The AirInsight Airline Performance Index continues to show weakness, with no significant recovery in sight. While the index has moved up slightly with the increase in flight activity in August, there has been no corresponding increase in passenger traffic or passengers per flight. As a result, as we enter September, the industry remains caught in the doldrums, able to add capacity but unable to generate traffic to fill it. As we leave the summer peak leisure period, the bodes ill for the Industry.
Our overall index is shown in the chart below:
The components of our index include passenger traffic, the number of flights, and passengers per flight. Passenger traffic remains quite weak, as data from TSA illustrate. The following chart shows traffic as a percentage of the same day of the week in 2019. The data indicate that the recovery is so slow that a return to 2019 levels, extending the July-August trend line, would not occur until 2025. During the pandemic, both business and leisure travel is down substantially, and layoffs loom for the industry.
Airline flights have continued to grow slightly, but remain well below previous levels. While 40-60% of flights are being operated, only 30-35% of passengers are available to fill them. While the chart that follows is not adjusted for the day of the week, it demonstrates a consistent pattern and is rising very slowly. The July 1st schedule appears to be a turning point.
Passengers per flight, a measure of how well airlines match supply to demand, hit a wall in early July when schedules expanded and have not recovered since. Airlines expanded the number of flights in anticipation of increased summer vacation travel, but demand remained flat, resulting in a drop-off of what was early on an upward trend. At the current rate, recovery appears to be a long way off.
The Bottom Line
We can’t be optimistic about the current data we are seeing in the industry. It appears that recovery is a long way off and that a massive stimulation of traffic will be required for the industry to regain its pre-pandemic momentum. The outlook for 2021 remains quite weak.