September is going pretty well for airlines. Riding high off a strong August, passenger numbers have mostly held steady, avoiding the “September Slump.” In fact, the first full week of September was the best week for US airlines since March. Airlines had previously forecasted a difficult September, so what is going on?
Passenger numbers so far are looking good
Here is a graph of the number of passengers entering TSA security checkpoints since mid-May. The chart shows weeks running from Mondays through Sundays:
As you can see from the graph, airlines experienced healthy growth from May through the end of June. Then, around Independence Day, numbers peaked, and growth stalled. Since then, traffic numbers have, in essence, plateaued, though Labor Day proved to be a fantastic holiday weekend for airlines this year.
Compared to 2019 levels, traffic is still at only about 30-35% of what it was last year:
The typical September slump sees passenger numbers go from about 17-18 million passengers in a week to around 14-16 million a week. This primarily has an impact on some of the more seasonal leisure destinations.
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Wait, aren’t airlines are cutting capacity?
Yes. Compared to August, airlines have pulled back their schedules and are expecting further cuts in the coming months, even though travel numbers have not necessarily slipped into a slump as many had predicted.
Year-over-year, United Airlines had told its investors it expects a third-quarter capacity decrease to be about 70%. At the same time, JetBlue announced that it expected capacity to decrease approximately 55% year-over-year for the third quarter. Meanwhile, looking out to October, American Airlines has plans to cut thousands of flights.
So what is happening?
By and large, it is easier for an airline to remove capacity than is to add capacity. Adding a flight might require another plane to be reactivated, more staff members to be called back, more supplies to be purchased, and more.
So, through August, even with lower load factors, airlines kept flying a pretty robust flight schedule. With close-in leisure travelers booking, airlines thought it best to offer more flights, even if there were not as many travelers, just in case people got an itch to travel. Unlike 2019, airlines had no reference to what travel would look like because there is no playbook for returning demand during a pandemic. However, it is clear that sun and leisure destinations, such as Palm Springs and various cities in Florida, are in high demand.
However, if there will be a spike in passenger demand, it won’t happen in September. If anything, Thanksgiving should give airlines a reprieve. So, airlines are pulling back capacity now after getting some idea for what travel was like in August, though there has not been a big slump yet. For its part, United expects revenue to plateau at around 50% of 2019’s levels before demand improves after a vaccine is available.
But, as we’ve seen thus far, anything is possible in this industry, and there are still many months to go. For now, plateaued passenger numbers are much better than declining numbers. As for the financial impact, with the end of the third quarter coming up in about a week, it will be about a month before we get a clearer picture of how the summer went for airlines.
What do you think of 2020 passenger trends so far? Let us know in the comments!