Alaska Airlines has predicted lower numbers of passengers flying in November than it had in October. The airline expects to fly up to 200,000 fewer people during the month, despite the impact of Thanksgiving on its traffic. Airlines across the States have been upping capacity for November in anticipation of a Thanksgiving bump, but with COVID cases surging, it’s unknown whether this will be a successful strategy.
Alaska Airlines predicts a worse November
For many US airlines, Thanksgiving is a key point in the calendar to secure a good boost to their winter season revenue. Or at least it is in normal years. But 2020 has been anything but a normal year, and despite best efforts by airlines, it seems there may well be less of a bump than usual over the Thanksgiving period.
This point is highlighted in Alaska Airlines’ most recent investor update, in which it lays out its estimates for passenger traffic across the fourth quarter. The update estimates that November, even with Thanksgiving in the mix, will see even fewer passengers than it did in October, pegged at around 1.2 – 1.3 million, compared to 1.4 million in October.
The airline’s lowered expectations come amid a ‘softening in demand’, driven by surging coronavirus cases across the States. The most recent update showed 172,000 new cases in the 24 hours to November 18th, following a trend of increased infections that has been ongoing since mid-October.
The airline states that it is expecting an increase in cash burn due to weaker than expected demand. It says that November’s cash burn will be up around $125 – $150 million, compared to October’s burn of approximately $97 million. It blames this on renewed restrictions by state and local governments, which have caused demand to fall off in recent weeks.
In terms of capacity, the airline is ramping things up, presumably in hope of some sort of Thanksgiving uplift. It will fly approximately 60% of its November 2019 capacity, an increase on the 55% it flew in October. Nevertheless, it says revenue passengers year on year are expected to be down as much as 70%, highlighting the difficulties faced in managing these fluctuations in demand.
Getting ready for Thanksgiving
Although Alaska’s investor update paints a rather bleak picture of November’s expected performance, other airlines have been gearing up to welcome passengers over the Thanksgiving period.
United Airlines has added some 1,400 more domestic flights to its schedule, hoping that the week of November 23rd will be its busiest since March. However, the airline noted that many passengers are leaving bookings until the last minute, making it difficult to predict the holiday demand.
JetBlue has similarly upped its service for Thanksgiving, expanding services from New York, Newark and Westchester County airports. An additional 25 flights will operate between November 20th and November 30th, adding in capacity on those routes with good potential for leisure or visiting friends and relatives (VFR) traffic.
American Airlines too has said it will up its flying by around 15% during the Thanksgiving holiday. It will increase its daily average of 3,500 flights in November to more than 4,000 per day during the holiday period.
However, with many US states issuing travel advisories urging residents not to take non-essential journeys, the outcome of Thanksgiving still remains unpredictable.
The Los Angeles Times estimates that 13.5% fewer Southern Californians will take a trip over Thanksgiving than normal and that, of these, 92% intend to travel by car. It’s a trend that’s playing out all across the United States, and could see one of the final opportunities for airlines to pull in revenue in 2020 snatched from their grasp.