Hawaiian Airlines CEO Peter Ingram joins Yahoo Finance’s Akiko Fujita to discuss how the pandemic has impacted the airline, and why the industry is in need for another stimulus package.
AKIKO FUJITA: No surprise here, travel has just been hit hard by the pandemic. And that is especially the case in Hawaii, where the state just lifted travel restrictions to the island for the first time since March.
Let's bring in Peter Ingram. He is the CEO of Hawaiian Airlines. And Peter, it's great to have you on today, and certainly timely, given that those restrictions were just lifted several days ago. How does the demand picture look like from where you stand right now?
PETER INGRAM: Well, thank you for having me on. We're feeling positive about the direction of demand at this point. It's been a long time coming. We've had the restrictions, the quarantine restrictions for incoming visitors in place since March 26th.
And then on October 15th, people have the ability to come to Hawaii if they get a negative result on a COVID-19 test before their travels. And we've seen bookings start to improve gradually. We had had pretty good bookings for the first couple of days. A lot of people wanted to come right on the 15th.
But now we're seeing, for November and December, things are starting to pick up. So we feel like we're at a moment of turning a page and trying to move forward. It's not going to be all the way back, but we're moving in a good direction.
AKIKO FUJITA: Yeah, I mean, you talk about the first day of those restrictions being lifted, roughly about 1,000 tourists coming in on that day alone. How sustainable do you think those levels are? Or you think it's going to pick up even more, going into the holidays?
PETER INGRAM: Well, I think we will see some pickup around Thanksgiving and Christmas. You know, a normal day for us would be 25,000 to 30,000 visitors coming in before the pandemic. So 8,000 is good from where we've been over the last six months, but it's still a long way to go.
But I think there is a lot of pent-up demand for travel to Hawaii. And we know we've got a great destination, and people want to be here. And I think as they learn about how the pre-travel testing program works, we're going to see more activity.
AKIKO FUJITA: You heard from our reporter Jessica Smith there a short time ago, was saying that relief for the airlines are unlikely at this point, given where negotiations stand on the stimulus. You've already announced about 2,500 job cuts. How does that number change if you don't get the relief from Congress?
PETER INGRAM: Well, we've made the reductions we think we need to make right now. If the payroll support program for the airlines were to be extended, we will unwind those, and we've committed that to legislators in Washington.
The situation has really been in a bit of a holding pattern for us for the past month. We have broad, bipartisan, bicameral support for support for airline industry workers. We just haven't had a legislative vehicle to attach that to, and that's what we're all waiting for, to see how those locations transpire over the next couple of days and perhaps beyond.
AKIKO FUJITA: And so how does that change your calculation for the holiday season? I mean, I imagine you're looking at capacity right now. You've said that your biggest region right now, Asia, whether it's Japan or South Korea or China, you still don't have a timeline on when those travelers are likely to return. But when you look at a potential lack of aid coming from Congress, how does that change the outlook for you going into year end?
PETER INGRAM: Yeah, well, the biggest source of visitors for us is the Western United States. So it was important to get that back going again. Japan is, by far, the biggest international source of visitors. And we look forward to having Japan come back online, hopefully by the end of the year.
As you said, there is no timeframe for that yet, but there are discussions going on about how pre-travel testing can be extended to include Japan and Korea, which are two important markets for Hawaii and two important markets for Hawaiian Airlines. So, we're hopeful that we can get everything back moving a little bit and get back to something maybe not quite the normal we all used to know, but something that is moving in a positive direction again.
AKIKO FUJITA: How much are you planning to increase capacity for the holidays? I mean, you've said that your biggest source is still from the US travelers. Now that you've got these restrictions lifted, what are you thinking in terms of capacity?
PETER INGRAM: Yeah, we've been running something in the range of about 10% to 15% of our normal capacity over the past several months between Hawaii and the US mainland. I think here over the next couple of months, we'll wrap that up pretty quickly to about 50% of where we were before.
But we have the capability to respond to demand. So if we see more demand, we'll turn it up beyond that. If the demand doesn't materialize, which I don't think will be the case-- I think demand is going to materialize-- we'll match the capacity to where the demand is.
AKIKO FUJITA: The state of Hawaii, of course, has been devastated more than any other state because of its reliance on tourism. I'm looking at the unemployment rate, roughly 12 and 1/2%. How long until travel and tourism, do you think, climbs back up to pre-pandemic levels?
PETER INGRAM: I think a lot of that depends on the prevalence of the disease, not only here in Hawaii, but also in the source markets we serve. A lot of people have said it's not going to be until we have a vaccine. And I'm not so sure about that. Because I think if we can get the disease under control, and if testing becomes more available, and the market develops lower cost options for testing, then maybe we can prove that this is a model that can get us back close to that.
But I think we're going to be well beyond next summer before we're back to where we were in 2019. But, you know, my crystal ball hasn't been so good over the last six or seven months. So I don't want to try and make too many predictions.
AKIKO FUJITA: How much of it is about ramping up testing, though? You have those like United Airlines, for example, that are offering up tests to passengers before they board the flight going into Hawaii. I mean, how important is that piece? And how are you looking at that for Hawaiian Airlines?
PETER INGRAM: Yeah, it's very important. And one of the things we did-- you mentioned United. We have lunch with a couple of partners, one called Worksite Labs, that we're getting in place in Los Angeles and San Francisco.
We've also partnered with a company called Vault. Vault has a mail-in test. So you order your test online. It's delivered to your house. You do an online observation of taking the sample, which is a saliva sample, so it's very non-invasive.
And then you put that in a UPS envelope and ship it off, and you get your results within the 72-hour window that the state requires. And I think as more of these testing options are developed by the market, it's just going to make it that much more accessible for everyone.
AKIKO FUJITA: And Peter, finally, I mean, it sounds like things are starting to move in the right direction, even if the recovery is a little slow. I'm just curious. When you look at where things stand, you look at the case counts, you look at the travel picking up, do you feel comfortable in saying the worst is really behind, or it's still, is there still a concern, given that we've started to see those case counts go up again across the US?
PETER INGRAM: Well, I feel for Hawaii. We have hit an inflection point. October 15th was a very important deadline to make. We had seen the date pushed back a few times. And I think everyone really wanted to cross the finish line and get started with the pre-travel testing program.
And the fact that it has come and we're successfully underway, I think does put a little bit of wind in our sails. And that's something that's been lacking over the last little while. So we're optimistic about the direction we're moving.
AKIKO FUJITA: Peter Ingram, the CEO of Hawaiian Airlines, it's great to have you on today. Appreciate your time.
PETER INGRAM: Thank you.