US airlines boost capacity to cater to ‘best spring break ever’

Shortages of crew, spare parts hinder ambitious capacity addition plans, says OAG
2023-04-10
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/ New Delhi
US Airlines
US airlines boost capacity to cater to ‘best spring break ever’

According to OAG, this year’s spring break holiday season is set to be the best ever for air travel in the country

With the ongoing spring break holiday in the United States that is forecast to be best ever, aviation analyst firm OAG says that legacy carriers are trying to improve capacity, but are hindered by lack of crew, including pilots, as well as spare parts, limiting the number of their aircraft flying on any given day.
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A recent forecast by the top 10 airlines in the United States, under the aviation lobbying group Airlines for America, says that this year’s spring break holiday season, which are normally among the busiest travel months in the United States, is set to be the best ever for air travel in the country.

An analysis by aviation industry tracking firm OAG says that the expected surge in flyers is a big opportunity for the airlines, since it is the first spring break season since the US widely eliminated masking and testing requirements related to Covid-19. It says that it could boost the airlines’ fortunes, even though they have continued to struggle with pilot shortages and shrinking margins.

OAG says that while demand for travel has been skyrocketing, several large legacy carriers have been forced to limit the supply of seats and flight schedules. It says that this reflects a cautious mindset of legacy carriers, who are focused on improving reliability, after fliers found themselves drained by persistent delays, late cancellations, or extensive airport lines earlier in the year.

It adds that besides the staff shortages, the airlines have also been hit by delayed deliveries of new orders for aircraft as well as a severe shortage of spare parts. Both these factors have led to a cap of the number of planes flying and hence the airlines have not been able to bolster their schedules to cater to the rising demand.

OAG says that for example, the capacity of both, Delta and United, for April 2023 is down 13.1 pc from 2019 levels. This decrease in flight volume by United and Delta is impacting availability for their hub states as well. Delta’s home base in Georgia is down nearly 200,000 seats, a drop of 15.4 pc in capacity for April, while United’s home base, Illinois, is down 250,000 seats, a fall of 20.1 pc in capacity. 

Yet, higher demand and better fare realisations have led to higher earnings for the airlines. OAG says that Delta reported higher revenues in 2022 than it did in 2019 due to strong demand, while American Airlines reported achieving record revenue in the fourth quarter of 2022, while flying 6.1 pc less capacity than it did in the fourth quarter of 2019. 

But while legacy carriers tighten the reins on capacity, pent-up demand is colliding with a worsening economic outlook, and it is changing how consumers are spending for their holidays.

OAG does point out with a note of caution that this spring break season comes right after the collapse of two major US banks in early March, the first bank collapse since the disastrous 2008 recession. It says that understandably, consumers are watching their spending amid the gloomy economic outlook. Though current predictions indicate this year will outperform 2022’s spring break demand, the jury’s still out on whether the economic climate will push demand above 2019, or pre-pandemic levels. 

For starters, there are signs that economic concerns are having a larger impact on travellers’ decision making this year than they did in 2022, with current spring break booking patterns suggesting more Americans will travel within driving distance to save on costs. Indeed, warm-weather destinations, the historical haven for spring breakers escaping winter temperatures, have seen the biggest hikes in fares, according to a recent analysis by Airlines Reporting Corp. 

With the price of airfares on the rise and financial concerns growing, low-cost carriers are taking the opportunity to bolster their schedules. Frontier’s capacity is up 28.5 pc for this April over 2019 levels, with Allegiant up 20.1 pc over 2019 capacity. In the case of Allegiant, warm-weather seekers benefit from the increase in scheduling. Florida, home state of two of Allegiant’s focus cities, is a standout from a volume perspective, with an added 100,000 seats for April compared to 2019 levels.

The growing economic crisis created by the collapse has the added effect of making the capacity cuts from carriers a smart economic decision in addition to streamlined scheduling. Fewer flights means reduced operation costs, including less concern over labour costs for ground and flight crew, says OAG.

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