Delta and United Play Catch Up in August While American Slows

American, Delta, Southwest, United

The story of the summer so far has been American’s aggressive approach to capacity in the domestic US market. The airline put out far more than United and Delta, and throughout June, it benefited greatly as leisure travelers started to make plans and buy tickets. But now, things are changing in several ways. August schedules are loaded, and others are playing catch up… just in time for a booking slowdown.

American and United both loaded their domestic August schedules over the weekend. For United, this was a big deal… big enough for the airline to put out a press release touting 25,000 new flights in August compared to July. This is growth, but let’s put this in perspective.

Using Diio by Cirium schedule data, I took a look at one week in each month from April through August and compared that to schedules from a similar week the previous year. Here’s a look at what percent of flights are being operated year-over-year.

Keep in mind that in April, airlines canceled a whole lot of flights closer to departure, so they were scheduled but not flown. In other words, that number should be lower. But what we see here is that Southwest has remained above the rest, as you might expect. American has been perched above the rest as well, but it began to expand the gap versus Delta and United in June with it peaking in July.

Once the other airlines saw American’s success at filling airplanes, they decided to join the party. You can see that Delta is just about where American is for August with United still trailing. At the same time, American has gone flat in August versus July.

This is interesting, but it’s also a lie. We have to take into account the load factor caps that only some airlines are implementing. To do that, I had to look at seats year-over-year, not flights. Then I reduced 2020 numbers for Southwest to 65 percent, Delta to 60 percent, and American to 85 percent only through June. These aren’t perfect by any stretch. Delta varies percentage by cabin, and American had a cap on the number of bookings it would take but not a hard cap on load factor. [Update: American tells me it was a hard cap, so the number is more accurate than I thought.] Still, this tells us a great deal.

This looks a lot different, doesn’t it? With load factor caps, Delta and Southwest fall down the chart. Now it’s American that looks most aggressive, especially in July and August where it removed any internal shackles that it once had.

United has closed the gap, but Delta is just so far below everyone else, it’s remarkable how much lower they are.

In August, Delta is effectively working to rebuild a viable network for the first time in months. Take a look at this chart showing the net number of routes added.

Southwest has pushed ahead with adding a great number of routes — 85, to be exact — while cutting 15. But Delta is not far behind, and United has added a large number as well.

Looking at Delta’s schedule, it’s distributed among the hubs pretty evenly. Minneapolis/St Paul is the big winner with 11 new routes while Salt Lake City is runner up with 9. Los Angeles gets 8, Atlanta and Detroit both see 7, Cincinnati gains 5, Boston adds 3, and Seattle gets 2. This is Delta building back up to overflying other hubs as demand picks up. That’s good from a route network perspective, but there are still very few seats being offered.

For United, it’s a different story, as the airline mentioned. It is focusing on building up its central US hubs and focusing on places where there is less virus and more outdoor activity. Because of that, Denver gets 19 new routes while Houston gets 6 and Chicago 5. Newark continues to rebound from nothing with 7 new routes. Los Angeles surprisingly gets 8, but half of those are simply Hawai’i routes coming back as the quarantine gets lifted. San Francisco has only 3 new routes, one of which is to Hawai’i.

I left Alaska and Hawaiian on this list, because they’re notable. Alaska is basically saying, “Hey, that schedule we were going to operate in July but canceled recently? Well, we’re gonna just try that in August.” And Hawaiian, of course, is just coming back from nearly nothing since the quarantine has been lifted.

American, however, remains at the back of the pack with very little change at all. Four of its additions are to Hawai’i. The rest are Charlotte to Williamsport (PA), Phoenix to Memphis, and Philadelphia to both Islip and Stewart in New York. All of those operate once or twice a week.

Does this mean that American knows something? Maybe it rightly bet on demand growing early, but then it saw that demand had plateaued and has frozen its schedule for the summer. Or maybe it’s worse than that and things are backsliding. This would certainly fit with the new round of coronavirus cases that are primarily impacting states in the south and southwest. If you take away big vacation destinations like California and Florida as viable spots to visit, there may be big problems on the horizon.

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15 comments on “Delta and United Play Catch Up in August While American Slows

  1. It is great to see updates as new capacity comes into the market but it might simply validate that some airlines have the financial strength to support a measured and slow return of capacity while others are being forced to fly as much as they can fill today.

