Cuts, Cuts, and More Cuts Begin to Bleed Into Spring Break

Feb 1, 2021

More Reading on This Topic: Schedule Changes

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It was a busy and rainy week in Airlineville this week. It wasn’t raining water, however. It was raining doom and gloom. Cut after cut filled resident plans this weekend, and more cuts may need to come. It took quite some time to roll through the massive amount of Cirium data this time around.

The Globe made its plans for March, and they are conservative. It has cut more than any other US airline by far. That doesn’t mean others didn’t join the party. The Eskimo, Ms Blue, and the Heart all piled on more cuts on top of the previous ones.

In a rare change, the Animal looked into the future and made some cuts through the year. Cuts here, cuts there, what’s the difference?

All this and more this week. Like sands through the hourglass, so are the skeds of air lines.

Alaska Does All Kinds of Things

There was a lot going on for Alaska this week. It had previously pulled down Mexico flying for March after the US testing plan was announced. Apparently February didn’t hold up well enough, because it has now pulled a fair bit of that flying down in February too. March saw more general cuts to bring down capacity. Meanwhile, in April it extended its Canada cuts.

Separately, Alaska made some long term route changes with a hefty transcon pulldown.

Gone for good: San Francisco – Philadelphia, San Jose – Newark
Won’t operate until the fall: Anchorage – Kona; Los Angeles – Chicago/O’Hare; Seattle/Paine Field – Portland, Palm Springs; San Diego – Fort Lauderdale; San Jose – Redmond/Bend
Lose 1x daily through the summer: San Francisco – Washington/Dulles
Add 1x daily through the summer: Anchorage – Chicago/O’Hare, Los Angeles; Los Angeles – Bozeman, Reno; San Diego – Honolulu, Kahului; Seattle – Denver, San Luis Obispo
Jackson Hole – San Diego will operate in the summer

Allegiant’s New Flights

Allegiant loaded the new flights it announced earlier this month including its first service to Portland (OR), Key West, and Jackson Hole. Details here.

American Adds More Leisure, Pushes Back Long Haul

American is back to beefing up its summer leisure flying once again.

Extended into and in some cases through the summer: Chicago/O’Hare – Key West, Palm Springs, Puerto Vallarta, Sarasota; Dallas/Fort Worth – Ixtapa/Zihuatanejo; Philadelphia – Daytona Beach, Salt Lake City
Increase from weekly or sub-daily to daily during the summer: Chicago/O’Hare – Cabo San Lucas, Ft Walton Beach; Philadelphia – Hilton Head, Key West, Nantucket, Traverse City

Also, the start of service has been pushed back in several markets. Philly – Madrid goes back from March to April while Philly – Amsterdam gets pushed back to May. Most China flying (including Hong Kong) has been delayed from restarting in March to now restarting in May. In the meantime, American will beef up DFW – Incheon flights and tag on Beijing/Capital (not Daxing as previously planned).

Delta Shuffles

Delta also is pushing back some international service. Amsterdam flying gets hit hard thanks to the pending Dutch testing rules that are going into place. Some of that is getting replaced in Paris, however, which sees more flying from Atlanta and the return of Seattle in March. Atlanta – Jo’burg gets pushed back to June. Boston – Dublin and Minneapolis – London are delayed to May. Plans to ramp up Asia in April are gone with most new flying canceled. Latin America saw that same fate for March.

Frontier Cuts Long

Frontier took an axe into the summer, a surprisingly long view for the airline.

Gone through the spring: Cincinnati – Dallas/Fort Worth; Denver – Boise, Burlington; Islip – Atlanta, Las Vegas; Las Vegas – Charlotte; Miami – Hartford; Nashville – Chicago/O’Hare; Newark – Atlanta, Cancun, Phoenix; Orlando – Colorado Springs; Philly – Boston; Salt Lake City – Atlanta, Austin; San Juan – Baltimore, Boston; Tampa – Atlanta, Austin; Trenton – Charlotte, Raleigh/Durham, Sarasota; West Palm Beach – Cleveland
Gone through the summer and beyond: Austin – Atlanta, Chicago/O’Hare, Miami, Philly, San Diego, Washington/Dulles; Denver – Huntsville, Jackson (MS); Los Angeles – Cincinnati, Orlando, Philly; Miami – Buffalo, Providence; Newark – Fort Myers, Myrtle Beach, Ontario, West Palm Beach; Philly – Cincinnati, Kansas City, Phoenix, West Palm Beach; San Antonio – Atlanta; Tampa – Albany

JetBlue Cuts Again

JetBlue was feeling bullish once again in March with a nearly 23 percent cut. That puts it down 31 percent YoY, but I’m guessing there’s more to come. I didn’t see any particular trends here, though it was interesting to see Newark – San Francisco gone completely for the month.

