Recovery of Collapsed Airline Traffic in the US Backtracks

Yves here. As one of those bad people who has flown since mid-March (three times! for good reason, as in search of medical treatment), I can add a couple of reasons why people aren’t flying to the obvious ones like no reason to travel for business, Covid-19 airline fears, and caution about spending.

One is the airline schedules suck even more than in the old normal. For instance, I managed to book 2 of the 500 flights that Delta had reinstated and then cut for September, both nonstops. Within a week, I was baited and switched with Delta turning both into two-flight trips. One of them turned my NYC-Portland nonstop (an hour and a half flight) which left at the barely-tolerable-for-me hour of 9:00 AM to a six hour ordeal, departure at 6:00 AM, via Detroit. Oh, and they had the nerve to e-mail a schedule change saying you could only get an ticket credit if you cancelled (I was prepared to dispute the charge but Delta did issue a refund when I called).

Not that American, the other carrier that flies my routes, is better, it’s just bad in different ways. Its schedules are more convenient and it seems less prone to schedule changes. But it’s flying its planes as full as it can (thank God a reader sent me n95 masks), its gate agents and stewardess seem indifferent to promoting distancing (a few press hard to have passengers board and debark with adequate distancing, but they are a minority) and only lately seem to have gotten religion about mask compliance, and its overhead bins are enough smaller than Delta’s on same-sized regional jets to make a difference with the luggage I normally haul.

Second is that despite promises about refunds and ticket credits, I’ve had horrors with both airlines. Literally five calls to Delta to get one flight booked and an old ticket credited to it, including to get them to undo repeatedly cancelling my return flight. American has failed to provide me a ~$400 coupon for the leftover value of a ticket American cancelled that I then applied to a cheaper flight. And I can’t reach a live human to fix this, I am supposed to e-mail. Help me. This is not a way to generate loyalty (and I’m a million mile American customer!).

Putting my beefs aside, the reason this matters is a tremendous amount of activity keys off airline travel, not just airport operations and terminal retailers but all of the tourist and business travel spending. That’s why governments continue to prop the carriers up. They still hope, despite evidence otherwise, that a decent sized rebound is not that far away.

By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street

TSA checkpoint screenings, which track how many people enter into the security zones at US airports on a daily basis, were down -72.6% yesterday (Sunday) compared to Sunday in the same week last year, according to TSA data released this morning. This was a notch worse than Sunday last week (-71.7%). And this reversal has been playing out since early July.

The seven-day moving average, which irons out the day-to-day volatility particularly around the Independence Day weekend, has edged down to -74.5%, right back where it was on July 2. The peak, so to speak – the smallest decline from the same period last year – was on July 8:

 

The miserably slow recovery for airlines in terms of ticket sales, from near-zero in late March and early April to some level above near-zero started backtracking in late June. United Airlines and Delta Airlines both issued early warnings about this industry-wide phenomenon that was not supposed to happen in this recovery, but is now happening.

Ticket sales today result in passenger traffic some days, weeks, or months later when these customers are actually walking into an airport to get on the plane. And those declining ticket sales that United had warned about with charts, using industry-wide data for all airlines and sales channels, is now translating gradually into declining passenger traffic into the security zones of US airports.

Sure, this is summer travel season, when traffic is always up seasonally compared to lower-traffic seasons. This year too, there has been a seasonal uptick. But these are year-over-year comparisons that eliminate the seasonality of air travel.

Both United and Delta cited the renewed outbreaks of Covid-19 as the primary cause for this reversal in the recovery – people not wanting to be in an airport with all the exposure this produces and not wanting to sit on a plane near people who might potentially be contagious. This is in addition to travel restrictions globally.

Airlines, which are in an existential crisis given this collapse in revenues – Delta’s passenger revenues collapsed 94% in Q2 – have been promoting the theme that they’re working hard to make flying as safe as possible. That may be true, except that, after having slashed capacity to match the collapsed demand, they’re packing people like sardines into the few planes that are flying, which is not reassuring to everyone on these flights or to people contemplating to fly.

