Ever since its emergence as a global pandemic in February of 2020, COVID-19 has been an unprecedented shock to the airline and travel industries. Since early March, most jurisdictions in the United States have put into place restrictions limiting commercial activity to essential businesses, issued stay-at-home or shelter-in-place orders, and encouraged social distancing to slow the spread of the disease. At Embark Aviation, we are committed to providing the aviation industry with the best, most up-to-date analysis to help airlines navigate this difficult time. We are continuously monitoring the situation, so be sure to check this page frequently for new updates and information.
The Transportation Security Administration (TSA) recently began publishing total TSA checkpoint counts by day on their Coronavirus Information page. TSA checkpoint counts roughly correlate with a country-level count of enplanements. Because connecting passengers typically clear security once, this data gives us daily insight into O&D traffic decline and recovery trends nationwide.
TSA checkpoint analysis
Under normal circumstances, airline demand throughout the week fluctuates by day of week. For this reason, we take a rolling average of the past seven days.
You will note a modest trend upward on the far right-hand side of the chart, but because of how small the numbers are relative to last year, the scale makes it may be difficult to tell when exactly it began. Checkpoint number declines bottomed out about March 23 and began recovering about April 16. Since then, throughput has been showing encouraging signs of recovery – about 2% to 5% increases daily. As states’ Coronavirus restrictions expire, are modified, or extended, we expect to see those changes make a material impact on these trends.
How does this compare to last year?
Taking the 2019 data as baseline, we can compare current performance as a percentage of the norm. As demand fell away, each day’s traffic represented a smaller proportion of its 2019 day-of-week-adjusted traffic. Because week-over-week growth is affected by seasonal shifts (especially around the Easter holiday) showing the data as a percentage of previous year eliminates this possible source of error. As traffic begins to recover, the proportion of 2020 to 2019 traffic will increase; a value of about 100% would mean traffic for that day is back to normal. In order to better visualize the current situation, we have focused on the dates after traffic bottomed out.
Checkpoint counts bottomed out at 3.6% of their 2019 total on April 16 and have been increasing steadily ever since. Counts on May 21 show a significant spike in checkpoint totals. We attribute this to improved booking confidence following the expiration of stay at home orders, some of which ended almost two weeks ago. As stay at home orders expire, we expect to see 21, 30, 60 days out from the order expiration continued acceleration.
Some days retained a greater portion of their 2019 traffic than others, suggesting a recovery that is strongest on certain days of the week, which we investigate in greater detail in a later section of this report.
There was a significant spike in demand around Memorial Day weekend beginning Thursday, May 21, 2020. The Memorial Day increases in checkpoint counts as a percentage of 2019 continued throughout the week of May 25; under normal circumstances increases in demand due to the holiday weekend fall off after the Tuesday following Memorial Day, but this year the gains were preserved.
What about the industry response?
Industry response in the form of capacity reductions lagged the change in checkpoint counts by about three weeks. Although we observed a modest increase in passengers around April 16, industry capacity did not bottom out until May 5. However, given existing demand, we should expect to see similar capacity reductions stay in place until demand begins to improve.
Although TSA checkpoint counts do not include all enplanements – connecting passengers only pass through the checkpoint once in the vast majority of cases – we are able to estimate the industry load factor by factoring in historical connection rates.
Although the bulk of the collapse in traffic took place in mid-March, impacts were already beginning to show early in the month, with load factors declining 12 points year over year on March 1. Industry reporting from early March confirms that airlines were starting to modify policies (such as waiving change and cancellation fees) in response to customer uncertainty as early as late February. This suggests that ticket sales were already declining to a noticeable degree by the time the dataset published by the TSA begins.
At the end of April, load factor began to recover more quickly than passenger traffic, primarily a result of the capacity cuts that were put in place. If the steady upward trend in load factor continues we do not anticipate significant further capacity cuts, especially as increasingly full flights begin to improve the airlines’ financial position. However, it is also unlikely that the airlines will begin to restore capacity outside especially strong routes until load factors are closer to where they were on March 1.
As above, note the significant increases in load factor around Memorial Day weekend beginning Thursday, May 21, as demand increased without a corresponding increase in capacity. There was a modest increase in seat counts on May 31, which does not show up on the seven day average, which resulted in the significant loss in load factor seen on that day. Although demand increased significantly following Memorial Day, this indicates that it is not yet strong enough for increases in service to be sustained.
Have travel patterns changed?
As mentioned, airline demand is variable throughout the week. The below chart summarizes the share of TSA checkpoint counts by day of week for the week of April 6 onward (right as traffic bottomed out) and the average for 2019.
As a result of COVID-19, demand has become considerably more variable, with the busiest days (Thursday, Friday, and Sunday) now comprising a larger share of overall traffic than they did before. Under normal circumstances airlines price and inventory manage different days and times according to demand; more price-sensitive traffic tended to shift away from the peak days.
However, in the new extremely low-demand environment, people can choose the travel dates they prefer and create a natural shift toward the peak days of week. There are also a handful of other notable trends:
- Until the week of 5/4, traffic was consistently shifting away from Mondays and toward Sundays, suggesting a relatively larger share of bookings are leisure or personal travel rather than for business. After that point, the trend reverses sharply. It is likely the case that this indicates a relative increase in business travel, as trips that were delayed at the beginning of the crisis could no longer be put off.
- Sundays have leveled off at roughly their pre-COVID share of weekly travel even as overall traffic continues to recover, suggesting that increases in traffic are no longer leisure-focused.
- After an initial boost, Tuesday’s share of traffic has collapsed rapidly, as has Wednesday’s to a lesser degree. In a peak-focused recovery, we do not expect to see a return of these days to their normal share of traffic until peak-day capacity begins to fill up enough that prices begin to rise on those days.
- Memorial Day weekend shifted travel demand significantly toward Thursday and Friday during the week of May 18. There was also a corresponding spike in the Monday and Tuesday percentage of weekly travel during the week of 5/25.