Has the recovery stalled? |

As we observe the recovery from the global pandemic, some data are worrisome and lead one to ask has the recovery stalled? Air traffic in the US is one of those datasets, and we now appear to be at an inflection point that could determine whether we have reached a temporary new normal or will see another wave of instability as the SARS2-COV19 Delta variant expands its reach in the United States. The following chart shows traffic levels in 2019, 2020, and 2021 through August 23rd. Several things are notable: Traffic has grown monotonically month by month through July but took a setback in August That pattern is like a setback in August 2019 from July 2019 We know airlines have been constrained in growing their frequencies as advanced bookings have fallen in August Airlines have also found it difficult to re-grow their schedules as they have lost employees during the pandemic This leads to a set of questions on where the future lies, with three likely outcomes: The recovery has been temporarily set back by the Delta variant, but the recovery will begin again in the third/fourth quarter as herd immunity comes closer to being achieved. We are seeing the beginning of another downturn, albeit much slower and less impactful than the primary downturn in the pandemic. We are seeing the impact in August of schedules that were growing earlier in the year but have been constrained with airlines finding it difficult to staff and deploy additional aircraft in the third quarter. We’ll likely obtain an early indication of which scenario we are seeing in September, and know whether traffic levels are headed up, remain at a similar level, or head downward. September will be a key month to watch to ensure we have a good understanding of what is happening in the industry, what we are likely to head from a demand standpoint, and answer the question has the recovery stalled. I have highlighted two sections of the chart. One is labeled recovery - which covers January to July of 2021 when the industry saw monotonic increases in monthly traffic. The second is labeled constrained normalcy, in which the patterns of travel are similar, but reflect the decrease in industry capacity and mirror historical patterns, just at a lower level. If we took the two lines in the constrained normalcy box and put them on top of each other, the patterns would be remarkably similar, much like January and February of 2019 and 2020 prior to the pandemic. The scenario that nobody wants to see is a return to a pandemic downturn, caused by the Delta variant, which reduces travel demand. While it appears we are seeing a downturn with some low-cost carriers, the level of the downturn through August has not been significantly different than seasonality patterns in the data for 2019. So far, it does not appear that a major meltdown is recurring and that passengers are continuing to board flights and book travel, even if not quite at the same levels of growth shown from January to July. The AirInsight view: It appears that we’ve reached a set of constraints that are slowing the recovery and have reached a plateau that behaves with normal seasonality, but traffic is not returning to pre-pandemic levels quite yet. As a result, we believe the “constrained normalcy” scenario will prevail. While we believe that full recovery will occur as more international routes open and business travelers, many of whom will return to their offices after Labor Day, resume their travels, this won’t come until 2022. We expect a continued plateau, following the 2019 patterns, until traffic growth resumes in early 2022 as the industry restores additional capacity. While traffic has dropped slightly from July levels in August, the traffic patterns appear to be normal and the answer to the question has the recovery stalled is no, it hasn’t, but merely reached a temporary equilibrium.

US Flight Planner - US DoT On-Time Data	Airbus vs Boeing - Official OEM Data
US Airline Schedule Performance - US DoT Data	Daily OEM Production & Deliveries -

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