At around noon today, the WOLF STREET airline index of the seven largest US airlines – Alaska, American, Delta, JetBlue, Southwest, Spirit, and United – is down 3.7% from Friday’s close and down 50% from the end of the Good Times in mid-January 2020, and down 60% from  January 2018 (market cap data via YCharts):

Airlines are in shrinkage-and-survival mode instead of V-shaped recovery mode. “It will be more than two years before we see a sustainable recovery”: Delta CEO. ReadDelta’s Passenger Revenue -94%. How it Plans to Stay Alive till “Demand Returns.” Confirms United’s Warning About Newly Waning Demand

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29 comments

  1. The Rev Kev

    I have read so many airline horror stories from the US over the years but they still amaze me to this day. Here they are only flying a small fraction of what they normally would and you would think that they would try to treat all their passengers as first-class passengers to encourage others to fly as well. But going by Yves’s experiences, they still suck as bad as ever. How about we look at how they used to be able to do it?

    https://www.businessinsider.com/vintage-photos-airplane-flying-2017-4?IR=T

    Reply
      1. Wukchumni

        The smoking section on overseas flights was my haven in the 80’s, i’d wait until a few minutes before they closed the doors and make a beeline for it, as I could seemingly always find a row of say 5 empty seats and i’d plop down in the middle and have myself a nice sleeping arrangement for 10 hours.

        I’d grown up in the awful smog of LA in the 60’s, so a bit of smoke wasn’t all that bad.

        Reply
        1. Hal

          Yep that’s what I used to do, then the airlines caught on and made the smoking sections smaller and smaller then they were eventually eliminated altogether

          Reply
        2. HotFlash

          A former boss of mine who was married to an aircraft engineer (back when Canada had an aircraft industry) told me that the repair crews would spot pinholes by the tobacco stains on the fuselage.

          Reply
  2. Buck Smith

    I think my likelihood on getting on an airplane is best summed up this way in a conversation with my Sister in Law, “Your sister is very ill what are your plans for the inevitable?”

    “I will be sad and will mourn her from here.”

    “You won’t come to the funeral?”

    “I won’t get on a plane and at my age driving that distance is also a non-starter.”

    The rest of the conversation is best described as “unpleasant”.

    But I’m not traveling anytime soon (2023 maybe).

    Reply
    1. marieann

      My husband’s brother died in February 2017 in June he went back to Scotland with the ashes.
      When I picked him up at the airport he said he was never getting on a plane again.Three weeks later his brother in Scotland died…and he went back over for the funeral.
      On arriving back here he was exhausted and he again said he was never getting on another plane….I said what about other brother left in Scotland. He told his brother he would need to get planted without his attendance.
      I went back in December 2018 and I made arrangements to see all my family (a busy 2 weeks) but in effect I was saying goodbye as I know I can’t handle the airports and traveling again

      Reply
    1. rd

      I think Air Canada is betting that it will be so long (e.g. 2 years) before they can do many flights between the US and Canada that people will have forgotten they didn’t get a refund by then.

      Reply
    2. Morpheus

      I am not a lawyer, so can someone explain how what Air Canada is doing is not theft? They are failing to provide a service for which the passenger paid and then refusing to return the money that was paid. Seems straightforward to me, but I am sure that I am missing key points that an economist could easily explain to me. /sarc

      Reply
  3. allan

    A recent upbeat email from United on their covid-19 procedures.

    … Safety has always been our top priority, and with that in mind, we’ve teamed up with leading experts at Cleveland Clinic and Clorox to ensure we’re getting the best scientific advice. In making their guidance a reality, we’ve created an environment on the airplane that is one of the safest public places you can be:

    • We’re requiring everyone to properly wear a face covering.

