American Airlines has been one of the most aggressive in restoring its schedule. As Senior Vice President Vasu Raja has explained, with the federal government picking up payroll costs through September, at $35 oil their break-even load factor is 25%. So they added a bunch of flights to the schedule, restoring 55% of 2019’s capacity.
A month and a half ago I said to expect that travel wouldn’t rebound as quickly as some expected. Even at low break-even levels American is finding they need to scale back their flying again.
While many countries have brought back more domestic travel than the U.S. has with coronavirus cases peaking precisely where air travel demand had seemed the strongest – Florida and the Texas Gulf Coast – airlines are backing off of their expansions.
And as we look ahead to the end of summer, which is traditionally peak travel season, leisure travel tends to dry up and get replaced by business travel. But there won’t be any meaningful business travel this year.
For September Delta removed 36% of its previously-published flight schedule.
American Airlines though is still cutting August. They reduced their August schedule eight and then four weeks out – and they’re going to cut August again by another 10%, as shared by JonNYC:
— JonNYC (@xJonNYC) July 21, 2020
Actually, Gary – you and I both know at AA doesn’t usually cancel flights until after a couple hours of rolling delays at the gate, so this is extremely early warning by their standards 😀
Why is this a surprise? It’s nothing but a new iteration of Parker declaring to the financial world that AA will never lose money again. How long can the investors/Board sit back and put up with this non stop irrational decision making by executive management at AA which was out of their league the minute the walked in the door? Why not finish the job and rebrand the company as USAir II on Steroids!
Amazing how AA’s Board and investors snooze as AA sinks into its perfected design of a glide path into oblivion, given how every area impacting the customer experience, e.g., operations, scheduling, catering, marketing fails to adequately perform.
In AA’s case, how true it is that the “fish rots from the head.” Indeed, this USAir team is not even at the Junior Varsity level of performance. Each week it’s another surprise announcement; when accumulated, it defines how such a major airline is “flying on instruments at night, in the fog and rain; but the instruments are not turned on.”
At what point will the water rise for the investors to seize upon Casey Stengel’s aphorism describing the floundering NY Mets in 1962, “can’t anybody here play this game,” and seek a buyout/takeover from a better run carrier? If America is the last bastion of capitalism, why should the taxpayer be required to fund such a failed company whose mission statement is “what me worry?”
Don’t worry, many people are saying it’s just going to disappear like a miracle someday soon
So much foolishness in these posts. AA was very smart to expand its summer schedule because domestic summer traffic was going to be healthy — over 1 million enplanements. But then America got a nasty COVID surprise. We had thought we were done with the virus, but the reality was that “flattening the curve” has simply delayed the infection for places distant from NYC — basically the Sunbelt. When the Sunbelt lit up with its outbreak, travel demand (or, more accurately, the growth in travel demand) fell. Obviously, this was a bad break for AA, and for the country as a whole.
The good news however is that we now know how the virus behaves, even though so many of our elected officials and media prefer to wallow in ignorance. There is now overwhelming evidence that the virus follows a gompertz curve of infection, until about 15 or 20% of the population is infected. This group then combines with people who have immunity through t-cells, and then infections peak and start going down. The upward curve is about a month. The Sunbelt has now basically peaked and will start going down. This will obviously make Americans less fearful and more willing to travel. We will start seeing rising enplanements again by the middle of August. The misfortune for the airlines is that this delay ate up a good chunk of the summer travel season, but not much to be done about that. Fall travel will likely be stronger-than-expected though due to pent up demand. Fall should look pretty safe for most Americans. The nice thing about the virus is that there is zero scientific evidence that — once you get to burnout — the virus rebounds. That’s certainly been the experience of the USA north and Europe. Let’s hope it’s true.