Over the weekend, Delta and United filed their June schedules, and again, I dove into Diio by Cirium data to see how things look. Compared to the American filing from last week, United and Delta look pretty conservative. Here’s a comparison between the three.
American’s June schedule looks downright enormous compared to Delta and United, each of which are operating near half of what American is planning. Of course, we don’t know for sure that all of these will operate. We can always look back in July and do the math on that, but for now, we’ll take these airlines at their words.
Let’s take a look at Delta and United in greater detail since American went under the microscope next week.
Delta Returns to New York, Small Growth Elsewhere
In the month of June, Delta will add back flying on 23 routes that didn’t operate in May. Here’s a look at twenty of them, color-coded by hub.
As you can see, the bulk of the returning flying is a still-modest ramp up in New York. New York had been pulled down to nothing, so this isn’t all that bold. It’s just an acknowledgment that demand may begin to return ever-so-slightly. Not shown on the map are Delta’s summer return to the Alaska markets of Juneau, Ketchikan, and Sitka from Seattle as required by the CARES Act.
So, New York ramps up, but it does lose one route: the flight from JFK to Bangor. Delta is relocating that to Detroit. Other than that, Delta will pull out of two others that operated in May: Albuquerque to Los Angeles and Detroit to San Antonio.
Keep in mind that the recent announcement that the airline would pull out of 10 secondary airports goes into effect in May so it’s not reflected here in the month-to-month comparison. That being said, it’s worth highlighting the 10 airports (listed first) that lose all service from Delta until at least September.
- Akron/Canton (currently to Atlanta)
- Burbank (currently to Salt Lake City)
- Chicago/Midway (currently to Atlanta)
- Long Beach (currently to Salt Lake City)
- Manchester, NH (currently to Detroit)
- Newport News (currently to Atlanta)
- Oakland (currently to Salt Lake City)
- Providence (currently to Detroit)
- Stewart/Newburgh (currently to Detroit)
- Westchester (currently suspended due to runway construction)
Looking at frequencies, only four routes will lose more than a daily flight. That includes Minneapolis to San Antonio alongside Atlanta to Evansville, Springfield (MO), and Tri-Cities. There are 76 routes gaining an additional daily frequency in June. Half of those are from Atlanta, most going from two to three flights per day. The rest are scattered around the other hubs.
United Builds Up Newark, Even Less Growth Elsewhere
Meanwhile, United appears to be looking at things similarly here. Its big growth is in Newark, which had been pulled down to near nothing. Here are all but five of the routes coming back:
Beyond Newark, you do see some limited additions out of Chicago and Denver here. Denver to Paine Field, for example, will replace the flight from Portland in May that was just meant to keep the airport with any service as required by the CARES Act. Not on the map include a seasonal return in the Washington/Dulles to Nantucket market as well as four Hawaiian flights that had been cut… Los Angeles to Honolulu and San Francisco to Kahului, Kona, and Lihu’e.
The only other markets — besides Paine Field to Portland — losing service in June versus May are seasonal routes from Chicago/O’Hare to Key West and from Washington/Dulles to West Palm Beach.
Frequency changes are remarkably minor. There are 7 markets from Chicago and Denver that drop either from 7 to 3 weekly or 14 to 10 weekly frequencies. Only one market loses more than that, Denver to Wichita drops from 2 daily to 1. Frequency additions are even more sparse. Chicago/O’Hare to Allentown/Bethlehem goes up from 3 to 7 weekly flights while Denver to Portland (OR) and San Francisco to Honolulu each go from 1 daily to 2 daily. The big winner is Los Angeles to San Francisco which increases from 2 daily to 4 daily.
As you can see from this, Delta and United are far less confident of any significant return of demand in June. Other than trying to restore New York and Newark from near zero, the rest of these appear to be just tweaks. American appers more bullish, but we won’t really know until we see what the airline actually flies that month, not just what it schedules.
Did UAL cut its two bus flights EWR-ABE and IAH-BPT?
Wany – The BPT bus was cut long ago, I believe. As for ABE, I don’t think it’s going now. I just see a daily flight to ORD.
Great analysis Cranky!
First on first glance at the maps I thought Delta was announcing SAN to BGR! Probably one of the longest possible flights (San to Presque Isle would be longer) within the Continential US.
