The US Summer Surge: The Domestic Market Is Likely To Have Too Much Capacity

This summer, airlines are expecting a surge in passengers. Combined with a steady stream of vaccinations and loosening travel restrictions across much of the country, airlines expect pent-up travel demand to lead to a summer surge in passengers. In preparation, carriers have been adding a plethora of new flights across the country. However, as airlines add more flights in anticipation of a busy summer, domestic capacity is likely to run well ahead of demand.

LAX Delta Air Lines and American Airlines
US airlines had a tough 2020, but as they prepare for a summer, airlines are showing a willingness to fly more capacity than there will be demand. Photo: Getty Images

US carriers are upping capacity

US airlines are already planning to up their domestic flights. A variety of carriers have announced several new routes for the summer. One of the more conservative carriers in the US, Delta Air Lines, is planning for expanded services to over 20 leisure destinations this summer. Those flights stretch to Montana, Wyoming, California, the southeastern US, and more. Delta has also announced an Alaska expansion for the summer.

Southwest Airlines, meanwhile, has introduced or plans to introduce services to nearly ten new airports ahead of the summer. One of the places getting a massive expansion in new services is Myrtle Beach. Located in South Carolina, a whopping ten cities will get nonstop Boeing 737 service this summer from Southwest.

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Southwest Airlines is focused on expansion. Photo: Getty Images

United Airlines also announced its own domestic expansion this summer. On top of expanded hub-based flying, the airline is adding point-to-point services from cities in the Midwest US to South Carolina, Maine, and Florida.

Spirit Airlines has also been on a bit of an expansion spree. The airline announced it would be adding Louisville, Milwaukee, Pensacola, and St. Louis to its route map. Added flights from New York’s LaGuardia Airport (LGA) are also on the horizon for Spirit.

Spirit Airbus A321
Spirit is betting on a new transcontinental flight out of LaGuardia this summer. Photo: Getty Images

American Airlines is turning Austin into, essentially, a focus city. Ten additional routes out of Austin will bring the airline to 26 destinations, across its metal and its partners metal, served from the Texas capital city this summer. American has also upgauged some flights to Alaska.

Hawaiian Airlines has added new flights to Austin and Orlando for the summer, and expanded its California flying. Domestically, Hawaiian plans to operate much of its network this summer.

Hawaiian
Hawaiian Airlines is expanding its mainland US network for the summer. Photo: Getty Images

And, not to be left out, Alaska Airlines on the West Coast is targeting an aggressive ramp-up of capacity for this summer. This includes targeting new flights out of Anchorage.

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There is evidence of a summer surge materializing

Since March 11th, over one million passengers a day have passed through a TSA security checkpoint. Seemingly a regular occurrence, the spring break holidays across the US are indicating a release of some pent-up demand.

With numbers staying above one million per day already, this summer, those numbers could reach up to two million passengers in a day, as vaccinations roll out. The US is already planning to open vaccine eligibility to all adults by May, though many individual states are beating that timeline.

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The TSA is consistently recording over one million passengers flying in a day. Photo: Getty Images

As more people become vaccinated, people are showing that they are willing to travel. With fares at some of their lowest points in recent history, leisure travelers are heading wherever they can.

Leisure travel leads the way

Leisure travel is leading the way. As pandemic-weary travelers get ready to go out and see the world again, they are predominantly going to various destinations like the beaches of Florida, the Hawaiian islands, the national parks in the western US. This is where airlines are adding significant capacity. One of the top destinations for growth this summer is Bozeman, Montana, which is a gateway to Yellowstone.

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Families and leisure travelers are the bulk of people flying. Photo: Getty Images

Business travel will continue to lag, which is why airlines are focused specifically on leisure travelers. Leisure passengers tend to prefer weekend-flights or flying around major holidays.

Domestic overcapacity is highly likely

Airlines have never had to face the recovery out of a public health crisis as widespread as this one. With that in mind, airlines are hypothesizing that vaccinations and case counts will determine the outcome of this summer.

With many carriers planning to get at or near 2019-levels of capacity this summer, there will certainly be overcapacity in the marketplace. Daily passenger numbers compared to the same time in 2019 are still around 50% of what they were then. While those numbers are expected to trend upwards heading into the summer, they certainly will not be enough to keep all of these new flights full.

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United hypothesized in early 2021 that there would be domestic overcapacity. Photo: Vincenzo Pace | Simple Flying

This will put a downward pressure on loads and fares. As domestic capacity remains ahead of demand for the summer, load factors should be lower than 2019-levels, even as passengers continue to come back. And, on routes with higher competition, fares should be a little lower, but not all passengers will benefit.

Overcapacity in some, not all markets

Some markets will continue to have constrained capacity. In most respects, this will include spoke to hub travel. For example, consider cities like San Antonio, Spokane, Birmingham, and others.

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While some US airlines are focused on their hub-and-spoke strategy, they have not hesitated adding some point-to-point flights, though only a few. Photo: Getty Images

These cities have not seen the mass expansion in air services to leisure-oriented destinations. So, for many of those passengers, the best option to get to a leisure destination will rely on them connecting through a major hub. Those passengers may see higher fares.

Why overcapacity makes some sense for airlines

It might seem strange that airlines will willingly run more capacity than they may be able to fill up, there is a reasoning behind this. First and foremost, the recovery will be non-linear and demand at the start of the summer could be lower than what it will be at the end of the summer.

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Airlines have stepped out of their usual positions to chase down demand where its seen. Photo: Getty Images

The issue for carriers is scaling up capacity to match that demand. In most respects, it is so much easier for airlines to take away capacity than add it at the last minute. Adding capacity at the last minute can lead to meltdowns if there are not enough crew or ground staff scheduled to handle the new flights.

Running ahead of demand gives airlines an opportunity to have the excess capacity if there is another surge. The calculus is that if people want to fly, the airlines will keep the capacity open. If people choose not to, expect some tweaks and cut downs of schedules. But, this summer, it is seeming much more likely that there will be a summer surge, but there is still likely going to be more capacity than demand this summer.

Do you think there will be more capacity than demand this summer? Are you planning to fly this summer? Let us know in the comments!

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