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 to a daily count of O&D passengers. When combined with a shortened passenger 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||Year over Year|
TSA checkpoint analysis
Recent Trends in Passenger Data
As we move into the winter off-peak, the trends are beginning to settle in. The 7-Day Average of TSA screenings are hovering around 710k screenings per day, which is about 36% of normal.
Looking at history, and somewhat past the noise of the holidays, at this point screenings versus ‘normal’ have grown by only 1 point since mid-October 2020, versus the roughly 5 points experienced in the month prior to that. As we are comparing to seasonally adjusted averages, it suggests that the industry has reached a new normal of demand in a range of 35% to 38% of normal during off-peak periods.
Given the changing passenger type, more focused on personal travel, it is likely the industry will continue to see surges of demand around holidays and events, as the business travelers who fill in the gaps remain grounded.
Technical analysis of moving averages
The stock-market inspired moving average analysis, showing the average change day-over-day vs. normal, has been adjusted to shorter periods – 4-day and 7-day moving averages. It now reflects the ‘bottoming’ of the trend, as the variation in the 4-day moving average is at zero and the 7-day moving average is approaching zero.
Based on the recent trends, it is expected that the two lines will co-mingle, without clear crosses, like late September and October. If that co-mingling occurs at 0%, then it represents stagnation of growth, which appears likely to be the short-term trend. If the co-mingling occurs above zero, it will indicate steady growth.
Correlation between new Covid-19 cases and TSA screenings
Prior to the holidays, some loose correlation between daily growth in Covid-19 cases and growth in TSA screenings vs. normal was observed and seemed real. Although there was also some correlation over the holidays, it likely reflected a change in testing behavior and not a reflection of airline demand reacting to Covid-19. In fact, the slow-down in growth could simply have been related to a change in focus, as testing likely slowed while people concentrated on holiday activities.
Since the holidays, the rate of increase daily new Covid-19 cases appears to have stalled. At the same time, travel demand plummeted – more a reflection on the holidays than any correlation between Covid-19 cases and travel demand.
It will be interesting to see if any new correlation appears in the coming weeks – particularly, if declining new case rates is reflected in travel demand.
What About the Industry Response?
Since the holiday period, the gap between capacity vs. ‘normal’ and TSA screenings vs. ‘normal’ has returned to 20 points. The industry appears to be satisfied with this gap between normal demand and supply levels. Certainly, the recently passed extension of the CARES Act with returning minimum capacity levels will assist the carriers in maintaining more capacity than demand warrants.
Looking at future capacity, there was very little capacity change implemented this week. The carriers are likely fully assessing the impact of the CARES Act extension, understanding what this means for their workforce availability and economics.
As a technical note, as we move into March, we begin to lap one full year of Covid-19 impact. Therefore, we are not comparing ‘year-over-year’, as that would be meaningless. Instead, we are defining ‘normal’ as the year immediately preceding the pandemic: March 2, 2019 through February 29, 2020.
The forward-looking capacity changes are very minor in the overall scope of capacity. Alaska, Delta, and Hawaiian implemented small capacity changes for March, while Hawaiian and JetBlue did the same for February.