I’m not planning to fly anywhere soon but have been looking at the daily departures/arrivals for my home airport of SBN and noticed similar changes, Delta (normally are largest airline with multiple daily flights to DTW, ATL, and MSP) is down to one flight per day to DTW, United has reduced its normally 5 flights a day to ORD to one.
American that had no flights to our airport before 2018 has only gone down from 4 daily flights to 3 (normaly two a day to DFW and CLT, one of the CLT flights has been discontinued).
Allegiant is still flying plenty of flights but since I have a hard time of keeping track of their non-daily flight schedule during normal times, I have no idea how much service they’ve cut. Cranky I think an article on how Allegiant is handling the CARES act and I think the unique rules they finally got would be fascinating.
SFO – BGR/PQI would be even longer. SFO – PQI would be 63 miles further than SAN – PQI.
Yup. People don’t realize how far east southern California really is, and instinctively think of the California cost as being oriented more north/south than it is in reality. Southern California is roughly at the same longitude as the western border of Idaho, and San Diego (longitude of 117.1611 W) is actually **east** of Spokane, Washington (117.4260 W).
Paine field doesn’t count as a secondary airport to SeaTac? It’s closer to Seattle and SEA than either MHT or PVD are to Boston.
Jason – Nope, Paine is Everett which is different from Seattle. Go figure.
United has not flown Washington/ Dulles to Nantucket since 1997.
Its seasonal return to Nantucket in June will be from Newark, not Washington/ Dulles.
United has not flown from Washington/ Dulles to Nantucket since 1997.
Its seasonal service has been from Newark, and its seasonal service to Nantucket for this summer will be from Newark, not Dulles.
Jason – That will be a surprise to United which has filed Saturday-only flights in June from Dulles to Nantucket. Flight 5003 to ACK and 5006 back.
They seem to operate it on the 20th of June and maybe the 21st. But not any other weekend. It’s not there the 13th or 27th. And not in July at all.
Regardless, United hasn’t flown nonstop from Dulles to Nantucket since 1997. Their normal service is to Newark in the summer. Service from DC tends to be from DCA on AA and B6. I’ll reach out to some planning folks I know at UA to find out what’s going on
United’s prices are hideously high even three weeks out (ie., NYC airports – Denver).
hideously high prices in the N.Y. – Denver market – even over two weeks out.
So Joellen, I’m curious. 3 weeks out, what were they hideously high fares you found? I’m guessing you checked various carriers, and connections vs nonstop, right? How about some details. Oh and since you think they are too high, what do you think a reasonable airfare between NY and Denver should be right now?
AA is in a cash grab at this point. Nothing more.
When the US airlines’ largest supplier says that a US airline will likely cease doing business before the year is out, nobody that is even remotely tuned into to financial data is confused about which airline is in the crosshairs.
Oh. Tim Dunn predicting the end of AA again?
In the words of Mr Potato Head: “where did I leave my surprised eyes…”
You really need a new hobby. This chicken little bit on AA (on EVERY ARTICLE Cranky writes that barely mentions AA) gets very tiresome… The Boeing CEO didn’t even say what you’re suggesting he said. Look at what he actually said. He said “Yes. Something will happen in September comes around… There will definitely have to be adjustments that have to be made”
The actual audio clip is readily available and it said a lot more than what you quoted.
Selectively ignoring things you don’t want to hear doesn’t and won’t change reality.
AAL was by far the financially weakest US airline before the crisis.
It will take enormous amounts of debt for all airlines to survive.
AAL had more debt than multiple other airlines combined.
All of that new debt has to be serviced at some point in the future.
The Feds have already handed out $25 billion in grants with a minority of that first round of help made as loans.
They have made no commitment to lend anything to any airline and are not going to accept just any risk.
UAL was denied a loan after 9/11 which is turning out to be far less economically damaging than this crisis.
AAL has far fewer unencumbered assets relative to its cash needs than other airlines as a result of its high debt levels.
AAL has accessed a far lower percentage of capital markets than any other airline.
AAL has said they have “a right” to Federal loans and are including that in their published financial calculations.
When the CEO of Boeing says what everyone else recognizes which is that there will be failure, not just reorganizations, of US airlines, it is not hard for anyone that is remotely objective and knowledgeable about airline finances to know which airline will be the first to go.
