During the initial phase of easing the travel restrictions, some airlines promised social distancing onboard. Middle seats were blocked, which allowed creating some distance between passengers while seated. That was supposed to comfort the passengers and potentially curtail the spread of the virus. Many hoped that such a decision would get people flying again. Yet, blocking middle seats is financially unfeasible for almost all airlines and is unlikely to remain.
Insufficient load factors
Currently, most of the flights taking place are short-haul, with most airplanes having a 3-3 cabin layout. That is the case for the A320 and B737 family. Blocking the middle seat would translate to a roughly 30% capacity reduction (assuming families were to be seated together). Even if all other places were sold, flying at a 70% load factor is significantly below all major four carriers in the US (as well as most airlines globally). For the biggest for North American carriers, the break-even load factors range from 72.5% for Southwest and 78.9% for American Airlines. (Delta’s is 74%, United’s 75.6%).
Naturally, the picture for narrowbodies with a non 3-3 layout is even worse, as 2-3 or 2-2 arrangements with implemented social distancing reduce the maximum, achievable load factor by even more. Operating flights at a 50% to 60% load factors may reduce the cash outflows, yet it remains very far off from profitable operations.
Turning a profit
Can airlines operate at a profit with middle-seats blocked? Yes, but to achieve that, ticket prices have to go up. Roughly 15 to 20% increase in fare prices could amortize the reduction in load factors and allow airlines to break even or to turn a profit. However, higher ticket prices are likely to disincentivize travel, hence achieving the 70% load factor could also become a challenge.
Furthermore, to minimize the cash bleed, the airlines are more likely to fight for every passenger, trying to attract them on board their aircraft and not the competitors. This will likely prompt them to reduce ticket prices, especially on competitive routes. Thus, operating at a two-thirds capacity today is likely to produce worse financial results than before the pandemic.
We are still at a very early stage of demand recovery. Passenger numbers in the United States still oscillate at around 20% of last year’s numbers. And because of that, choosing a pricing strategy forward may prove to be particularly tricky. The next weeks will show whether airlines decide to choose an aggressive strategy, dropping airfare prices and driving load factors, or a more conservative one, where blocking a middle seat comes with higher ticket prices.
Are blocked middle seats driving demand?
Many people, including myself, would want to have a clear answer to this question. Nevertheless, some argue that a blocked middle seat is not sufficient to convince those afraid of flying. In the end, even at the airport or during boarding the passengers are likely to break social distancing precautions. Additionally, during boarding or deboarding, the 1.5m distance is not being kept. With all these, promoting a blocked middle seat may not be sufficient to attract passengers. The initial promise made by some airlines seems to have stuck with the people, as many now expect social distancing to be maintained on every flight.
Over the last weeks, many have complained about full aircraft and full middle seats. Hence, it might turn out that even if not sufficient to convince the passengers to fly again, blocking the middle seat idea could eventually backfire on airlines.
What is your take on blocked middle seats? Would you be ready to fly in a middle seat today?