To say it has been a whirlwind month for those who live in Washington, DC would be an understatement. It has been an absolutely insane month, truth be told. Now, American is pulling back at its primary airport in the region, Washington/National, or DCA, and I’m guessing that these two things are directly related.
Just think about everything that region has had to endure since inauguration day. With the new administration in “slash and burn” mode, it seems that about 75,000 federal employees took an early-out and left while more than 30,000 have been laid off. Not all of these are in DC, of course, but DC has a high percentage of its population that works for the federal government — probably at least 20 to 25 percent if you include contractors — so that means there is likely to be an outsized impact on the region.
But the impact on airlines is not just from those who have lost their jobs or even those who work for the feds. Think about the entire DC ecosystem. There are consultants and lobbyists and restauranteurs and so many more who make a living based on what happens in the federal government. And right now, the federal government is looking for austerity spending to guide the way.
This creates the first hit to air travel demand. There are fewer people in the federal government and the government is cutting back spending, so there is likely to be less demand for those traveling on or to government business in the region. Less business travel means lower demand for flights.
There are obviously still hundreds of thousands of people who live in the area and haven’t lost their federal jobs, but… they are worried they might. There is a tremendous amount of uncertainty in the region, and what does that mean? People are more afraid to spend on unnecessary things that might deplete savings.
This brings us to the second hit to air travel demand. When people lack certainty, they spend less and travel is one of the first things to see cuts. That means air travel demand will drop on the leisure side as well.
This is already a bad story, but if that’s not enough, well, we can’t forget the accident at DCA last month. Yes, the loss of so many lives was a national story, but it always hits people harder when it’s at your home airport. On top of that, you have the delays that resulted when capacity was reduced. It just feels harder to travel by plane in the DC area, especially if using DCA, and anxiety is rising. That is the third hit to demand in the region since it might cause some to delay travel plans — or pick a different mode of transport — even if they have the money. I don’t think this is a major driver, but it’s icing on the top of this demand-dropping cake.
With demand on the ropes, what can airlines do? DCA is slot-controlled, so American can’t just cut back on flights without risking losing the slots in the future. So, it is doing the next best thing and downgauging to smaller airplanes.
For the May schedule — probably the closest one that can be adjusted without causing severe pain for travelers — American filed several downgauges from 128-seat A319s to 76-seat regionals. We imagine we will see future months get the same treatment. What dropped?
- Atlanta 1x daily to CRJ-700
- Boston 1x daily to Embraer 175
- Burlington 1x daily to CRJ-700
- Charleston (SC) 1x weekly to Embraer 175
- Fort Myers 1x daily to Embraer 175
- Fort Walton Beach 1x daily to Embraer 175
- Hartford 1x daily to Embraer 175
- Indianapolis 1x weekly to CRJ-700
- Jacksonville 1x daily to Embraer 175
- Pittsburgh 1x daily to Embraer 175
- Providence 2x daily to CRJ-700
- Raleigh/Durham 1x weekly to CRJ-700 and 1x weekly to Embraer 175
- Syracuse 1x weekly to Embraer 175
Where are all those A319s going? Well, here’s a map we published in Cranky Network Weekly this week showing that they are being scattered around in various places where American thinks it can make more money than it can flying them in DC.
Looking at a sample week using Cirium data, that cuts about 2.5 percent of departing seats for the airline at DCA. This is not a big number, but it’s also an easy cut to make. If things continue to drag on or even get worse, then I’d imagine American will have to take an even harder look at what it is planning to fly.
This could very well be the proverbial canary in the coal mine. The actions of the federal government won’t just impact DC, and an economic slowdown is a real possibility here, if not likely. It may be time to strap in and get ready to ride out some, shall we say, less robust times.
17 comments on “As Uncertainty Reigns Over Washington, American Cuts Back”
I think a key point was missed, are other airlines at DCA reducing capacity or is this just an AA story? American has been reducing capacity compared to DAL and UA for awhile industrywide. I would be interested if this is just the continued decline of AA and not a reduction in demand at DCA.