Southwest Cuts March Too

Southwest took another swing at March. It had hoped to be able to fly more, but bookings just aren’t shaping up. The 9.5 percent cut brought Southwest down to -30 percent YoY for the month, still fairly aggressive.

Buried in here, Southwest also did some market tweaking. Miami to Tampa failed quickly. Instead of using that to connect people throughout the Southeast, Southwest is now going to try 2x daily to Atlanta and 1x daily to Dallas. We’ll see if that works better for the airline. Atlanta – Sarasota also joined the network. Oh, and Long Beach gets Kahului flights on airplanes that were probably going to be used for Lihu’e flying until that market shut down.

United Cuts Deep

United has put out its March cuts, and while most airlines are down about 30 percent YoY at this point, United is down 44 percent. The airline continues to be very bearish, and it has often been right so far. This isn’t a great sign for the industry.

Other Randomness

Air China has extended its US pandemic schedule through May.
ANA won’t fly Narita to Honolulu or JFK until April.
Cayman Airways will fly Denver – Grand Cayman from May.
Eastern looks to be getting rid of most plans to fly to the Dominican Republic. It will, however, start Boston – Mexico City in May.
JAL has pushed most of its Hawai’i flying back another month to April.
Silver continues expanding throughout the Southeast with Savannah to Fort Lauderdale and Tampa coming online in April.
Sun Country loaded its new summer and fall route schedules detailed here.

That’s it for this week. Next week, we’ll see what cuts are to come on the next exciting episode of Skeds of air Lines.

Brett

35 responses to “Cuts, Cuts, and More Cuts Begin to Bleed Into Spring Break”

Tom Ronadle

Feb 1, 2021 at 5:11 am

These cuts aren’t very severe compared to the past year, although the headline makes it seem that way.

Reply
1. southbay flier
  
  Feb 1, 2021 at 1:31 pm
  
  Wasn’t last year’s cuts based on a full schedule. This year, the schedule was already reduced.
  
  Reply
Bobber

Feb 1, 2021 at 5:38 am

They’ll be no significant bounce-back in traffic unless the vaccine roll-out makes its way around the globe, rather than just in those wealthy nations who have bought up their stocks. Whether being on-board a plane is COVID-safe or not, is irrelevant – vast numbers of people moving around to be in contact with other people remains a risk, and will do so for at least another year. Depressing, thoroughly depressing.

Reply
Tim Dunn

Feb 1, 2021 at 5:40 am

and yet LUV starts ORD in less than two weeks and has its cheapest fares readily available. LUV expands in MIA and IAH is on deck.

And getting out of NYC on an airplane today will require real luck as snow continues to fall. 70% of JFK and EWR flights and 90% of LGA flights are cancelled. 2/3 of B6′ schedule, 20% of UA’s schedule and 10% of WN.

Reply
1. MissTheMasters
  
  Feb 1, 2021 at 5:56 am
  
  We’ll just pretend that MIA-ATL and SRQ-ATL is taking market share from every airline except Delta. By the way, when is Delta leaving Terminal H in MIA?
  
  Reply
  1. Tim Dunn
    
    Feb 1, 2021 at 6:55 am
    
    anyone can pretend anything they want.
    Doesn’t change the fact that
    1. WN’s overall presence in ATL is smaller than it was a year ago by a larger percentage than DL. WN has reduced its presence in many more ATL markets and its presence even to SRQ and MIA is +/- 1 flight/day for March.
    2. Some airlines have figured out how to restructure their networks for growth during this pandemic. WN is doing that by adding service to nearly all of the remaining legacy/global carrier hubs they did not serve pre-covid.
    3. 100% of the routes that WN is adding from ORD, IAH and MIA are served by the legacy carrier that hubs there. Several of the routes they are adding are hub to hub (or at least hub metro to hub metro) for AA and UA which will have a disproportional impact on AA and UA.
    4. ATL, like DTW, MSP, and SLC are single airport cities in their metro areas and effectively so are BOS and SEA which constitute the majority of DL’s hubs unlike the majority of AA and UA hubs.
    
