International Airlines are Scrambling to Restore Routes Amid Travel Demand Boom

(Yahoo!Finance) - International travel is back, and operators are cashing in on years of pent-up demand.

After two years of putting off travel due to the COVID-19 pandemic, the number of passengers going through a Transportation Security Administration (TSA) checkpoint is almost near pre-pandemic levels at nearly 2 million on average over the past week.

Eager to capitalize on this explosion of demand, international airlines are scrambling to not only restore pre-pandemic routes, but to also build up new routes. For instance, Qantas (QABSY) recently announced ultra-long-haul flights between Sydney and Melbourne to London and New York by the end of 2025.

Emirates, which hasn’t restarted its nonstop ultra-long Dubai to New Zealand flights, told the New Zealand Herald that it’s been “amazed” at how demand has been.

Singapore Airlines (SINGY), which also operates ultra-long nonstop flights from Singapore to various parts of the U.S. from Newark to San Francisco, has rapidly ramped up routes in recent weeks, now operating more than ten flights daily from multiple airports in the U.S.

The company operates six non-stop flights to North America from Singapore, which includes New York, Los Angeles, San Francisco, Newark, Seattle, and Vancouver.

Additionally, plane ticket sales are already on the rise reflecting the demand. According to travel booking site Kayak, domestic flight prices are up roughly 25% year-over year, while international flight prices rose by about 41%.

'Demand has been better' than expected

Joey Seow, who is Singapore Airlines' regional vice president for the Americas, told Yahoo Finance that passengers’ appetite for travel has been insatiable.

“Because the demand has been tremendous, we’ve been quick to scale up our services to the U.S.,” Seow told Yahoo Finance in an interview. “We’re probably one of the few carriers to the U.S. that has restored our capacity to our pre-COVID capacity.”

With many Asian countries like Singapore, which often serves as a jumping off point for travelers hoping to visit other countries in Southeast Asia, relaxing COVID restrictions such as pre-departure testing and on-arrival testing, there’s been a sharp uptick in travelers, Seow noted.

“It facilitates a lot more corporate travel,” he said of the country loosening entry requirements. As a result, he added, “our business class and premium cabins are doing extremely well." According to the company, the airlines’ luxury suites — which sets one back upwards of $15,000 — are sold out through the next month.

An economy class round-trip from JFK to Singapore is roughly $1,140, according to Hopper, which is up 19% from last year and up 8% from 2019.

At the same time, travelers are shelling out big bucks to splurge on more comfortable seats. “In the past, people would buy economy first” before upgrading to Premium Economy, Seow said, but that’s since been reversed, and now “demand has been better than what we had expected.”

Nonstop flights also tend to be costlier, Madhu Unnikrishnan, editor at Airline Weekly, told Yahoo Finance. Part of the willingness to spend more on premium seats could be due to people having more in savings, or having deferred travel for many months during the pandemic, he said.

He noted that Lufthansa (DLAKY) had reported success in selling business and premium economy seats to leisure travelers to offset the loss of business travelers.

Additionally, Lufthansa CEO Carsten Spohr even noted during an earnings call in 2021 that bookings for the previous summer had "been so strong" that they expected passenger numbers to go back up to 50% of pre-pandemic levels.

Still, operating an ultra-long-haul flight amid the surge in fuel prices is a challenge: An 18-hour flight from Singapore to New York — a 9,530-mile journey — requires around 100 tons of fuel, according to the Points Guy. Fuel efficiency becomes especially key for these routes, Seow said, with the company using newer aircrafts such as the Airbus 350-900 Ultra Long Range, which burns 30% less fuel than earlier models.

Qantas has also ordered Airbus planes for its long-haul flights, opting for a dozen Airbus A350-1000s.

Where are Americans going this summer?

Back home, where are Americans traveling to this summer?

Hopper said that Americans are planning international trips to nearby destinations with locations like Cancun, Mexico, and San Juan, Puerto Rico emerging as top destinations this year.

Demand for travel to Mexico and Central America has “doubled” compared to 2019, the company’s Hayley Berg said. There was also “significant growth” to Canada and islands in the Caribbean, she added.

By Aarthi Swaminathan · Reporter


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