Monday Insight – November 15, 2021

To Start:

Late Monday Insight Update:

The Cuts Are Starting

American has just cut 21% of its formerly-filed capacity for January, and 20% in February.

Some of the commentary will be that it’s based on “staff shortages” but most likely it’s due to booking shortages. It is possible that the combination of inflation and higher fare expectations are the main causes. If so, we again would note that our 2022 forecast is now for well under 800 million enplanements and starting to slide.

The question is where will this go in weeks ahead. We’ll be keeping subscribers at Airports:USA updated.

Thanksgiving Traffic – It’s Emblematic of  The New Airline System

There have been some media stories trumpeting that this coming Thanksgiving holiday will be back to “normal” – i.e., pre-2020 levels.

Not quite… but actually, the term “normal” could be used. Based on data from our friends at Cirium, the USA will be seeing about 11% fewer flight departures over the holiday. That, coincidentally, is what we can expect in the full year 2022 – an air transportation system structurally smaller than 2019.

Let’s start with the upcoming holiday, and what it can tell us about the post-CCP-pandemic airline system.

For the period extending from the Tuesday before Thanksgiving through the following Monday, we took a look at data from 2019, 2020 and 2021.

The Real Message- New Fleets & New Revenue Requirements. These data are not just indicators of a holiday weekend but are emblematic of the fundamental shifts taking place in the air transportation system.

A pointer for future air service planning is the change in seat capacity – down @7% v a departure decline of 11%. Message: fleet changes are in progress in the airline industry. The average capacity per flight this year is down from 126 seats in 2019 to 120 seats – about 5%.

Not a lot on the surface, but it points to two accelerating trends. One is the faster retirement of 50-seat jets. The second has been more subtle and actually pretty much unnoticed – the upscaling in the fleet of single-aisle airliners at both mainline and ULCC carriers.

On Average There’ll Be Another 20 Seats To Fill At The Gate. Taking a look at current orderbooks, virtually all carriers are shifting narrow-body fleets upwards. Southwest is shifting to 737-800s and has pretty much exhausted the availability of used -700s across the globe. American is adding more A321s. Frontier has retired its last A319 and last week ordered another 91 A321s. Delta has been quietly digesting a fleet of additional 737-900s previously operated by Lion Air.

The trend is clear: In the USA the bar for supporting air service is going up. This is underscored by cuts in smaller feed markets at American and United. This will go into warp drive if (when) jet-A faces another 10%-15% price jump. The folks in Washington are quite comfortable with this, hoping it will spur more “sustainable” energy sources that don’t exist. A lot of smaller airports, unfortunately, will not be as enthusiastic.

Revenue Is The Goal. Even If  It Means Dumping Newark. Adding to this new fleet mix is the concurrent shift toward replacing brand loyalty with revenue generation as a core strategy. American has dumped a number of markets out of high-cost LGA and JFK. Frontier has waived goodbye to Newark, which just 18 months ago was intended to be a lynchpin in that carrier’s route system. There is more of this to come.

The Leisure Travel Vulnerability. We will be updating Airports:USA forecasts shortly to accommodate these shifts. Unfortunately, we do not see 2022 exceeding 800 million enplanements any longer. Plus, we are anticipating the emerging effect of higher inflation on air travel demand, particularly in the 2Q of 2022.

No More Trends. Just Episodic Shifts. Airports need to be ready to anticipate what these trends will do to enplanement levels.

This is the reason aviation leaders are becoming member/subscribers to Airports:USA®. It is the only source that monitors trends on a daily basis and translates them into traffic forecasts and future air service projections.

Take a look at It delivers an eye on the future that’s current and reflects the real world.