    While WN has been much more cautious in re-adding capacity across its network, it is not backing down from growing its network to legacy carrier hubs.
    WN’s growth into AA and UA hubs will very likely be the most significant growth and strategic story of the pandemic era. WN’s MIA growth to such a young airport on their network shows how likely they are to keep growing in their other new cities.
    
    Reply
    1. MissTheMasters
      
      Feb 1, 2021 at 8:13 am
      
      Exactly. So the questions remain: When is Delta vacating Terminal H in MIA and where are they going?
      
      Reply
    2. Jake
      
      Feb 1, 2021 at 8:59 am
      
      Your line of logic is really entertaining. WN already has a bigger presence in ATL, DTW, MSP, and SLC than anything they’ve announced so far in ORD, MIA, or IAH. But sure… keep deflecting from the obvious and making a huge deal out of WN flying from ~two gates in MIA, ORD, and IAH… And somehow bringing up WN’s largely O&D presence at ATL vs Delta’s mega hub in the middle of a pandemic as though their current flights and percent to Delta at ATL means anything at a time when largely no one is flying.
      
      And again, if you were to look at actual capacity sold (incorporating blocked middle seats and discounting Delta’s ATL capacity numbers by a third), WN is likely not any smaller and is probably bigger in ATL relative to DL year on year. Of course Delta has to fly more flights to keep up any semblance of sold market share. But, as with all of your analysis, you love to ignore the sold capacity vs flown and act as though Delta’s middle seat blocking strategy means nothing.
      
      Reply
      1. Tim Dunn
        
        Feb 1, 2021 at 10:48 am
        
        Jake,
        I very much do use accurate data including flown data where it is available and capacity when we are talking forward looking.
        There is no DOT data on WN’s covid era expansion into AA and UA hubs yet. Capacity is what matters.
        In that regard, you are correct that the amount of capacity WN is adding is relatively small in ORD, IAH, and MIA to either AA or UA – and I’m not even sure what the basis is for comparison to ATL, a “hub” that WN acquired and has continuously downsized, simply moving around routes. They have a minimal presence in ATL to the west and very small in a number of other major markets from ATL including to NYC and BOS.
        WN has been in ATL for long enough that there is decent flown data and it consistently shows that DL gets a significant average fare advantage not just to WN but to every carrier on the routes they serve from ATL. And, that is NOT true out of every airline’s hubs in the markets that other carriers serve.
        WN has maintained a 12-15% passenger market share on an O&D basis for years and that has gone up only slightly during the 2nd and 3rd quarters when AA and WN both added significantly more capacity than other carriers – only to significantly pull that back. That is comparable in DTW, MSP and SLC. WN does poorly, in general, in other airline hubs where the city has a single airport. IN cities where WN has a “hub” in a metro that also hosts a hub by another carrier in the same metro, WN does much better, not just in the metro as a whole but also in its performance in the legacy carrier hub.
        In contrast, WN already has more than 20% in the metro areas of Houston, Dallas and Chicago because of the “hubs” it already has at the secondary airports in those cities. Unlike in the past, WN is operating its route system much less on a point to point basis and much more with banked hubs which means that its ORD to BNA, DEN, BWI, PHX etc routes have a much larger multiplier effect on its ability to pull traffic than it did in the past.
        Further, MIA is clearly a hot market right now for everyone but when WN is adding capacity even before public data is available on an O&D basis, they are clearly doing well. Their statements about their new routes have to be taken credibly or else you just throw out anything any airline exec says to investors – which is regulated by the SEC.
        Finally, let’s look at what actually happened in the 4th quarter of 2020 which was supposed to be the quarter that US airlines were supposed to operate without government help.
        Here is CASM ex (without fuel, specials and, in DL’s case, its refinery)
        CASM-ex
        ALK 11.35
        LUV 11.96
        DAL 12.57
        AAL 17.59
        UAL 16.28
        JBLU 12.31
        Delta had just a 5% cost disadvantage to WN and even less to B6. In contrast, DL had a 40% unit cost advantage to AA and 30% to UA. Given that DL is blocking seats and can add back that capacity at very low costs, it is absolutely clear why WN is adding capacity in AA and UA hubs and not competitive with DL.
        Then look at yield.
        DL 17.77
        AA 14.98
        UA 14.12
        B6 13.63
        AS 13.54
        WN 13.01
        WN has the lowest yield which says they are adding capacity that is y8ielding low revenues – but they have the cash to do that. In contrast, DL has the widest gap between yield and CASM-ex which means they are getting not just a strong revenue premium but also are very capable of not just defending its own markets but also to gain share at other carriers’ expense.
        And, finally, bottom line numbers don’t lie.
        Pre-tax earnings $ millions GAAP including charges
        