This is a great question, Brian, I was thinking along similar lines.
AA is already weak compared to the others majors. They have had a proclivity for RJs to run routes and the makeup of the total AA fleet is more RJ heavy than either DL (lowest # RJs) or UA (in the middle for RJs), but in some way this reminds me of the Smisek days at UA where he was downsizing to meet declining demand which in many ways was caused by the reduction in gauge (and service) and then it became a self-fulfilling prophesy.
As a UA flyer, I hated those days of more and more RJs and less mainline flying. At one point Denver had so few mainline flights I wondered if UA would keep the hub going – and my what a difference today with the buildup of Denver and mainline flying.
But back to the Smisek days, the reduction in gauge sent frequent flyers to the competition, when UA was flying DEN-ATL with nothing but CRJ200s, it drove a lot of UA flyers to DL as nobody wanted to fly that route in a CRJ200. There were a few times where I could buy F on DL for about the same cost as the CRJ200 seat. Kirby got this quickly and reversed course to start building what is UA today.
I wonder if some of the same fate awaits AA with the reliance on smaller jets for more routes.
It sucks here right now. My wife already got laid off and I know dozens of others that have too. From a flying standpoint don’t forget the absolutely absurd rules that are making it impossible for Feds and Contractors to fly, such as the 1 dollar credit card limit for feds and Contractors needing to stay on fed employee per diem rates when flying while not having access to Fed IDs that make those rates accessible.
If there’s one thing that should be our saving grace it’s no economy can survive millions of firings + 25% tariffs + cutting medicaid + cutting SSA benefits + having a completely unstable president + having a copresident only in it to enrich himself, so the sooner the inevitable crash happens, the sooner we can rebuild and people will come to their senses
I agree 100%
Assuming we are able to pull ourselves out of this destructive pattern. This is “Project 2025” in action & this is exactly what The Heritage Foundation has been wanting for the last several decades.
Have to commend Brett for saying what he said in such a neutral, apolitical way. I doubt I’d have had it in me! (I’m more like Mike above.)
They key point is that is it is quite possible, likely even that this is a harbinger of economic turbulence ahead. As with delays at ORD or bad weather in NYC, such can have ripple effects throughout the system.
I do believe the “fasten seatbelts” sign is about to come on. Strap in everyone.
Don’t forget about the agencies like the FAA being decimated from the inside out & that will cause many people to reduce flying if they don’t feel safe. This is all being all by design.
being done by design.
Oops!
What we see in DC is similar to what we’ve seen in other metro areas where their particular “industry” declined for various reasons (ie. PIT).
Sure but what you saw in the rust belt happened over decades and was the result unfortunate changes in the global economy mixed with a desire from wealthy to consolidate their power. Whats happening now has no justification beyond destroying an economy merely to exert political retribution (and for the wealthy to further consolidate their power)
Furthermore, the erosion of hubs has as much to do with airline consolidation (US airways, continental, nwa) as it does economies. Which is why Detroit got hit hardest of all but still has a strong hub at its airport
Make Every Week DC Week!
Really intrigued to see what UA does at IAD since there was been so much build up to push connections there. Along with EWR missing a runway for 2 months and UA putting additional flights through IAD.
International travel (especially to/from Europe) is going to drop which will certainly be a hit to UA @ IAD. Only possible good news is prices will also decline due to over capacity. In DC (IAD & BWI) there are 4 airlines offering non stop flights to London daily in the summer.
Something tells me flights to Moscow may ramp up
Wonder if US based airlines will be banned from certain countries in the near future, or if the administration will ban an airline from a country that doesn’t bend to their will.
That would indicate a doomsday scenario, right? Alas every the doomsdayers have said would happen has indeed occurred thus far, so… nothing can be dismissed as possible
Are there any flight cuts or just capacity reductions? DCA’s slot rules may make it impossible for AA to scale back on the number of flights, even if it would be a good idea (notwithstanding what’s happening in the administration) in light of how saturated the airport is.
Like sands through the hourglass, so are the Skeds of Airlines…
May need to make a few cameos in 2025.