And the fact that AAL is willing to fly far more capacity than DAL and UAL shows that AAL is motivated by very different factors given that operating flights with 20% load factors costs money. AAL is looking for any cash it can get right now. Other carriers are focused on cutting costs and trying to match supply with demand.
I’m sorry if that reality hits you square between the eyes.
The bleeding stops. It always does.
Reality is this: You were fired by the only major airline you ever worked for. Your credibility on anything is zero. Your ability to pontificate and speculate on the demise of American at every possible opportunity is certainly unquestioned and without parallel.
Anyone can randomly make unqualified statements like you do and make comments that sound interesting but have zero corresponding relevance to put them in perspective.
I’m sorry if the reality hits you square between the eyes.
As I said, inventing facts because you don’t like the ones that exist doesn’t change the reality that does exist.
Someone will be right and someone will be wrong.
I am willing to wait it out.
Well if AA goes under then Boeing is screwed. Don’t they have like 25 built 737 Max’s already built for AA waiting to be delivered? Not to mention a larger order of 787’s. Just exactly who is going to buy Boeing or AB planes with a flooded market of planes? AA going out would only flood the used plane market even more.
America West saved USAIR, then USAIR saved AA, might we see Alaska save AA?
Yes, Ed, Boeing has to sort this all out. So does Airbus.
Boeing issued $25 billion in debt – which is as much as all US airlines have received in grants so far.
If any airline fails, it won’t be the first or last time that a supplier was left with airplanes that the airline planned to take.
Boeing and Airbus have every reason to not flood the market with aircraft; they know that economic downturns lead to airline failures. Both manufacturers are cutting production.
Eastern, Pan Am and TWA were all great names in aviation. They might have sold a few assets along the way but they ultimately just went out of business.
As hard as it is for some to believe, airlines have and will just go out of business; the fact that everyone recognizes this is the greatest blow to commercial aviation in its history means that the world will see at least what has been seen in the past during economic downturns.
Since you and others love to drag the rest of the internet into this discussion, would you also like to acknowledge that the predictions I made over a decade ago that AA would file for bankruptcy and lose market share actually ended up taking place? And maybe it is precisely because some people get so wound up about anything negative being said about AA then that there were people that wanted me thrown off of some discussion forums.
And next time you and anyone else wants to show up and denigrate someone else, would you at least be big enough to use your own name and explain to us why it is so difficult for some people to read anything negative about a company?
and then note that there are people that can respectfully discuss difficult subjects w/o personal attacks.
Unless you are a media-know-nothing, it is beyond obvious from watching this clip that Boeing’s CEO did not predict the demise of a USA airline in that clip. He responded somewhat inartfully to a multipart question. What he actually said was that he expected “adjustments” in the Fall — aka airline layoffs. Boeing has since clarified his remarks to reflect this reality.
Even if he didn’t mean it, multiple media and financial outlets interpreted his comments as being that an airline or two would fail.
Airline investors aren’t convinced of your point. They have been hard hit for 2 days.
LOL, he is predictable as a sunrise. Same thing every time, which is why he has been banned from other boards…
Tim, assuming AA does file for bankruptcy but keeps operating (the most likely case, if a BK filing occurs at all), wouldn’t a filing by UA and DL be inevitable to keep the cost strictures in line with each other?
This I was happened in the 2000s, with AA’s decision to delay their filing ultimately hurting them by giving UA/DL a head start.
It seems like it is in the best interests of all of the US3 for none of them to file bankruptcy. Once the first one files, the other two won’t be far behind, unless they want to repeat AA’s mistake of 15 years ago.
First, thank you for being willing to have a factual, honest discussion of issues without name calling or defamation of character.
That is the way mature people communicate.
It is not a given that any carrier will be able to get costs down significantly in a chapter 11 filing. The two primary benefits of C11 based on what US airlines have done in the past is to cut labor costs and to restructure debt.
AAL and UAL have relatively low levels of unsecured debt; DAL has more because it had an investment grade rating before the virus crisis. DAL has more unencumbered assets now because it was able to issue debt w/o having to put up collateral. DAL also paid cash (essentially) for a lot of its fairly new aircraft so those are unencumbered.
Most airline debt is secured by aircraft, including the majority of AAL’s debt. A large majority of AAL’s debt is secured by relatively new aircraft; those aircraft are holding their values so far.