        B6 -521
        AS -621
        DL -1108
        WN -1331
        UA -2373
        AA -2809
        
        DL is by far on the best path to cutting losses because of its ability to manage costs far better than its peers and because of its premium revenue strategy.
        WN did not do as well in the 4th quarter as DL – but they are far better positioned than AA or UA.
        
        And it is in AA and UA’s top markets, not DL’s, that DL is growing.
        
        Looking at real world data, DL and WN are the predators while AA and UA are the prey during the covid era – but each are doing it differently. DL is maintaining its position better than other carriers in top markets while WN is growing into other carrier markets.
        
        Reply
        
        Jake
        
        Feb 1, 2021 at 11:49 am
        
        So much misdirection and purposefully ignored data…
        but… for a start. WN is cancelling routes out of MIA already and trying other markets. Not sure if you read the report.
        
        And yes, WN has hubs at MDW, HOU, and FLL, but you’re the one who loves to make such a big deal out of two gates at IAH, ORD, and MIA as though it’s significant and a HUGE move that doesn’t impact Delta. Good for southwest. They view those airports as distinct markets in those cities. Which then also translates to why it’s just as significant that WN already has a significantly bigger presence in ATL, DTW, and MSP than the three new airports. Southwest is a great airline but it’s not as though they need to grow their presence in ATL, DTW, and MSP when they already fly to FAR more cities from those airports than anything from ORD, MIA, and IAH.
        
        And, true to form, you bring up Yield but ignore RASM. As though it matters that Delta made higher yield with significantly lower load factor.
        
        Pre-Tax: come back to us when Delta has rehired those 18k people that left and are needed to fly this summer. Also, come back when Delta is NOT forcing 25% pay cuts on their people which they absolutely were to a significant number in the fourth quarter.
        
        And ignoring FY2020 pre-tax and only referencing 4Q20 is very VERY Tim Dunn. Delta lost ~$12B in 2020; more than American; ~$5B more than United and nearly $7B more than Southwest. Delta paid for those people leaving so you can’t reference the savings in 4Q without, at least, mentioning the cost to get them to leave focused in a 3Q special item.
        But it was a cute manipulative try.
        
        Tim Dunn
        
        Feb 1, 2021 at 12:07 pm
        
        Jake,
        I’ll leave it with this – because my comment was originally about WN’s expansion into AA and UA hub markets – because WN has a solid plan to grow its business and transition it from a high frequency, heavily point to point network to one much more focused on connections and serving as many cities as possible.
        As much as you want to argue otherwise, WN is not expanding in DL strength markets but is in AA and UA hub markets – including setting up to become the dominant airline in a number of AA and UA strength markets, in part because AA and UA divide ORD while WN dominates MDW (and AA and UA aren’t even there) while WN will be adding capacity to ORD in large enough proportion to be just as relevant at ORD as DL is (and DL has been the 3rd largest airline at ORD based on O&D revenue for years).
        
        Specific to your points, DL did, in fact take major charges to permanently get costs out of its business – both for fleet and early retirements. There is a big difference between pre-tax and operating margins that reflect how well a business is being run and longer term metrics which include one time charges -which all airlines have taken. And, btw, UA just said that it will be offering costly early retirement programs – which means they will end up w/ special charges.
        
