LONDON (Reuters) -Delta Air Lines Inc and partner Virgin Atlantic said on Tuesday that pent-up demand for international travel meant customers were willing to pay higher fares, spurring a rebound in bookings and helping them cover surging fuel costs.
Russia’s invasion of Ukraine has forced the closure of vast swathes of airspace and pushed the cost of fuel higher, applying new pressures to an airline industry that has spent two years battling travel bans and restrictions from COVID-19.
CEO Ed Bastian told a news conference in London that Delta had enjoyed the busiest booking day in its history last week, even though many Asian routes remained suspended, and he was seeing the strongest demand in his career.
Virgin CEO Shai Weiss said that while he could not predict how consumers would respond to higher prices in the long term, for now it was seeing strong demand for premium leisure travel and a strong recovery in business travel.
“We really haven’t seen any impact at all, in terms of reluctance to travel from U.S. travellers coming to Europe,” Delta’s Bastian said, adding that he was not at “a point of nervousness” about rising oil prices.
As Bastian was speaking, Delta raised its current-quarter revenue forecast.
U.S. airlines, which cut capacity during the pandemic, do not hedge against volatile oil prices like most European airlines. The industry expects fares to rise as demand increases, helping to soften the blow.
Weiss said Virgin had seen a bit of a dip in demand after the Russian invasion, but that it had since recovered.
“There is a very strong pricing environment right now, which makes sense given the pent-up demand but also of course the high input prices of fuel,” he said.
Both airlines also said they had seen a recovery in business class bookings, with Delta saying corporate travel was 60% back, led by demand in the United States, while Virgin’s business bookings were at 50% of 2019 levels.
Delta hold a 49% stake in Virgin Atlantic, while Richard Branson’s Virgin Group holds 51%.
(Reporting by Kate Holton, writing by Paul Sandle, editing by William James and Jason Neely)