No airline is going to be able to go into bankruptcy and cut its aircraft-backed debt and still hold onto the aircraft.
And AAL’s real problem is that its debt level is so high that adding more debt makes it virtually impossible to pay down that debt esp. in light of the decreased revenue environment.
American was spending 3X more on interest expense than Delta and 1.5X more than United even before the crisis.
As for labor, in a bankruptcy filing AAL could terminate its pension plans which would save them several billion in cash that they otherwise would have to spend over the next few years. if DAL filed, they could do the same thing – but DAL has made enough voluntary contributions that they do not have to contribute much if anything to their frozen pension plans for the next several years.
Airlines have also cut deeply labor costs in bankruptcy. American could cut its labor costs down to levels that would allow it to be competitive with other airlines but no airline has ever successfully cut half or more of their labor costs and been able to survive; that is the level of cuts that American needs to make in order to not just survive but also be profitable enough that any lender would bet on them.
The reason why the big 3 all went through bankruptcy post 9/11 is because they all still had pension plans which they could not terminate or freeze except in bankruptcy. That is not the case now.
AA’s delayed bankruptcy filing in the 2000s also led to market share losses that AA has never turned around. B6 started aggressively growing in NYC (at JFK), AA pulled back, DL jumped in many of the markets that AA cut or exited, and AA is now number 4 in NYC in terms of passengers boarded – but still #3 in local revenue.
AA has consistently said that NYC is one of their weaker performing hubs. American consistently said that DCA, CLT and DFW were its best performing hubs. Given AA’s system margins, their hubs at MIA, PHL, NYC, ORD and PHX were at best breakeven and probably lost money at least part of the year.
AA never got its system costs down on a consistent basis competitive with DL and they have continued to lose market share and key revenue not just in NYC but also in Chicago (they only operated to one longhaul international destination on a year round basis at the end of 2019).
Also, Southwest and other discount airlines were able to compete at much lower costs than they have now – and they did not have the financial strains that the big 3 had (it was really the big 6 post 9/11). Revenue is down for ALL airlines by monumental amounts. When WN’s CEO says that they might be forced to walk away from their history of no furloughs, and WN is the most consistently profitable airline in the world, then it is going to be really bad for those that are far less profitable and far more in debt.
Again, thanks for the positive discussion.
Others would do well to copy your example.
And American has operated an expansive international route system which generated high revenues even though their costs to operate that network were much higher which is why DOT data shows that AA’s international network was far less profitable than Delta or United’s.
And the bigger issue is that there simply is not enough revenue right now for any airline to successfully reorganize in bankruptcy. It is the same for many retailers. Banks are simply not willing to make loans when revenue is down as much as it is and when there is very little collateral left.
It is not a given that all airlines will end up in bankruptcy and it is also a very real possibility that if an airline goes into bankruptcy under chapter 11, they may not be able to reorganize – which is precisely why Boeing’s CEO said the possibility is very real that at least one US airline could go out of business – which is far different from just reorganizing in bankruptcy.
to Ghost below, criticizing Boeing’s business decisions – which I and others have certainly done – does not mean that their CEO is not capable of making very factual and obvious conclusions about the current state of the airline industry.
Yes, any of the airlines you mention could fail – he didn’t provide enough color to know exactly what he meant – but AA is still by far the weakest airline financially in the US and was even before the virus crisis.
If any airline fails, AA is very likely to be the first to go.
No one wants to think about anything failing or anyone losing their job; aviation has seen plenty of that since airlines began. But there are some airlines that have done better jobs than others in preparing for the inevitable crisis while others justified their decisions which were financially poor even in the best of time.
The near term future looks very dark for large portions of the global economy. Airlines have and will continue to be one of the most impacted in any downturn. To pretend that the world and the US can emerge from this crisis without real pain is naive.
There are those that know that airlines and economies have downturns. Mocking those that say difficult things to hear doesn’t lessen the downturn or the reality that it brings
this is a 1,000 word blog post comment.
Cut the “this is the way mature people communicate” nonsense. You insult every person that responds to you.
I haven’t done that & in fact I commented to Tim yesterday.
directed at Tim. not you.
