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 have discussed over the past month, the previously well-defined trend in TSA screenings from Labor Day Weekend until Halloween was broken following Election Day. The fact that trends are disrupted during November is not a new phenomenon, as the general off-peak nature of the fall-winter season is interrupted by what used to be the busiest air travel days of the year. While still a busy period, when airlines run 85% annualized load factors, these formerly peak days are now less so – with the airlines making up the difference with fares.
In fact, there are two phenomena on display right now. One is normal seasonality. While the load factor variations are not as great as in the past, the peak days still exhibit stronger load factors and airlines add single day capacity to accommodate the added demand, which drives total passengers. Second, of course, is the new requirement to review traffic through the Covid lens, manifested as a percent of last year’s demand.
Going into Thanksgiving period, it is logical to expect the normal seasonal increase in demand as well as an increase in the year-over-year Covid metric. As Thanksgiving holiday traffic is overwhelmingly VFR (“Visiting Friends and Relatives”) and that traffic appears to be the most resilient category during the pandemic, it is logical to anticipate an increase to this metric. The logic really stems from the underlying passenger type shift from business to VFR that occurs for this holiday as a normal course of business, every year.
As seen above, leading into the Thanksgiving weekend (data through Tuesday), the seven-day rolling average day has reached 925k, its best performance since the pandemic began. This is driven by a 6 point increase in year-over-year demand over the past two weeks.
As noted in the daily statistics that lead this column and the chart below, two of the past seven days exceeded one million screenings – which has only occurred once prior to this week. Four of the remaining five days exceeded 900k, and accomplishment previously reserved for just peak days.
While these results are good for the airline industry, they are also reasonably expected. While we were surprised over the period since Election Day that the previously well defined year-over-year growth pattern did not resume, we are happy to report that thus far into the Thanksgiving traffic, demand has returned to nearly meet our expectations. To the extent that traffic is falling a bit below, we expect this is related to the travel restrictions put in place in various locations during the last two weeks.
What About the Industry Response?
As we have previously discussed, the virtually every carrier except for Southwest and Frontier has been selling capacity pre-Covid capacity levels right up until their crew planning deadlines. This leads to very dramatic schedule reductions occurring about four to five weeks in advance of the impacted month. January is no exception to this trend, with the industry reducing selling capacity for January and early February from about 90% of last year to about 75%.
The 15 point drop this week was led by American, Alaska, and JetBlue, all of whom reduced January to between 55% and 65% of January 2020 levels. Delta and Southwest also tweaked capacity levels, issuing further reductions to their already reduced schedules.
The teams at Spirit and United will likely publish their January reductions over the holiday weekend.
Because the variation in segment passengers is directly related to the variation in TSA screenings discussed above, there has also been a variation in estimated industry load factor. As TSA screenings and passengers did not meet our expectations since Election Day, neither did load factor. Estimated load factor has increased to 53%, still somewhat below our expectations as is traffic.