    It would be great to see bookings (with revenue) to see how this is all working out, esp. in the South as virus cases skyrocket.

    The point of airlines is to raise revenue sufficient to cover (and eventually again) to surpass costs.

    There is also a good chance that DL and WN’s strategies to create extra space onboard its planes does resonate with at least some travelers – but certainly provides greater opportunity to push fares up.

    We’ll see in about a week when financial results for the first quarter start but analyst estimates are for AA to still post the largest loss with DL and WN with smaller losses.

    1. 2nd quarter results are going to do nothing to show AA’s aggressive network schedule in July and August vs Delta.

      All the second quarter results will show is Delta’s decision to unilaterally cut their non-union employee’s hours by 20% despite the CARES Act paying for those hours.

      1. well, yes, revenue is indeed part of financial statements. and the traffic comparisons to revenue such as RASM.

        And multiple airlines also reduced hours for some of their employees. And tens of thousands of employees voluntarily took leave.

        AA so far appears to be the only one of the big 4 that is taking a government loan; UA said it applied and was expecting one but there has been confirmation of what they will do.

        Maybe, just maybe, other airlines would rather be in a position to get their financing from Wall Street and not be bound by the restrictions of the US Treasury.

        1. I’m actually not sure what’s the negatives of taking a loan if you need the money (which most carriers could use right now). It’s probably going to be at lower interest rate than private market. The major stipulation that I see problematic is that you can’t pay dividends or something like that for the duration of the loan + 1 year. That seems reasonable.

          At this point, I actually hope B6 would take it if there is no other conditions.

          1. Companies also can’t buyback stock, something that the airline industry has done alot of, esp. AA more than any other airline.
            The Treasury has been or will be granted stock warrants so that the stock value will be further diluted.

            And it is not clear that the interest rate will be lower, esp. if you factor in the stock dilution.

            B6 was in very good shape so is unlikely to take a government loan.

            The government did say it is still talking to other airlines – but they really don’t want companies to see the government as the lender of choice but rather last resort.

            Before rooting that other airlines take government loans, it might be worthwhile to wait for the deal sheet for each airline to be released by the Treasury. I doubt if they will release the term sheets until they are through negotiating with all airlines that are interested in loans.

  2. What I see are airlines desperate to fill seats while under the delusion that things with the pandemic are under control, see no evil hear no evil as it were. However reality has a weird way to make everyone pay attention at some point as Phoenix, Houston & most of Florida are just figuring this out & California.? Well they are relearning the hard way.

  3. It would be great to see international capacity and the extent of each of the big 3’s global network that is operating by, say, August and then later this year. While embargoes and international quarantine requirements are changing constantly, the extent of the schedule that is operating and is planned to operate does give some insight into how quickly each carrier is reinstating its “core” international network; even if stuff like SFO-ZRH and ATL-PVG will take longer to reinstate, it helps to see how “bullish” or “bearish” each carrier is regarding their longhaul international networks which are not impacted by WN or other largely “domestic” carriers.

  4. CF, interesting data. Just wondering do you have access to load factors (past and currently as booked) for individual flights, by class?

    If I call you as a potential customer, can you tell me the load factors, UA 1228, IAD-DEN, economy, for each of the past 7 days?

    Or, how about current booked load factor for future flights, like UA 1228, IAD-DEN, economy, each of the 7 days on or after July 13?

    Or, is this all company closely-held-type info?

    1. Jaybru – No, that information is not available. You can get past data when the US releases T100 data, but that is delayed.

  5. Is Southwest the only airline that is adding extra sections to accommodate demand? For example, during the last week they have added an 25-30 extra sections per day in DEN & PHX with 6000 flight numbers. Systemwide they have added thousands of extra sections during the last few month. Seems like a very smart strategy.

    1. Jack – I’m guessing those were just regular flights added to pick up capacity during the holiday weekend. Southwest uses the 6000 series for scheduled flights these days, so that’s probably also where they dump closer-in adds when there’s more need.

      1. It’s been going on for months with thousands of extra sections being added in June. The 6 thousand flight numbers are now exclusive to extra sections.

        1. Jack – Interesting. I see 6000 series flights through September now. It’s only the November/December schedule that I see those are gone. Not sure what the strategy is.

        2. Brett like Jack said, this has been going on for months. Instead of doing the usual ‘coming up with an answer,’ listen to your reader. After you listen, digest, research, follow up with an answer.

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