I didn’t want to wade into the ugliness above, so I am responding here. Right or wrong, I just don’t see how the government lets the world’s largest airline vanish. I get that Pan Am and TWA bit the dust, but they were shells of their former greatness when they finally went under. I don’t agree with it, but it sure seems to me that the way Wall St. works now is cash in during good times, lean on the government to cover mistakes during bad times. Too big to fail has become the rule, not the exception. Banks, Chrysler (twice), GM, and many others have been saved this way. Again, I’m not saying it’s right or that I agree with it… AA is a mess. I’m also not saying AA won’t make drastic cuts and/or look vastly different. I just don’t see how Trump or possibly a new Democratic administration lets that many jobs vanish overnight.
let me just address a couple issues which you raised.
The number of employees just at American (which has the most number of employees) represents less than ONE PERCENT of all of the Americans that are currently out of work.
Second, the Feds gave the airline industry $25 billion which was met with a great deal of discontent, esp. in light of the buyback activity in the airline industry, of which AAL led the industry.
Third, the airline industry was given a six month timeline to figure out how to transition to a dramatically changed world, esp. regarding revenue.
Finally, other airlines, led by Delta and Southwest, have accessed well over $10 billion from the capital markets. It was the Fed’s intent from the beginning to help viable businesses access capital markets. The federal grants helped inject enough cash into the airline industry for some to be able to access enough cash to keep them going – even based on their current expenses – for many months. The airline industry is not lacking for capital even if some specific airlines cannot access the capital markets. And just to highlight the difference in financial quality in the airline industry, right now, credit default swaps (which are a type of insurance on corporate debt) cost more than twice as much for American as they do for United, four times more than for Delta, and ten times more than for Southwest.
This is by far the biggest crisis commercial aviation has ever faced.
Airlines have failed, sometimes rather spectacularly and quickly.
Today is apparently the anniversary of Braniff’s shutdown.
Some may not want to hear that airlines will fail again and in spectacular fashion and others will have a really hard time if their “preferred” airline is most at risk of failing, but airlines will fail. There are real indicators that show financial stress for companies and American’s metrics are much worse than any other airline.
The size of the airline and the date of the election will not be factors when even the largest airline employs less than 1% of the total number of unemployed Americans.
and, no one has yet to provide any other explanation for why American is scheduling much more than Delta or United than American’s clear need for cash – and the fact that they have scheduled much less than what they flew for months, esp. at JFK.
> It seems like it is in the best interests of all of the US3 for none of them to file bankruptcy. Once the first one files, the other two won’t be far behind, unless they want to repeat AA’s mistake of 15 years ago.
Agreed. Once one airline files Chapter 11, the others will feel very strong pressure to follow, whether it’s in the best interest of the airlines’ owner (shareholders) or not. Definitely makes for a fun bit of “prisoners’ dilemma”-style game theory.
Not a surprise DL/UA are building back up NYC. Things have gotten better here in recent days. NYC will emerge ahead of other cities.
here is a rough count I did for DL in June on its coastal hubs and focus cities not including NYC.
SEA – 60 flights to 30 destinations
LAX – 39 flights to 19 destinations
BOS – 15 flights to ATL/DTW/MSP/SLC/JFK/LGA
RDU – 7 flights to ATL/DTW/MSP/LGA
RDU – 9 flights to ATL/DTW/MSP/LGA
SEA at this point is a vital part of their network, looks like that is going to get a lot of emphasis when things ramp back up. The funny part is AS also scheduled over 160 flights, which means SEA is way way overserved at the moment.
LAX is still a lot smaller than what I would’ve expected. I’m really surprised they didn’t make SEA/LAX about the same size. It seems like DL is valuing SEA more than LAX.
BOS/CVG/RDU are really going to be downsized. These are the stations DL is willing to sacrifice.
please include the flight counts for Delta’s competitors in each of those hubs and then you will gain some insight into why DL is doing what it is doing. If everyone is cutting the same percentage in a market, then there is no chance of share lost.
You only get accurate conclusions if you look at all of the facts instead of just the ones that confirm what you want to see.
DEN-OTH is coming back!? Only twice a week but still. Well, golfers gonna golf.
Southern Oregon is truly underrated.
First, the obvious. New York was the center of the outbreak in the U.S. and was cut more severely than most places. Things are improving in New York and people still need to get there.
