The US airline industry continues to experiment, under severe (and mounting) pressure to find the optimal/least painful network deployment.  We updated our models through the month-end and discovered that an under-reported factor bears consideration.

Before the pandemic plunge, several smaller communities were losing air service. This strategy was a consequence of industry consolidation among other factors.  Has the pandemic has given the airline industry more cover to focus on strategic markets in order to survive?

Back in “the good old days” of January and February, the Top 25 Origin markets accounted for around 59% of US flights. By March that declined a tad, as the chart below illustrates, the rest of the market has remained consistent at ~42% of the market.

There has been some jockeying, for example, American juiced their DFW and CLT schedules. Southwest juiced the LAS and DEN schedules. But the dropoff in traffic curtailed these experiments and everyone is retracting their market share claws. The market is too soft and an absence of traffic growth means fighting over scraps burns too much cash.  Cash preservation remains the top priority.  Airlines like Delta, that did not undertake market share experiments, conserved their cash burn. 

The winner in the market share war will the airline that handles the bleeding longest.  Southwest can afford an experiment more than American.  Delta and United wisely didn’t enter the fray. Allegiant is in a niche and managing to stay busier than one might have expected. Frontier grew DEN but cut back MCO. Spirit appears to have also experimented to chase ULCC traffic.  Jetblue suffered from being JFK centric but grew its BOS market. 

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