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
Change vs. same day last week: 4%
Change vs. same day two weeks ago: 4%
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
In the first few days of August, we have seen a noted increase in TSA passenger screenings. Although small, the increase is a noticeable change from the stagnation that started following the Independence Day holiday and persisted all through July. The average number of passengers throughout July was stuck at about 665k, and by August 3rd had climbed to 690k. This presents a return to about 27% of traffic versus the same days a year ago – a 2 point improvement from the 25% figure in mid-July
Figure 2 also shows marked increase in the last few days. Since mid-July, average daily passenger growth had been flat, with early July increases reversed the following week. However, we have now seen the average passenger counts grow by approximately 1% over the prior day for 4 days in a row, prior to zero growth yesterday.
What about the industry response?
Back in June, the airlines exhibited some enthusiasm for the return of capacity. This has been reduced over the last several weeks as the stagnation of July took hold.
For August, we have seen several weeks of reductions in the 10% range, and that is true again in the last schedule change. As this represents the last possible change prior to start of August, you can already see the reductions up to (10%) level are not effective until mid-month.
For September, however, the airlines have collectively implemented dramatic reductions, greater that (30%) after Labor Day versus the number seats offered last week. Given the stagnation effect we have been watching and the substantial amount of capacity that was in place for September, these reductions are not surprising.
Figure 4 demonstrates a few key points this week.
First, the (30%) reduction in seats offered week-over-week in September translates to a 20 point drop in capacity when viewed year-over-year for those same dates. The difference between the dotted and solid orange lines demonstrates that last week capacity levels were at approximately 80% of last year, and this week, they are under 60%.
Although a slight increase over July, the new levels of capacity for August and September are flatter month-to-month than they had been in prior weeks when the June enthusiasm drove decision to incrementally add capacity month to month.
October and beyond remain at approximately 100% of last year. This indicates the airline scheduling teams have been focused on reacting to the changing close-in trends – and will address capacity reductions for the winter later. Likely in the next few weeks. We also know most airlines are working to address their staffing levels post-CARES Act. As the staffing levels will impact the flying levels, the airlines are likely coordinating capacity reductions and staffing plans carefully, and some amount of coordination between the two can be expected.
On the passenger line, the very small increase in the last few days can be seen, but the gap between year-over-year capacity and passengers is still in excess of 20 points, versus the 12-point gap in June. It appears likely that the airlines will manage the gap to remain roughly the same, should demand trends hold steady.
Despite a few days of increased demand, we are not quite ready to view it as a trend. Yesterday’s return to zero growh supports this. Instead, we are viewing it as a one-week improvement, and then a return to flat trending. Given the airlines approach to capacity including recent reductions, this would appear to stabilize anticipated load factors in August at around 45%, a dramatic improvement over expectations last week.
Should this week’s improvements demonstrate themselves to being a trend, it would be possible to see the industry load factor rebound to near 50%.