US airlines continue to operate a significant portion of their route networks despite passenger loads teetering perilously close to single digits. They are, effectively, burning cash with every flight they operate but remain hesitant to cut their schedules too deeply. And they are running out of excuses for that behavior.
The recently approved bailout funds will help cover some of the costs, but require a minimal level of service from the airlines to receive the payouts. A recent review of published schedules suggests that for most carriers significant additional cuts could occur without risking access to those funds.
The billions in payroll funding that the CARES Act delivers for airlines comes with some strings attached. Treasury Secretary Mnuchin could decide to take an equity stake in the airlines as a condition of the grants, making them less a handout and more of a proper investment by the government. And the airlines must agree to not lay off any of the employees whose salaries are covered by the funding.
But there’s also the recently published guidance requiring the airlines to maintain service to all cities currently on the schedule with a minimal number of flights. As the airlines consider their options, however, it is clear that the current schedule exceeds these requirements by a massive margin.
How many cities, how many flights??
A review of OAG schedule data from 31 March for flights operating on 27 April suggests that most US carriers are easily in compliance with this requirement. The National Air Carrier Association representing, among others, Allegiant, Sun Country, Spirit Airlines, and Frontier, notes that its low cost and ultra low cost member airlines operate highly seasonal schedules with frequent adjustments to the service patterns. These are not reflected in the newly published requirements, though presumably the DOT will eventually allow for these carriers to operate based on their previously planned route maps rather than the schedule from February. JetBlue also has some seasonal routes that could affect its eligibility, though, again, an appeal to the DOT should clear that up as the routes were previously slated to end.
Currently Allegiant, Frontier, Sun Country, and Hawaiian Airlines all have destinations removed from their operation in April relative that could disqualify them from the CARES Act compensation. Hawaiian’s cuts are tied to its home market enforcing a strict 14-day quarantine rule for all arrivals to the islands. The others are generally seasonal shifts. In Frontier’s case the destination reduction also comes from drawing down underperforming markets.
In understanding the service requirements it is also critical to realize that any particular airport could see a massive reduction in capacity while the associated airline(s) retain their funding eligibility. JetBlue‘s approach to the cuts is perhaps the most aggressive so far. The carrier will remove 70% of its domestic capacity starting this month (with additional rolling cuts if flights are under-booked) and is also significantly reducing the number of routes serving its smaller markets. Nearly a third of the domestic routes will be cut; only Hawaiian and Frontier beat that level, and JetBlue does it while maintaining all its non-seasonal destinations.
Looking at the Big 4 US carriers the current filings suggest that 7-22% of routes will be removed, with Southwest Airlines cutting the least and Delta Air Lines the most. Delta also has a significantly larger overall number of flights removed from the domestic schedule (~54%) than the others (10-30%), suggesting that not all the previously announced changes are reflected in the schedules so far.
Spirit Airlines is also expected to announce significant cuts, to the tune of 90%+, in the coming days, though that data is not yet reflected in the published schedules.
Breaking the Network Effect
These airlines could simply drop to a single flight on each route each day. This would still be more flights than required by CARES and would reduce the current April 27th schedule by approximately 60%. But the CARES requirements are not the only consideration for the airlines. They must also maintain some semblance of their network and the connectivity that it enables. This is particularly important for passengers flying on routes that require a double connection between two small markets. Forcing an overnight somewhere along the way would create a significant additional burden for those travelers, going against the legislative goal of maintaining service.
Still, when looking at the number of routes with very high frequency levels it is much harder to summon sympathy for the airlines.
Very high frequencies remain in service
American Airlines currently expects to operate 254 routes with once daily service on 27 April. This is a decrease from the 31 March number. The number of twice daily routes increases for the carrier. At the “very frequent” level of service (>=5x daily) American drops from ~480 routes to ~280, showing a more responsible level of cuts. But it still scheduled 11 flights from Los Angeles to DFW, just in case some passengers show up.