The second obvious point is that one can’t book a flight that isn’t offered. I’m not trying to praise or criticize anyone. I have absolutely no clue about the “right” number of flights to offer. My point: No one else does either. There have to be enough seats on aircraft to allow for the proper spacing. Yet there was a lot of criticism yesterday about flights that were “too full.” The “right” number of flights is a real conundrum: Too few flights = crowded space. Too many = money down the drain. All any carrier can do is make its best guess. There’s not enough hard data to know what the “right” number is. And just about the time that number is figured out, it’ll probably change. Let’s hope it does – upward.
To Tim Dunn, a rhetorical question (meant facetiously, not sarcastically, and with all due respect): Isn’t a “cash grab” the reason a business operates? Businesses offer products or services to make money, that is, to “grab” cash. Boeing’s CEO predicted that a “major” airline will go out of business this year. If I’m not mistaken, a “major” airline is defined as one that brings in at least a billion dollars in annual revenue (sometimes known as “cash”). From what I understand, that list includes the likes of Allegiant, Spirit, JetBlue, Frontier, Alaska, Hawaiian, Envoy, Republic, and Skywest – as well as the big four. I hope the gentleman is dead wrong. Maybe he should worry about getting his own house in order. Boeing is in a world of hurt because it isn’t delivering enough airplanes and bringing in enough cash. Airlines are in a world of hurt because they aren’t carrying enough people and bringing in enough cash. Sounds like a pattern.
I believe the “cash grab” is to schedule many flights in order to collect the fare up-front and then cancel the flights the day before. Passengers would then be crowded onto the remaining flights or offered a refund (eventually).
Isn’t Southwest running a fuller schedule than most other carriers, too? Maybe I’m not quite as cynical as some. If I remember correctly, American didn’t delay refunds to the same extent as some other airlines did.
To reiterate my original point: No airline knows the “right” number of flights to offer. All they can do is guess. It’s also possible that United and Delta like the fact that American and Southwest are scheduling “too many” flights. There’s no way to accurately predict demand if everyone is artificially(?) restricting supply.
I also saw where Boeing’s CEO has “walked back” some of his comments about a major airline going out of business. Will there be “adjustments” as he also said? You bet! If Helane Becker (the main airline analyst at Cowen) is right, the airline industry will be 30% smaller at year’s end than at the same time last year. That will require a lot of adjustments.
I can’t tell if AA’s strategy is just “go big or go home,” or if they’re truly in denial about the depth of this crisis.
UA is framing it as the apocalypse.
DL is trying to craft almost a war effort internally to rally everyone.
AA reminds me of people on Facebook telling everyone that this is “just like a bad flu,” and posting car crash stats.
Hope Parker & Isom know what they’re doing!
My theory is that AA knows that if things are as bad as expected they will end up in bankruptcy. So they’re trying to act like it’ll be fine as a way to stimulate demand because they have no other option.
If you look at June on a seats basis, the difference between AA and UA is even more stark – UA total domestic seats are less than 37% that of American.
I’m surprised that DL can’t pull out of Worcester. The catchment area for Worcester is bound by both Logan on the east and Bradley to the southwest.
I can’t remember why it’s not considered part of the larger BOS market the same way MHT & PVD are, but DL has applied to suspend service to ORH.
That one I find confusing. Same with PAE not being considered part of SEA since both are in the Seattle metro area. Without traffic, you can drive from Everett to SeaTac in less than an hour.
The only reason that I can think of is that ORH is one of the closest airports in Massachusetts to the State Capitol, and that politics may have played a factor… BDL (Hartford / Springfield) is a few miles over the state line (i.e., in CT), and MA has much more political power than RI or NH.
I agree, it’s bizarre and inconsistent, but I guess you have to draw the line somewhere.
It will be interesting to see if AA’s gamble pays off.
Fuel is dirt-cheap.
The CARES act is paying salaries.
The planes have to be maintained on the ground or in the air.
And… AA is probably paying for lease payments anyway.
Why not fly and get some cash out of it? If the loosening of lockdowns continues, this gamble could really pay off well relative to complete losses otherwise.
You raise a good point. I wonder what the true marginal cost to operate a flight is these days, and I’d love to see some napkin math on the subject. Also, choosing which flights to operate based on which will provide positive short-term cash flow probably isn’t the best strategy long term, but if you’re concerned about the company going under in the next 6/12 months, longer term profitability takes a back seat to cash flow.