        As for RASM, it is merely a revenue ratio. We have been through it before, but it means nothing if it doesn’t drop to the bottom line. DL chose a
        
        I have agreed w/ the DL employee on here that raised the question about being made whole because AA and UA employees are being rehired. DL needs to deal w/ that – and I fully expect they will.
        
        We can debate DL vs. the rest of the industry but this isn’t the place. 4th quarter metrics – including bottom line numbers – show that DL has a solid strategy and is executing against it.
        
        And, as much as you want to believe otherwise, WN is adding capacity in AA and UA’s strongest markets and will expand it over the next couple months. And, year over year, on a capacity share basis, WN is not as large in DL hub markets as it used to be.
        
        We are entering yet another period when AA and UA lose share to most of the rest of the industry including WN, DL and low cost and ultra low cost carriers
        
        Jake
        
        Feb 1, 2021 at 5:25 pm
        
        Another blah blah blah “delta rocks; aa and United are about to be run over by WN with their two gates”. Let’s just ignore that delta wanted to turn Miami into a focus city and that certainly seems like old news at this point. Who’s really getting run out of Miami, Tim?
        
        Find a new argument. This one barely has any treads, even for you.
        
        Tim Dunn
        
        Feb 1, 2021 at 7:58 pm
        
        Jake,
        again, I am not interested in arguing.
        Delta has schedules published for its expansion as it was planned when covid began with flights increasing back to what was scheduled by this summer.
        If Delta pulls all of its MIA expansion, then you will have a point. Like everyone else, and why we all read CF’s weekly updates, DL still intends to resume its MIA expansion – just like the schedules everyone else has scheduled.
        
        Miami is growing for everyone because of an influx of new residents. There is room for growth. AA’s share will go down as competitors come in and as AA share decreases, its pricing power will be weakened.
        
        Chicago is not growing – and is probably shrinking. WN is still adding flights which will start in a couple weeks.
        
        Other cities that WN is adding are somewhere in between ORD and MIA. WN says they are seeing strong bookings across the board.
        
        DL’s strategy is to remain strong in the established markets it flew pre-covid; its financial reports shows that appears to have been a wise decision.
        
        WN’s strategy is to aggressively grow into new cities. In an industry where we constantly read about cuts from weak to weak, it is refreshing to see an airline that has the cash and the ability to grow in new markets.
        
        Like it or not, they are growing most in markets where AA and UA’s strongest markets.
        
        And can you share with us where WN is restricted to two gates?
        
        Jake
        
        Feb 2, 2021 at 2:19 am
        
        For a guy that isn’t interested in arguing, you sure do love to argue.
        
        Again, find a new line of AA and UA bashing. This one is pretty lame. Southwest is a great company and being as aggressive as they ever have but this dumb line that the end is nigh for United and American in Chicago, Houston, and Miami… please. You get one talking point stuck in your head and turn it into an endless repeating loop in the comments section.
        
        Delta’s financial reports show forced pay cuts, too few people resulting in operational deficiency during peak flying, debt on par with American, more aircraft retirements than competitors, lower rasm than competitors, and a strategy that believes 2019 will come again one day.
  2. Bill in ATL
    
    Feb 1, 2021 at 6:57 am
    
    What terminal is Delta moving to?
    
    Reply
  3. TC99
    
    Feb 1, 2021 at 7:06 am
    
    Why would Delta leave Terminal H in MIA? LAN is in H/J which is connected behind security. They have invested in the Infrastructure of the Terminal when it was built years ago. Finally, to which terminal would they be moving to? G (UA) is old and needs improvement to it’s facilities, F is mainly used for International departures, and D/E is AA and its partners domain.
    
    Reply
    1. MissTheMasters
      
      Feb 4, 2021 at 6:22 am
      
      TC99…..I absolutely agree that Delta had a stranglehold on Terminal H in MIA……until Southwest arrived. How did Southwest get two gates in Delta’s terminal to begin with? Given Delta’s growth plans for MIA vis-a-vis the LATAM JV, it makes no sense whatsoever that Southwest was able to get gates in Delta’s concourse. It seems to me that Delta now needs more gates, not fewer, in MIA. Also, given the growth that Southwest has already quietly announced for MIA, they will need more gates there soon. Something is going on there. What is your take on this, given your knowledge of MIA facilities?
      
