The DoT updated their DB1B datasets and here is a model that offers some interesting insights into how the US travel market ended last year.

  • On page 1 we offer four charts. (select the state of origin to see each market)

    • Passenger volume at the top left shows something of a V recovery for 2021 over 2010.  This is what everyone was hoping for, and several times during the year the recovery seemed to sputter and lose momentum. Yet by year-end, the market showed a good recovery – not quite 2019 levels, but close. The takeaway is that we might expect travel demand is in fact facing pent-up demand.  This is what we see now.
    • In terms of average stage length, on the top right, we note that Hawaiian flies the longest stages. Geography clearly plays a role, and the crucial data point here is that Hawaiian is the US airline that really needs the range other US airlines don’t.  This is why the A321neo plays such a disruptive role at that airline.  A single-aisle aircraft with a useful range to reach all sorts of markets at a much lower cost than the A330 or 767s that came before.
    • Average fares, at the bottom right, lists Hawaiian on top – no surprise.  But note the size of the gap between the average stage length and fares.  What was once a sizable fare gap has shrunk – we think this is because of the efficiency the A321neo offers. 
    • The average fare/mile at the bottom right shows the compelling improvement at Hawaiian. Delta, United, and Alsaka show at least flat lines.  But don’t miss the success at Frontier.  They are the low-cost leader, closely followed by Spirit and Allegiant.  By the way notice the trend at Southwest, which has the most MAX8s of any airline; its average fare/mile is rising.
  • Page 2 offers three charts.  You can select an airline and year.
    • Starting with the top chart: The largest US markets are California and Florida.  The second tier is quite a bit smaller.  By the time you get to the fourth tier, volumes drop off rapidly.  These markets provide a clue to where a startup like Breeze needs to operate.  It’s all fine to discover new markets, but in the end, you have to go where the people are.  It’s going to be tough to make a living off the smaller markets. 
    • Looking at the average fare chart, bottom left, we note that fare levels rose somewhat in 2021.  The number for 2022 is expected to be much higher.  Industry constraints are ensuring demand outstrips supply – and the incentive for the industry to fix this is in fact to keep it just like it is.  A better optimization is to fly larger aircraft, flying higher loads at high fares with the same number of flight crew.  Expect more widebodies on domestic service.
    • In terms of average fare/mile, bottom right, we can see the industry aiming to recover its previous levels.  And accomplish this quickly to grab back what 2020 took away.  This makes sense from the industry view.  But if you’re a traveler, this is a new reality.  What travelers are going to seek is Breeze service with better fares.  But can Breeze accelerate fast enough in key markets?  Will incumbents allow this? 

In summary, we see a market readjusting quickly.  The supply side is trying to exploit its position to strength for as long as it can.  Fuel prices provide a useful cover for higher fares.  But the labor shortage is playing a role, too.  From the demand side, there is a pent-up desire to travel and catch up.  How long will consumers continue to pay the fares we are seeing?  As these forces play out, we have two ULCCs jockeying through a merger, a startup finding its way, and network airlines trying not to fumble.  As always, interesting times!

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Addison Schonland
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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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