Roger Dow, President and CEO of U.S. Travel Association, joined Yahoo Finance Live to break down why it's so important the the U.S. and U.K. reopen travel.
- So we passed a milestone on Sunday, as well as Friday, June 11. The number of passengers moving through the airport TSA checkpoints was more than two million. That's the first time that has happened in more than a year.
Although, it's still not the 2.6 million you would normally see prior to the pandemic. So let's bring in Roger Dow. He's president and CEO of the US Travel Association, because as we see more people flying, this is good news for the airlines, but it's still not enough.
And there's an effort to open the skies between the United Kingdom and the United States. We have a commitment from the leaders, Biden and Johnson of both countries to create a task force looking at doing that, but they're not giving us specifics. So, Roger, what can the Association do to move that thing up faster?
ROGER DOW: I think it's most important that we work towards a date specific just as you said. Otherwise, you keep kicking the can down the road. So we're all in favor of a task force, but to open up this corridor is so important, because the rest of the world will follow. And this is the best corridor to open by far.
SEANA SMITH: So, Roger, there still is obviously a lot of uncertainty around this, but if you had to put a timeline on this when you expect this corridor to reopen, what is your reading as of right now on this?
ROGER DOW: I think you're going to see it hopefully late summer to I hope by August. We were looking for July. And with these, the Delta variant, Boris Johnson is pushed off opening UK to July 19. But hopefully, we can get a commitment to get it open and really work towards that. We've got to learn to manage this thing or make great strides in the health, but the economic and personal issues are just as important.
- But if they don't open till mid-July, perhaps even later, isn't that too late for the airlines? Won't they have missed what would be historically the summer travel surge to Europe or to the UK at least?
ROGER DOW: They will definitely miss the summer leisure travel surge But what we're finding is people around the world are staying home in the short term. So domestic leisure in the US is what that $2 million of passengers you spoke about, same thing happen around the world.
Most important thing is to get open for meetings, conventions, and business travel, which more is a fall phenomenon. So we're still OK. We're going to miss this summer, but the bottom line is leisure has been so strong domestically around the world.
SEANA SMITH: Roger, some of the trends that we saw over the weekend, more than two million passengers screened by TSA was the first time we've seen that since March 2020. The ability for these airlines to handle that number of passengers, is there are enough planes? Is there enough staff there in order to make sure that things are not delayed more than they were, say, before the pandemic?
ROGER DOW: Presently, there is enough to handle the $2 million. And they're handling it quite well. I've been traveling quite a bit the past two weeks.
The issue will be if we open up internationally, we open up business travel, leisure, conventions, they're going to need more capacity. And the challenges is you don't do that overnight. So if you decide to open up tomorrow, it still takes the airlines at least a month to put the capacity back on. They have the planes and the people, just a matter of at least a month in advance to get things moving again.
- Scott Kirby, the CEO over at United Airlines said recently, I think it was the Bernstein Conference, that a third of United's business in the past was international travel. That clearly is not what it is today. So help us understand what that looks like just in terms of that UK, USA corridor. How many flights daily were there before the pandemic between London and, say, the United States? And how many are there right now?
- I don't have the number of flights, but I'll tell you it's off 81% year over year. And the only reason it's off 81% is because what happened January through March before the pandemic. So it's basically nonexistent.
The UK route is basically $1.2 billion a month to the US economy. So it's critical. It's our largest overseas market.
SEANA SMITH: Roger, you mentioned the fact that it takes about a month for airlines to get up to speed once the, I guess, limitations are raised here just in terms of travel. When we talk about labor shortages here, it's something we follow very, very closely here at Yahoo Finance. Any concern that the airlines just simply won't be able to hire the number of workers that they need at that time?
ROGER DOW: I've spoken with the CEOs of all the major airlines. And they're comfortable from a labor standpoint, because of it's a high wage situation. They know who their people are.
Where I'm more uncomfortable is with the hotel services, the destinations, the theme parks, the restaurants. This is where it's a real problem. We have 5 million of the 17 million travel workers in America still unemployed. And of that five million many have found other jobs. So there is the Achilles heel is in the services of hotels, restaurants, attractions.
- So as we start to wrap this up, curious what you're hearing from those CEOs. And you don't have to name them, but a lot of them are making promises to their shareholders that this quarter is the quarter when the cash burn will go neutral to possibly cash flow positive. Are you hearing from them that just having visiting friends and relatives or domestic travel is going to be sufficient to get them to that milestone?
ROGER DOW: The summer travel, the strong domestic travel, should be enough to get them into the black, but to be highly profitable, you need business travel and international. It represents 41% of the revenue, because that's the main part of the cabin. And so we've got to bring that back, but the airlines should shift in the black. I've talked to each of the CEOs. And they're comfortable that this summer will be a turning point.
- Roger Dow is president and CEO of the US Travel Association. And we will clearly be keeping an eye on the airline situation. Thank you for joining us, and all the best to you and the team at the Travel Association.