      Reply
Eric

Feb 1, 2021 at 7:53 am

Cuts like these shouldn’t really be creating headlines anymore. Does anyone really expect any changes in demand until the vaccine is fully administered to a large percentage of the population? I would fully expect this through the summer.

Reply
1. southbay flier
  
  Feb 1, 2021 at 1:32 pm
  
  I tend to agree. I will fly domestically once I get the vaccine. But, the US has not done a stellar job rolling out the vaccine.
  
  Reply
Jimmy

Feb 1, 2021 at 8:04 am

It’s a little silly that the airlines are now cutting schedules that they published DURING the pandemic. Are they just going to keep publishing a “normal” schedule 11 months out forever?

Do they think there’s a PR benefit to cutting forever? Why not publish a bare bones long range schedule and then, gasp, add some flights if things improve?

Reply
David F.

Feb 1, 2021 at 12:09 pm

Having decided to go for it on Maldives trip we booked back in April (because by then COVID would be all over wouldn’t it? HA HA) – this weekend I went to book a OW JFK-DFW for March – tacking on F ticket on EY (which I am already pouting because they switched from A380 to a 787-9).

Everything I look at shows a Whopping 1 non-stop flight a day on B6, nothing on AA/UA/DL – unless I want to fly from EWR/LGA or take a long layover somewhere.

Any idea whats going on?

Reply
1. David F.
  
  Feb 1, 2021 at 12:30 pm
  
  Correction – Should not have put UA in there, I know their presence @JFK has been little to Non-Existent.
  
  Reply
2. CF
  
  Feb 1, 2021 at 1:08 pm
  
  David – There just aren’t a lot of flights in that market in general.
  Historically, LaGuardia carries most of the traffic and JFK just gets a couple connections for international. There aren’t a lot of international connections operating these days, so there’s little reason to keep those flights going for feed. JetBlue only went into that market relatively recently, and it apparently thinks it’s worth flying a single flight 5 days a week on a 100 seat airplane. So it’s barely still there.
  
  Reply
  1. David F.
    
    Feb 1, 2021 at 2:25 pm
    
    Thanks Cranky.
    
    I know things change, but Its just strange because the 2 airports are main gateways and especially because the last time I looked in October for this March, AA still had 3-4 Non-Stops a Day scheduled to DFW, Even now they have 3 each to CLT and MIA (although 2 of the MIA are 777 so I assume positioning flights).
    
    I guess the 1 JetBlue flight is laying the ground for the now approved alliance. I would consider it but I have no Status with B6 and AA flight credits to use and right now its cheap in F from EWR.
    
    I know LGA has the nice new Shiny terminal, but given our EY flight gets in @ 3pm, I don’t fancy spending the night at a hotel there. I would spend it at TWA Hotel, but I do have a Marriott Cert to burn.
    
    Reply
    1. Jason
      
      Feb 1, 2021 at 5:21 pm
      
      American- and most carriers- have only been finalizing their schedules a month out. Anything further out us just a “dummy” schedule that will be reduced. Even though you saw, in October , multiple dfw-jfk nonstops on AA, that was the dummy schedule. They probably weren’t flying any that month or in October either. Anyway, as cranky mentioned, aa only really flies dfw-jfk to feed the jfk international flights. There aren’t any. Most of the demand to New York prefers LaGuardia for a number of reasons. So that’s where they fly. JetBlue is flying the route to jfk but that has nothing to do with their proposed alliance with American. That hasn’t been implemented yet. Your best bet is probably just to fly in/ out of LGA and can between the 2. I’ve flown Etihad’s J and F products on the 787 many times- both are great. Enjoy.
      
      Reply
      1. David F.
        
        Feb 2, 2021 at 4:04 pm
        
        Thanks Jason,
        
        I am resigned to the fact it is what is.
        
        My Initial plan back when we first booked was to spend the night in the TWA hotel and go to the now opened.Paris Cafe Angelina on Bryant Park. That combined with the Apartment on the way home, from MLE was going to be a awesome end to the trip.
        