    • The HEPA filtration system on board our mainline aircraft recycles the air every 2-3 minutes and removes 99.97% of particles, making the air on board a plane cleaner than what you experience in restaurants, grocery stores, schools or even hospitals. Today, we announced that we’ll not only run these filters at full strength for the entire flight — we’ll run them during the boarding and deplaning process, too.

    • We’re making sure our aircraft are thoroughly cleaned: Electrostatic sprayers distribute a CDC-approved disinfectant before most flights, and all high-touch surfaces are wiped down to eliminate bacteria.

    “Our mainline aircraft” means that if you fly from a medium-sized or small airport on United Express,
    as many of us do, you’re out of luck.

    “Bacteria” means that United apparently thinks we should all be talking about COBID-19, not COVID-19.

    On the bright side, at least the email didn’t use `deep clean’, which is the new `natural food’.

    Reply
    1. TimH

      Also interesting misdirections: “The HEPA filtration system … removes 99.97% of particles, making the air on board a plane cleaner…”

      A virus is not a particle, and ‘clean’ describes absence of dirt, not of viruses.

      Reply
      1. Whiteylockmandoubled

        “Particle” is the correct word. The debate about airborne transmission centers on the persistence and infectiousness of small airborne particles contained within lighter than air droplets that are expressed when you speak, cough etc. these particles, generally known as “aerosols” are as opposed to larger droplets that fall to the ground or land on surfaces relatively quickly and within a few feet.

        It’s not yet known how many virions within an individual particle and how many such particles together constitute an “infectious dose” of SARS-CoV-2. But there are three strategies to reduce airborne transmission in indoor spaces: reduce the number of particles expelled (masks); disperse aerosols with ventilation systems that carry them away (open windows, etc); remove particles from recirculating air (ventilation systems that include filtration).

        There are HVAC systems that occupational safety experts believe efficiently remove large volumes of these very small particles from the air. They’re rated MERV 13 or higher. Whether the experts are right or not remains to be seen.

        The airlines are awful. There are lots of reasons to make fun of them. Using the word particles in this situation isn’t one of them.

        Reply
    2. Otto

      Cv19 is .25 microns in size. HEPA’s cut off is .5 so go figure. And complete change over in 3-5 minutes. Where the pilots cabin. I’m so glad trump’s made lying ok, alright, the thing to do.

      Reply
      1. vegeholic

        Quick google search reveals that worst performance of HEPA filter is 99.95% at 0.3 micron, with performance improving for both larger and smaller particles. Average Coronavirus particle is 0.12 micron. Seems like the right tool. How often do they clean/replace the filters?

        Reply
        1. rd

          Performance doesn’t improve with smaller particles, but HEPA filters are still quite effective against the 0.05-0.2 micron size for the virus. However, much fo the virus transmission is the virus hopping a ride on aerosol particles (usually something like a tiny water droplet), so the effective size of many of the “particles” that need ot be grabbed is within the zone of the HEPA filters.

          Filters are multi-layered systems that create a tangled web for particles to move through as air moves through. So filters will catch a sigificant percentage of particles that are rated smaller than the Apparent Opening Size.

          A HEPA filter will end up catching a very large percentage of the mass of particles that may have the virus (either individual viruses or aerosols). The dry air moving through the filters will also dry out the aerosols and the virus which will deactivitate it. Studies have shown that the people within one-row of you on the airplane or walking by you if you are in an aisle set are the biggest sources of getting infected. The ventilation system doesn’t appear to be a major transmission route because of the filtration.

          Even when they use outside air supplied during boarding and disembarking, that is often coming in with a fresh air source so will help dilute the air that may contain the virus.

          However, the policies of cramming everybody together as well as inconsiderate passengers not taking appropriate measures means it will be unlikely I will be on an airplane anytime soon.

