How travel brands are navigating the coronavirus landscape
Transportation is expected to be among the hardest-hit business sectors in the U.S. as the coronavirus (COVID-19) continues to spread across the nation. Airlines in particular were dealt a hammer blow on Wednesday when, following the World Health Organization's declaration of a global pandemic, President Trump issued a 30-day travel ban from Europe (excluding the U.K.) to the U.S.
Until this past week, travel brands in the U.S. have remained relatively quiet about the outbreak. But that's changing fast as travel restrictions and customer fears result in a steep dropoff of passengers. Already 21 percent of U.S. adults report they have either canceled or decided not to plan spring travel in the wake of the coronavirus and 15 percent are doing the same with summer travel, according to a CivicScience survey of 1,854 adults between February 12 and March 10.
As a result, airlines, ride-sharing apps, cruise lines and train operators have been adjusting their business tactics and messaging. As the virus spread, and continues to spread through the country, travel brands are reassuring passengers and showing how they’re taking traveler concerns seriously. So far, brands in the mobility space have been taking to social media and email to relay their messages over other forms of paid media.
Airlines like United and JetBlue are sharing details of cleaning procedures of their aircaft and real-time updates of canceled flights; ride-sharing apps like Lyft and Uber say they will fund drivers who fall ill; and cruise lines like Princess Cruises are postponing trips.
“The communication I have seen from mobility and travel providers have by and large been proactive and reassuring,” says Dipanjan Chatterjee, vice-president and principal analyst at Forrester Research. “Brands have little to gain and a lot to lose by downplaying the potential gravity of the situation … This is not the time to sell. A few destinations are alluding to light tourism as a way of attracting visitors, but travel brands risk being seen as opportunistic and uncaring if they push their wares at a time like this.”
Experts are saying that airlines are seeing their largest business crisis since the terrorist attacks of 9/11. The impact of the coronavirus on the global airline industry could cost $113 billion as demand dips, according to the International Air Transport Association. Airlines are doing as much as they can to reduce costs by cutting domestic and international flights. On social media, they’re making it known that passengers can change their flights for free and are sharing how they’re taking the proper steps to clean their planes.
United Airlines’ stock has been tumbling since cases of the virus began appearing in the U.S. The airline was selling at $82.20 on the stock market on February 12 and on Thursday afternoon stock price was around $41.70, about a 50 percent drop in just a month.
On a webcast of the J.P. Morgan 2020 Industrials conference on Tuesday, United President Scott Kirby said that the airline is seeing its domestic net bookings plunge by 70 percent and gross bookings by 25 percent. The airline estimates that it will take 18 months to recover from the impact of the virus on its business.
Until then, the airline is cutting 20 percent of its May flights, and has instituted a hiring freeze until June 30, while also offering current employees a voluntary leave of absence, unpaid.
Communication is key for the airline during this period of upheaval. “We are actively providing our customers and employees the latest information on what we are doing to manage through the COVID-19 situation with their safety as our top priority, and so that customers can make the best decision for their individual travel plans. This involves regular updates on our website, mobile app, social media channels, emails and internal channels,” said a spokesperson for United Airlines in a statement.
This week, the airline shared some of the steps it is taking to mitigate the threat of the disease with its followers on social, as well as through email and on its website, including how it cleans its planes and terminals. (United uses an “electrostatic fogger” to disinfect the air and the surfaces of aircraft on arriving international flights.) There are also changes to how the crew interacts with passengers. Crew members will now wear gloves during food service and will only refill drinks using new cups.
Another message to those on social: The airline will waive change fees for trips booked from March 10 to April 30.
SimilarWeb, which tracks the desktop and mobile traffic to websites, found that between February 28 and March 6 Southwest Airlines saw the greatest drop in traffic to its website, compared to rivals such as Delta, American Airlines and JetBlue. In fact, traffic was down 30 percent compared to the same week last year, according to SimilarWeb’s whitepaper on how the coronavirus is affecting industries. On Thursday, the airline’s stock dipped by 13.80 percent to $36.80. A month ago it was at a 52-week high of $58.82.
“9/11 wasn’t an economically driven issue for travel. It was more fear, quite frankly, and I think that that’s really what’s manifested this time,” Southwest Airlines CEO Gary Kelly told CNBC last week.
The airline has created a resource for its customers online to keep up with travel changes, shared its “enhanced cleaning procedures,” and is promoting its no-fee policy for changing flights. However, customers are complaining they cannot cancel their reservations, which the airline says it’s aware of. Southwest is also still promoting its annual spring travel sale and a contest in partnership with DreamWorks' upcoming sequel to the movie “Trolls.”
