Since its emergence as a global pandemic in February of 2020, COVID-19 has been an unprecedented shock to the airline and travel industries. Travel demand has been decimated by restrictions on broad every-day activities as well as specifically on travel. Although, hard restrictions are in place for international travel, softer regulations and typically voluntary quarantines driven by local governments have allowed for some amount of domestic travel. The impact on demand, now well documented, was dramatic and immediate.
As the pandemic took hold and the impact to travel became clear, the Transportation Security Administration (TSA) began publishing total security checkpoint throughput by day on their Coronavirus Information page. The count of TSA security screenings roughly correlate national count of daily O&D passengers. When combined with a shortening of the booking curve, this TSA data gives us almost real-time demand information for airline passengers.
TSA checkpoint count
|Single Day||Rolling 7 Day Average|
|Date||Passengers||Vs. same day last week||Passengers||Day over day|
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.
Recent trends in Passenger Data
With Labor Day weekend (and its shifting week on a year-over-year basis) now behind us, we are now able to get a better view of underlying ‘everyday’ demand than the past two weeks – and the signs are encouraging!
First, our year-over-year trend of the 7-Day average of TSA screening checkpoints has bottomed out at 30% post-holiday, late last week. Since, we have seen almost a week of improving trends with the year-over-year metric increasing to 31% of last year. This is the best performance of average daily demand year-over-year, excluding Labor Day, since the Covid-19 pandemic began. Prior to holiday impact, this metric appeared stuck just below 30% year-over-year, thus reaching 31% with several days of positive momentum is a welcome development.
Second, average daily screenings have once again surpassed 700k. Excluding the holiday weekend, this level of demand was last supported for about two weeks in late August, prior to the seasonal downturn.
The daily growth rate in the 7-day-average TSA screening has been over the last week, logging one of the best days (holidays excluded) since June. Our focus over the next week will be to understand if this trend continues.
What about the industry response?
Similar to last week, the capacity changes implemented by the airlines last week remain concentrated in October, and in smaller scale to previous weeks. The carriers are still not publishing broad changes past early November.
As demonstrated in Figure 3, there is little change in capacity week-over-week. Given the relatively positive trending we are seeing in travel, the carriers likely feel like they have established a balance between capacity and demand. In fact, the small but encouraging signs we have outlined and October capacity levels being where they are likely creates an understandable balance for the carriers.
Further, the carriers are likely not rushing out winter reductions, as they watch their sales trends. Given that bookings are likely occurring more close-in than in the past, the carriers clearly feel comfortable with a normal level of capacity 6-to-7 weeks out and making reductions closer in.
Day of Week Demand
This week, we take a refreshed look at day-of-week demand results for Summer 2020.
Figure 4 represents a comparison of the average day of week versus the weekly average for each non-holiday week from June through mid-August. To read this chart, Tuesdays averaged 5% smaller than the average weekday in the same week. In 2020, Tuesdays averaged nearly 20% smaller than the average weekday. Similarly, Sundays in 2019 were only 5% better than the average day while in 2020 increasing to 20% better than the average day.
This view gives us the opportunity to see with volume something the airlines normally see internally with yield. In normal times, airlines manage to achieve high load factors through tightly managed capacity and the use of pricing rules and inventory management to push demand from the strongest days to weaker days. As capacity is now completely unrestrained relative to demand and passengers have more ability to find low fares and availability on every day of the week, they are able to choose travel days with less price-driven substitution.
The result is that we can measure passenger preference by day-of-week with volume when fares are more normalized over the course of the week. Travelers naturally gravitate to the fringes of the weekend when they can, because its how they maximize their travel – both for leisure and business. Effectively, people prefer to travel on days-of-week where they are already in transition between work and leisure activities, in order to maximize time spent doing both.
Figure 5 shows the gap between 2019 and 2020 – with Sundays gaining 15 points and Tuesdays losing nearly the same. Sundays have become the strongest day of week by 6 points, based on the very strong year-over-year growth in this metric. Sundays leaped over Fridays and Thursdays to take the top spot. Fridays, Thursdays and Mondays also saw strong growth versus an average day, but otherwise remain in order.
Conversely, Tuesdays and Wednesdays saw strong negative growth, with Tuesdays now the weakest day of the week, followed by Wednesdays. Saturdays, normally the weakest day, had the second-best improvement, increasing nearly 10 points to become an average day-of-week.
The combination of strength on Saturdays and Sundays illustrate interesting and significant broader trends. First, it helps to show that business travel is down more than leisure travel, with business-like travel days Tuesdays and Wednesdays taking the biggest decline. Meanwhile, part of Saturday’s weakness is a total lack of business travel. Saturday’s traditional weakness is based on travel reason factors. There is little business travel on Saturday.
Second, leisure passengers are likely shifting to longer trips – thus enhancing the day-of-week impact. Weekender leisure travel typically means the customer wants to be in destination on Saturday – not in transit. A shift towards leisure trips measured in weeks suggests more weekend travel than weekday travel, as weekender leisure travel declines. The weekender travel days (Friday, Thursday, and Monday) still show some strength, but its likely a reflection of the extreme movement in volumes, driving unexpected impacts on share-based view.
Given the news around and nature of Covid-19, these conclusions are fully in line with the larger environment. Most companies are restricting travel, and ‘work from home’ can really mean ‘work from anywhere’. Thus, employees can more easily take a trip to visit family and work from their temporary locale while kids take classes – facilitating new ways to visit distant family without the traditional vacation. Meanwhile, traditional vacation activities – beaches, restaurants, theaters, amusement parks, remain capacity restricted or closed. This coincides with recent studies that suggest employees are taking fewer vacation days – with this new normal and traditional vacation activities restricted – they don’t need to – even if they travel.