a resumption of the pace of recovery as the Delta variant cases fall, similar to what was experienced elsewhere in the world.”
Reaffirming the view that the bookings slowdown will prove temporary, Frontier also announced that it entered into agreements to lease 10 Airbus A321s from to two lessors, with deliveries slated for the second half of 2022 and first half of 2023. Management said the additional aircraft will allow the company to boost its capacity growth rates as the pandemic recovery accelerates.
The carrier introduced service to more than 15 new destinations during Q2, while announcing large expansions planned for Q3 at Atlanta, Dallas, Las Vegas, Miami and Orlando. New international services added during Q2 include Antigua, Aruba, Belize, Costa Rica, St. Maarten and Turks and Caicos. By 2023, the airline plans to have a network mix with 20% international service, implying that a third of its growth will occur outside the U.S.
Capacity during the quarter exceeded 2019 levels by 10%, and is expected to rise 2-4% over 2019 levels in Q3. Capacity growth is anticipated to grow by 30% in 2022 and the “high-teens” in 2023, management said.
Photo credit: Airbus