Like its competitors, JetBlue is seeing red. On Thursday, its stock saw a 14.81 percent dip. “We’re planning for it to get worse. We don’t think bookings have stabilized yet,” JetBlue CEO Robin Hayes told CNBC on Tuesday. That same day, the airline shared what it’s doing in light of coronavirus. In an email to customers, JetBlue President and Chief Operating Officer Joanna Geraghty explained it has waived all change and cancellation fees for travel through the end of April, and for new flights booked through the end of March for travel through September 8, 2020.
Online, the airline is sharing all travel notices and safe practices. There, it shows an image of how cabin air is being filtered and encourages people to self-scan their boarding passes, among other cleanliness procedural updates. On social, JetBlue is highlighting its free change and cancellation fees.
As more people choose to stay home to avoid contamination, ride-sharing apps like Uber, Lyft and Via are feeling the pressure. In the past few days, these companies have begun to inform passengers of the steps they’re taking to clean their cars and take contaminated drivers off the road. Still, popular ride-sharing services like Lyft and Uber are continuing to see their stocks decline. “We could be entering a much more troublesome phase for Uber and Lyft where people choose not to go out at all,” Atlantic Equities analyst James Cordwell told Bloomberg.
On Thursday, shares of Uber fell 11.85 percent. The drop comes a day after Uber sent out a notice on social media and through email stating what steps its taking during the pandemic. Uber says its suspending drivers that have contracted or have been exposed to the virus and will provide financial assistance for those drivers for up to 14 days. It’s also providing disinfectants to drivers.
Last week, Uber CEO Dara Khosrowshahi said that the company expects its ride-sharing app to take a hit, although he expects its Uber Eats food delivery app to benefit. Airport bookings make up 15 percent of Uber bookings, he said.
On Tuesday, the company became the first ride-sharing service to share the steps it's taking regarding the coronavirus. In an email to its community members, the service said it's suspending Lyft drivers who test positive for the virus but will also provide financial assistance to the drivers it does temporarily suspend. The company is also partnering with EO Products to distribute 200,000 bottles of hand sanitizer and cleaning products to drivers.
Even with that, shares of Lyft continue to fall, plummeting to 15.93 percent on Wednesday, the largest drop it's seen since going public.
On Thursday, ride-sharing company Via, located in major cities like New York, Chicago and Washington D.C., sent an email out to its community, explaining that it’s providing cleaning supplies to drivers and will offer compensation for drivers who become sick.
Even at the best of times, cruise ships are criticized by some for being a health hazard ("floating petri dishes") so it’s no surprise that business is bad right now. One crisis expert even says it would be a miracle for the industry to recover within a decade. Cruise lines like Princess and Viking are suspending trips, while others like Norwegian and Royal Caribbean are relaying messaging about their updated cancellation policies.
On Thursday, the company announced it's suspending sailings across its fleet of 18 ships for two months and that guests can exchange their canceled trips for future cruises. On Facebook, Princess Cruises posted a video of President Jan Swartz announcing the decision. “We’ve been asked—and we’ve asked ourselves—why Covid-19 seems to be impacting Princess so heavily. We don’t really know,” said Swartz in the video.
On Thursday, Viking Cruises announced it's suspending operations until May, and is giving guests who booked cruises during this time vouchers worth 125 percent of the original cruise price, or a total refund.
"We have made the difficult decision to temporarily suspend operations of our river and ocean vessels embarking from March 12 to April 30, 2020—at which time we believe Viking will be in a better place to provide the experiences our guests expect and deserve," said the company in a statement.
The cruise line from Richard Branson, a partnership between the Virgin Group and Bain Capital, has postponed its launch. The Scarlet Lady’s maiden voyage is now scheduled for August 7, rather than April 1.
Trains and buses
As with planes and automobiles, people have to worry about their risk of contagion on trains and buses, too.
Amtrak is offering no change fees on trips made through the end of April, has increased the frequency of its cleaning and quantity of cleaning supplies, has suspended three trains that operate between New York and Washington D.C., and is telling customers to stay home if they’re feeling ill.
Last week, on March 5, the Metropolitan Transportation Authority in New York seemed bullish that New Yorkers “don’t give into fear” and told commuters that the risk around coronavirus remained low. “Drive to Penn Station? At rush hour?? Absolutely not!” read one tweet.
On Thursday, however, the subway system reversed its tone. On social and online, the MTA is sharing some of the steps it is taking to reduce the risk to passengers, including disinfecting “high-touch” surfaces like turnstiles, ticket machines and handrails, twice a day. Usually, these are cleaned once a day, the MTA says. The “entire active service fleet” of trains, cars and buses is being extensively cleaned every 72 hours. It’s also extending the hoursin which its employees can receive flu shots and is encouraging riders to commute at less-busy times.