        Then it was going to be just catch a flight home as soon as we could after the EY flight, but the last Non-Stop DFW flight leaves at 4.30 from LGA/EWR.
        
        So Now its a case of do we spend the night at the JFK TWA and Uber to LGA, or go over the EWR and spend the night at the Marriott there (I have a cert to burn). Both have good airfares in F to DFW. There are worst problems to have I know!
        
        Reply
Kilroy

Feb 1, 2021 at 1:07 pm

I checked prices for flights from the Northeast to Florida recently and was blown away… Lots of $70-100 roundtrip fares available, on multiple airlines (DL, B6, G4). That’s ~3-5 cents/mile, and certainly not sustainable, even in the short term, as it means those flights have to be VERY full (or have a solid chunk of seats filled by pax paying MUCH higher fares) just to break even on marginal costs.

Based on some back of the envelope math for an A320’s fuel burn, if DL were to sell all ~100 seats on the A320 (allowing for DL’s seat blocking policy) at that fare, its revenue would be roughly the same as the market price of the jet fuel required to operate that roundtrip.

Reply
1. Tim Dunn
  
  Feb 1, 2021 at 3:42 pm
  
  Kilroy,
  there is DOT O&D data for the 2nd and 3rd quarter. None of the airlines except for NK reported average fares well above what you found. Some more, some less.
  In the NYC to FLL and MCO markets for the 3rd quarter, DL was well above the industry average and at the top of the industry in average fare which includes NK – which gets a much higher percentage of revenue from ancillary fees. Interestingly, DL got the second highest revenue in one market. B6 did above average in both average fare and volume. AA and UA both were below average in fares – which shows that their market share strategies didn’t work with their high costs. Note above that their costs were much higher than everyone else. DL’s average fares were more than 50% higher than AA and UA which is more than offset DL’s seat blocking. Note above that DL’s costs are well below AA and UA’s. UA’s low average fares appear to be related to B6′ expansion – which speaks to the financial risk to airlines that are seeing competitors grow in key markets.
  You are absolutely right that no one is making money at these fares. There is too much capacity in the industry right now.
  The relevance of what CF reports here every week is seeing who blinks where and when. It is easy to focus on the week to week reports to the exclusion of the real trends they represent.
  As was noted before, there are still a lot of airlines adding capacity that they never fly. It is the markets that are being cut more than that carrier’s average that are most significant.
  I am glad CF continues to highlight these market moves.
  
  Reply
  1. Tim Dunn
    
    Feb 1, 2021 at 4:19 pm
    
    Let me clear up my first paragraph. ALL of the airlines except for NK reported average fares well above the fares you found…
    Of course, the 4th quarter and right now (1st quarter) are not the same – but all airlines revenue manage and offer deeply discounted fares but don’t sell the entire plane at that fare.
    Enjoy the conversation and your perspectives.
    
    Reply
    1. Kilroy
      
      Feb 1, 2021 at 6:05 pm
      
      To be clear, I wasn’t trying to claim that that anecdote is representative of the whole, or even trying to draw comparisons between airlines, and as mentioned I certainly don’t expect every (or even many) seats on the plane to priced that low.
      
      However, when multiple airlines are selling seats 3-4 weeks out at prices that are barely above the seat’s share of the marginal cost of fuel for that flight, and on a route that normally has plenty of demand (moving pasty white Northeasterners to warmer weather / sunnier locations for winter/spring break and for a break from the cold) and fares that are normally 2-3x what they are now, that speaks to the bloodbath that adding capacity to FL routes is becoming, and speaks to likely further schedule cuts until natural demand picks up. As Cranky pointed out with regards to Hawaii’s pricing strategy recently, demand is very price inelastic now. As a result, fare cuts aren’t driving much in the way of additional sales, just stealing sales from competitors in a race to the bottom.
      
      A few hours ago I booked BOS-TPA in the last week of February nonstop, for just under $100 roundtrip in basic economy; DL’s base fare (after extracting taxes/fees/etc) was $63 and change, for 2,370 statute miles of air travel; the cheapest off-airport parking will run me that much. B6 & G4 had similar fares. That’s a route that I normally fly or price out a few times a year, and $200-250 R/T is what I’m used to paying for off-peak basic economy.
      