Just thinking aloud…
Some labor the airlines are already paying for, as required by the strings with the bailout money, but I was under the impression that they had cut back on hours etc, so there’s still probably a marginal cost for additional labor to operate a flight.
The price of fuel has fallen greatly but is still extremely volatile and is creeping back up. I’m not familiar with the details of landing fees and agreements with other subcontractors that service the plane under the wing (lavs, bags, and more), but presumably there are additional costs in some of those areas that an airline wouldn’t incur if they kept the plane parked.
Obviously there is a maintenance / wear & tear cost associated with each additional flight (e.g., each flight hour and cycle puts a plane that much closer to needing an A/B/C/D check), but many of those costs are lumpy and not incurred until months/years down the road, so they don’t have as much of an immediate impact on cash flow. If you’re just focused on cash in the short term, you could probably ignore many of those costs.
Some of you aren’t seeing that there is a definite uptick in demand for air travel at the moment. When the shut down first happened the flights were almost totally empty. But over the last month that has gradually increased and this week the flights have been on were much closer to normal. Not full, but one was 50% and one was 65 or 70%
This is on American but the other airline seem to be seeing the same thing.
Travel is not going to go back to what it was anytime soon, but there is a demand, and people need to get from one place to another.
This fits in the overall scheme of people beginning to be unwilling to just hide at home. We cannot just sit at home and stay there until there is a vaccine.
Too early to know whether AA’s move is strategic or accidental. I’d guess strategic, but nobody’s told me anything. :) If you think about it, it makes some sense. Thanks to CARES, you’re already paying for your employees anyway (an airline’s highest cost), and fuel is now cheap. You’ve also got these planes otherwise paid for and parked. So why NOT fly?
Meanwhile, we are definitely seeing a strong and steady increase in enplanements: at least 35,000 week-over-week if you follow the TSA daily stats. This number will certainly grow as the lockdowns ease. I would also note that the media and liberal-leaning politicians are far more invested in the lockdown that the science would support. Dr. Stephen Shapiro, the chief medical officer of one of the largest hospital networks in America, has called COVID-19 a “disease of the elderly, sick, and poor.” Very few people are willing to come forward to support Dr. Shapiro (and the media doesn’t write about him), but the statistics show he is indisputably correct. Massachusetts presents its data very clearly, and it shows that 98.5% of COVID-19 victims had serious pre-existing conditions, and that the death rate for people under 50 is about 3 in 100,000. In contrast, it’s over 1000 per 100,000 for 80+ year olds. These are not the kind of stats that can sustain a sustained lockdown of the country: they demand devoting the resources to the relatively few citizens who are at serious risk. As the states that reopen continue to show that there are no dire consequences to reopening, more of the country will quickly do so. This undoubtedly means more people will work, and more people will fly. In other words, unless we get a Lombardy-like disease curveball, betting on more demand than less demand seems like a good bet, especially when your variable costs are low. I also think AA will get some good press out of this as its planes will have somewhat lower load factors next month than their competitors, which will make travellers more comfortable (even if it does not actually increase their real safety).
Unfortunately, the country and even the CDC is not providing the detailed risk information that Dr. Shapiro is citing – and everyone else w/ medical knowledge knows.
This disease is not the same risk to all people and yet people cannot make accurate risk assessments because they are not being told of their own personal risk.
Travel recovery as well as normalcy for the rest of the economy has to come down to an accurate presentation of risks for each person that wants to know – and the individual freedom to make decisions, just as we do about every other aspect of life, most of which has some impact on one’s health.
thanks for sharing the link.
and the world is watching Georgia since it was one of the first to aggressively open. If they are right not just about the number of infections but about the number of severe cases and deaths, then there could be some changes to the way the US and the world is being reopened.
Tim, what’s the option to opening? There is no way we can keep the country closed until there is a cure or vaccine. We will go bankrupt in short order.
It’s a fantasy to think we can wait it out. We can’t. Keep it closed until…when? There is a vaccine? A cure? Those are many months if not years away.
Better to open with restrictions and get to work with some protections for the susceptible.
The WHO is now saying that this could become endemic like HIV. You (we as a world) have to figure out how to live with it and make individualized risk decisions.