Prose and Contrails: Commercial Aviation Recovery From Covid-19

Airline flight schedules. They tell us what assortment and quantity of flights and seats are offered for sale, presumably providing future travel on your chosen carrier. But future schedules are subject to change. And, in this uncertain period of crisis, schedules are as prone to change as the weather.  

As with weather, flight schedule change patterns begin to emerge, analysis becomes possible and predictive models may anticipate those future changes.

In normal times, flight listings depict steady trends in supply. Seasonal adjustments occur, fleet additions provide added lift, but very few erratic gyrations occur otherwise. Going into the global pandemic, worldwide flight schedules were being listed at roughly 102 percent of levels seen for the same month a year earlier.  Indeed, January 2020’s departures (102.2 percent), seats (102.8 percent), and ASKs (102.7 percent) all told a similar growth story vs 2019 [see Chart 1 below].

That was until February, the first month in which the novel coronavirus began impacting airline schedules, tapered to just 95 percent of 2019’s seats. Adjusting for the additional 29th day of February due to leap year, the comparative pace was really about 92 percent. But, at this point, departures, seats and ASKs were still moving in lockstep.  

The schedule changes for March through summer saw ASKs fall farther than seats and departures. This separation reflected two factors:

• A steeper decline on long haul flights than short (particularly international); and,
• Narrowbodies being favored vs widebodies (influenced again by domestic vs international).  

By May, global schedules had reached their nadir at 21 percent of last year’s ASKs and 31 percent of departures. In reality, actual operations were even softer as many carriers opted to fly far less than what their schedules promised.

Chart 1: A U-shaped capacity outlook is seen in published schedules thus far, as if a full rebound is fast approaching.

But, as we sit here in mid-July, the forward looking flight schedules would suggest that supply is in the process of returning to normal. Indeed, November and December currently show a full return to last year’s levels. Even September and October are listed at 92 percent and 96 percent of last year, respectively.

Closer in, we have August which now stands at 70 percent of last year’s departures, while July has wilted to just 48 percent and shows potential signs of further decay in the latter half of the month.

Kambr Advisory’s models are anticipating significant further reductions to August and September flight schedules (see Chart 2 below).

Chart 2: Early publications of flight schedules suggest optimism, but capacity has tended to decay with each successive schedule update until reality is better reflected within the corresponding travel month.

So, what should travelers really expect if they book a flight right now for, say November travel?  At the moment, a full menu of flight options on par with last year is what they’ll see.  

But how likely is it that the flight they choose will actually operate when day of departure arrives?  

Well, based upon past patterns of schedule changes, and barring a miraculous rebound in traveler confidence/demand, the likelihood is not great. Booking a flight 60-90 days in advance right now is akin to planning a picnic a fortnight from now based on what the weatherman is predicting. It is a coin flip as to whether your plans will happen as expected. And here’s why.

Most airlines are choosing to keep their future schedules intact at mostly normal (i.e., last year’s) levels until those travel periods creep closer in. When bookings don’t materialize to adequately fill all listed flights, then cancellations or other modifications get reflected when updated schedules get loaded into commercial systems at the end of each week. At some point, the airline will contact a traveler who previously booked a flight which is now cancelled. That passenger will be offered “re-accomodation,” an industry term for rebooking onto another flight.  

The passenger’s mid-morning arrival may become early evening. Her connection may now involve an overnight layover. The jet might be replaced by a turboprop. As long as the traveler is willing to accept the substitute flight, airlines are happy. They have succeeded at casting the widest net possible while knowing that much of their schedule will not fly. But hope springs eternal and a re-accommodated booking is still a booking.

This practice is widespread in the airline industry right now, but probably isn’t helping consumer goodwill.  

If Amazon used a similar strategy in selling shirts, here’s how it would look: First, they would list that cool shirt in 7 different sizes, with 9 different color choices available. They may not have all 63 combinations in stock, but if enough consumers order each of them, a crate of that size/color could be ordered and shipped by the manufacturer in time to fulfill your order.

Maybe.

But, if not, then you could be offered a different size or color that is ready for immediate shipment. In the worst case, you cancel your order and Amazon refunds your money. Or issues a voucher for future purchases.  

Sound familiar?

To be clear, we can hardly blame airlines that initially hope for the best (a return to normal) and adjust later on to reflect the stubborn realities of a slow recovery that reveal themselves. If carriers had a perfect crystal ball with which to forecast demand, then they wouldn’t want or need to over-offer their flights.  

But, in the foreseeable future, the future will likely remain unforeseeable. So travelers booking farther in advance will continue to play some form of flight cancellation roulette. And airlines will keep looking for whatever crystal ball they can find.