      The same itinerary departing this week (i.e., booking < 48 hours out) is $161 R/T, including all taxes, while the same days/flights leaving next week are $107 R/T. Excluding taxes etc, that's 3 cents a mile to the airline for a trip booked < 9 days out. I'm surprised DL hasn't cancelled that flight and rebooked pax on its other 3 or 4 nonstop daily flights on that route.
      
      Point is that at fares like that, airlines (yes, including DL) are practically giving seats away, at least some seats and on some routes. Anecdotal information it is, but sustainable situation it is not.
      
      Reply
      1. Bill from DC (aka Cranky Gazelle?)
        
        Feb 2, 2021 at 5:36 am
        
        Hi Kilroy, glad you “was” here, I found that quick analysis very informative and agree that fares like that are totally unsustainable.
        
        If the fares are barely covering the jet fuel, that is not a recipe for success. And I have had similar anecdotal experiences to yours with fare comparisons to/from Florida to both the DC and Chicago areas.
        
        Reply
        
        Kilroy
        
        Feb 2, 2021 at 10:46 am
        
        Bill,
        
        Glad someone gets the name reference. 60 or 70 years ago, when my late grandfather was a private pilot he once tried to figure out where he was by descending with the idea of reading a town’s name off its water tower, only to discover that “KILROY WUZ HERE”, which didn’t help him all that much.
        
        They are a bit harder to compare (as their fares aren’t available on Google Flights, and as their site lacks a good option to check for fares to/from multiple airports at once), but ironically enough I’ve found that for the routes I fly, Southwest usually has (both pre- and post-COVID) fares that are usually on the high side relative to other carriers, even during sales. Relatives flying other routes find that Southwest is more price competitive for them (though rarely incredibly cheap, especially if one isn’t checking a bag), so I know it depends a lot on the specific routes.
Tim Dunn

Feb 2, 2021 at 5:23 am

no disagreement with anything you wrote in this reply.

My point is that no airline sells every seat at the lowest fare. Based on DOT data from the 3rd quarter for the market you noted, DL did give up share in the BOS-TPA market to B6 but ended up getting higher average fares as a result. The year before, B6 and DL had identical average fares. It is precisely to your point that there isn’t enough demand to be able to discount successfully that DL decided to reduce capacity, including by seat blocking, and in the process, get costs out of the system necessary to reduce the size of DL’s operation to reflect current demand.
Based on CF’s weekly reports, several airlines are still putting far more capacity into the market than they can sell and cutting capacity multiple times before departure. Other airlines are taking the approach of posting a fairly full schedule and then pulling it down across the board approx. 2 months out with minimal market specific changes – similar to what we saw before covid

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1. MissTheMasters
  
  Feb 4, 2021 at 6:13 am
  
  Mr. Dunn…..As you correctly indicated, it does appear that Southwest sees future growth in MIA. It won’t be long until they outgrow the two gates they already have in Terminal H, which is essentially Delta’s terminal. What do you foresee there? Will SWA relocate to another terminal or will Delta either voluntarily give up more gates or be forced to involuntarily accede additional Terminal H gates to Southwest?
  
  Given the bitterness between the two carriers over one gate at Love Field, it seems doubtful that Delta was thrilled that SW got even 2 gates in Delta’s MIA Terminal. It just seems counterintuitive, unless Southwest has some sort of sweetheart deal with the MIA Aviation Authority. What do you make of this? Where is this going for each carrier in terms of their MIA footprint?
  
  Reply
Indy

Feb 2, 2021 at 7:11 am

Southwest might peel off some O&D traffic at ORD but I don’t really expect the impact to be that big. AA may be more impacted but so much of United’s business at ORD is connects to/from Europe. Just off the top of my head: Swiss, Austrian, LOT, SAS, TAP, Lufthansa, Turkish – all fly to ORD. It might take a while for some of these to bounce back but TATL traffic will return. Southwest will have zero impact on this. Nor for most business travelers out of ORD. Southwest is like a cult and I, for one, don’t and won’t drink the Kool-Aid.

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