          Reply
      2. HotFlash

        One of the participants in the video Lambert linked to in his post https://www.nakedcapitalism.com/2020/07/how-the-sars-cov-2-virus-gets-in-and-how-to-block-it-aerosols-droplets-masks-shields-with-discussion-of-reinfection.html is an occupational health and safety engineer/professor who has extensive experience w/airlines and their air quality (in the Q&A, abt 1.26.10). He said he isn’t flying until the airlines get better abt Covid-19 safety, which, in his opinion, would include reversing the ventilation direction, currently top to bottom, which fights against the ‘heat plume’ given off by a 98.6F (or more) human.

        Reply
  4. ChrisFromGeorgia

    After a cruel summer, it is going to be a long, cold winter for the airlines.

    I have a nasty vision set sometime in October, right before the election, after the loans from the CARES act expire. I see a parade of dog-faced executives walking up to Capitol Hill, hands extended for another round of funny money to keep their bloated operations in moth balls for the rest of 2020 and into 2021.

    Reply
    1. d

      i can see that, but it would have to go to at least the spring of 21. if not later.

      course if they shrink they take a lot of other jobs with them, like hotels, resorts, and restaurants

      course travelers could drive, but not many will, since who wants to drive a day or more there and back. and only be there for say 3 days, makes it not worth it…because you might have 10 days of vacation…maybe

      and i doubt that many will want to take the bus or train. bout the only advantage there is not having to drive

      Reply
  5. Mer56

    Braver with your life than me. I travel, or should I say traveled , domestically and internationally, near constantly for business and pleasure. Until March 9, 2020.
    Luckily my firm has halted ALL employees from flying until next year. As a hale and healthy 63 yr old with a healthy family I would NEVER take a flight anywhere for ANY reason until there is a strong vaccine or until this virus recedes dramatically and verifiably. I will retire if the firm forces me to in order to keep my position.
    I have people who depend on and love me -I would never risk their life and happiness for any reason.
    With a brother in law a pilot for American I already know way to much about the sham COVID19 protocols as well. He is terrified and he is a combat vet.
    I would really suggest people here stay off planes. You are a smart thoughtful group and I would hate for unnecessary risk to catch up with any of you.. stay safe all.

    Reply
  6. Oldish Fogeymax

    Yves:

    > … American … its gate agents and stewardess seem indifferent …

    Holey Moley! Did I read that right? I thought we couldn’t say that any more — or are you coming back around on the whip-around, against all that foolishness?!? (More power to ya, if’n you are.)

    Reply
    1. Yves Smith Post author

      Oop, on my trips, all flight attendants were female. So stewardesses and stewards would have been accurate had there been any male passenger-minders.

      Reply
      1. Wukchumni

        Circa 1982, i’m at a big national coin show in San Diego and fellow Australian numismatists want to go to Vegas, and the airline had $29 roundtrip ‘champagne flights’.

        So i’m in my seat, and perhaps the most beautiful stewardess i’ve ever laid eyes on walks down the aisle pouring a glass for those so inclined, and she makes it my way and I notice the bubbly is ‘JFJ’ brand (still made, a bottle will set you back $6) and I said something like “i’ve never heard of that brand before” and she leans over and whispers into my ear “it’s Just Fvcking Junk’.

        I laughed so hard…

        Reply
  7. d

    for the last few years, i have only traveled to Vancouver (Canada). needless to say I cant go now. not sure when or if that will happen soon.

    Reply
  8. Glen

    It will interesting to see if the airlines every really recover. Business travel will never recovery, and this will force the airlines to change practices/pricing.

    I suspect we just finished the high water mark of cheap flying. Probably a good thing with global climate change now here.

    Reply
  9. josh

    Inside an aircraft could be the safest place to be and it wouldn’t matter too much for ticket sales. The full fare business travelers have nowhere to go. What’s the point of flying to a client/customer/supplier/conference if they’re all working from home too? The essential workers that are actually on site aren’t exactly the employees that get sent cross country business class. The international cash-cow will all also be shut down if/until there’s a vaccine. The airlines are screwed, permanently if businesses start to question the ROI of their old travel budgets.

    Reply

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