And those passengers are not showing up. Data from New York City this week suggests American Airlines saw an average load below 10 passengers on Wednesday. But the flight frequencies remain in place.
Delta Air Lines also sees its number of 2x daily routes increase but so do the 1x daily routes. At the “very frequent” level the carrier drops from 470 to just 74 routes, a much more significant drop.
United Airlines will keep nearly 90% of its “very frequent” routes operating (300 v 330). Southwest drops from 255 to 111. And while Hawaiian continues to operate a handful of interisland routes at 8x daily frequencies that is a massive cut from the peak in excess of 20 daily trips it normally runs on some “shuttle” markets.
No cooperation, no mandate
Short of being forced to cede markets to each other or halt operations completely is it reasonable to expect that airlines will simply walk away from their more popular routes, even in these trying times? Perhaps not, even as the airlines are burning cash and fuel to no real benefit.
The 16,000 daily flights showing in the schedules today is an almost egregious level of operations from the airlines. There is no rational justification for continuing those expenses and putting those employees at risk, particularly given the single digit load factors.
In other countries the cuts run far deeper. Air New Zealand will operate at 5% of its prior capacity linking only a handful of cities. That’s easier with only one flag carrier and tight government cooperation. But the US could make similar mandates, particularly seeing as how the government is paying the bulk of the airlines’ fixed costs for the next six months.
For a (generally) up-to-date listing of airlines and their operational levels check out this spreadsheet maintained by PaxEx.Aero and other industry experts.
More on COVID-19 and the airlines affected
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- Massive cuts, uncertain recovery timelines for aviation in the face of COVID-19
- Qantas cuts international 25% through September facing coronavirus-induced demand drop
- Spirit Airlines plans 5% growth reduction for April as COVID-19 hurts demand
- American Airlines slashes schedule, increases flexibility for customer rebookings
- US to block some European visitors
- Two key takeaways from American’s latest schedule cuts
- Regulators suspend slot rules, opening door to deeper airline cuts
- Beyond route cuts, airlines initiate extended suspension of operations
- Gogo looks to ride out coronavirus-related dip in demand
- Trans States Airlines: The first US airline victim of COVID-19
- JetBlue removes 40% of capacity, delays new deliveries as demand drops
- Airlines get a break on coronavirus EC261 comp, looking for more
- Airport lounges shutter as airlines slash capacity
- Will COVID-19 delay the opening of Berlin Brandenburg Airport?
- Qatar Airways plans 75% capacity cut in response to COVID-19
- Emirates, Turkish Airlines slash route networks, ground aircraft
- JetBlue plans additional draw down in service
- Is it time for US airports to start closing terminals??
- Converting to cargo: Putting passenger planes to use in the COVID-19 era
- IATA anticipates recession, slower recovery, as COVID-19 impact drag on
- US carriers cut frequencies, not destinations as they seek federal funding
- JetBlue plans 70%+ cut in April operations
- Cancelled flights, vouchers and the airline cash flow crunch
- Spirit Airlines reportedly cutting 90% of flights
- US airlines cut deep, but not deep enough
- An eerie quiet over New York City: The flights are gone
- Who wants what? How the US airlines are responding with CARES Act funding on the line
- Delta, United extend elite status by a year, adjust other benefits
- DOT adjusts, finalizes airline route requirements for CARES Act funding.
- Lufthansa announces major, permanent fleet restructuring
- Air Canada, Alaska Airlines extend elite status
- Deeper cuts, reprotect options coming for JetBlue
- Air Canada replaces seats with cargo in 777-300ER cabin
- American Airlines extends status, eases qualification
- A new take on amenity kits in the COVID-19 era
- COVID crushing inflight connectivity: Part 1
- Stuck in the past, DOT botches its CARES Act implementation
- DOT grants exemptions to Delta, Alaska Airlines, Hawaiian Airlines under CARES Act obligations
- Introducing yin-yang seating for economy class
- Inflight social distancing will kill short-haul LCC travel: IATA
- Gogo furloughs 60% of workforce, applies for CARES Act support
- COVID crushing inflight connectivity: Part 2
- De Havilland, Air Canada Cargo partner on Dash 8-400 cargo conversion
- JetBlue plans new route network for CARES Act compliance
- Spirit Airlines running triangle routes to meet CARES Act requirements
- Sun Country wins big as United, Frontier lose in latest CARES Act ruling
- Frontier Airlines pushes new route plan for CARES Act compliance
- Argentina plans to restart flights in September 2020
- Spirit Airlines asks DOT again to drop destinations
- Delta Flight Products, TechOps develop isolation pod for COVID-19 military transport
- JetBlue aims to drop 16 "major hub" destinations from its network
- Allegiant scores leniency from DOT in CARES Act obligations
- Panasonic Avionics implements furloughs to address slowing business
- American, Delta confirm accelerated fleet retirements
- Airbus aims to ease "COVID Combi" temporary freighter conversions
- The Weekly Wrap: FlightPlan, personal screening and more!
- United’s long-haul operations focus on a new "workhorse"
- United plans touchless bag tag kiosks
- Temperature scans in, 767s out for Air Canada, Rouge
- JetBlue, Spirit score exemptions to drop service at major US airports
- IATA recommends against blocked middle seats, favors "layered" protections
- United plans to resume (cargo for now) Hong Kong-Singapore service
- JetBlue suspends six cities through June
- Project Wingman USA Opens Lounges for Frontline Healthcare Heroes at Two Major New York City Hospitals
- Cape Air’s ugly April stats (and some possible good news for May)
- Fighting for the middle: A pandemic seating shift
- Avianca declares bankruptcy, seeks protection in restructuring
- United raises ire in cutting hours for salaried employees
- DOT further relaxes airline CARES Act obligations
- Allegiant sees quick recovery on the horizon
- Delta drops 777 fleet as coronavirus cuts continue
- JetBlue offers free TrueBlue Mosaic status, plus a year extension
- United faces lawsuit over M&A employees pay cut
- Optimism on the horizon: The Weekly Wrap 15 May 2020
- Beached Whale: A380’s future turns more bleak
- TSA implementing lower-touch screening protocols
- Volotea plans for growth into a COVID-affected Summer
- Health passports in our future: The Weekly Wrap
- LATAM seeks US bankruptcy protection, plans to continue operations
- JetBlue plans return of international markets in June
- Frontier, Mobile bicker over flights to Orlando
- US retaliates against China, blocking all flights
- China blinks, US to back down on flight ban
- ATPCO moves to ease ticketing changes for airlines worldwide
- Inflight magazines are not dead yet: The Weekly Wrap–5 June 2020
- From pre-flight massages to COVID-19 testing: XpresSpa pivots to XpresCheck at JFK
- GermFalcon to take flight as Honeywell UV Cabin System
- Allegiant driving passenger traffic recovery
- Air travel is bouncing back: Can the trend hold??
- Masks Matter: US carriers plan more enforcement for on-board behavior
- JetBlue plans to outsource airport operations at (more) smaller destinations
- Norwegian set to restart European services from 1 July
- Jilted travelers get aggressive in seeking airline refund enforcement from the DOT
- LATAM Argentina, LEVEL Europe face bankruptcy
- Air Canada launches half-priced Aeroplan rewards in North America
- AirShield proposes curtains of air to separate passengers in flight
- Curing Catering Concerns: The Weekly Wrap–19 June 2020
- A big hint that British Airways will retire its 747s soon
- JetBlue’s crazy summer of new routes
- Air Canada fights back on refund demands, disputes DOT authority
- JetBlue pilots secure no furlough deal through April 2021
- Peek inside the largest converted cargo aircraft flying today
- ZIM Flugsitz seeks insolvency protection
- JetBlue launches trial for Honeywell’s UV Cabin System (f/k/a GermFalcon)
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