The old adage "strike while the iron is hot" comes to mind when looking around the Aero 80 dashboard this week. As we've covered stories over the course of the pandemic here at Kambr, I don't think it occurred to any of us that we'd be seeing some of the growth we are seeing in the market right now.
With operated flights up 36% week-over-week globally, it is evident airlines are doing their best to react dynamically to what the market is demanding. And they should. As we enter the waning half of the summer for the northern hemisphere, consumers may be trying to squeeze in a last-minute trip to a beach destination before the notoriously slow September season and realities of cooler weather during a pandemic set in.
A Tale of Two Hemispheres
Europe and US
Europe Operated and Cancelled Flights
Europe has continued to move towards relaxing coronavirus restrictions, and with that, flights continue to come back in a rapid fashion. Last week, we discussed how flights took a big jump during the beginning of July when travel restrictions were relaxed there. Operations were at 4,000 flights per day then, they've now ballooned to 10,000 (a 75% increase since last week). Demand for leisure travel is heating up. Travelers are realizing they either take a trip now, or spend the next half a year at home and in the cold.
Of course, it's not always so rosy. As this demand heats up, and airlines continue to meet that demand for a leisure fare, COVID cases will unfortunately continue to rise as people get tired of social distancing rules and hit the usual leisure hot spots like the beach and beachside cafe. The question on all airline executive minds should be, will this rise really affect demand going into August? Or will these trips continue to lure leisure travelers from their homes, government permitting, as the customer demographic skews towards younger, less at-risk travelers?
U.S. Operated and Cancelled Flights
In the U.S, where cases have rocketed to 50-60 thousand per day, flight operations are looking like that of Europe anyway. But, it should be worth noting that cancellations are starting to materialize as well. So, this may help answer the question of what European demand will look like going forward. Now is the time to capture some much needed cash flow, and it looks like it may stick around for at least a couple weeks as travelers seek a last chance getaway.
Oceania and Southeast Asia
In the southern hemisphere, where it is now full-on winter (although much milder than in the northern hemisphere), things have not picked up like they have elsewhere, and forward looking schedules reflect no growth in the cards.
Looking at some schedule data from Cirium:
- In the Oceania region, Virgin Australia and Australia's flag carrier Qantas have largely gutted their schedules, with each down to about 25% of what their schedule was last year.
- The same goes for Jetstar, who was not immune to their wholly owned subsidiary's cuts (Qantas). Jetstar saw some curious total shutdowns for their Jetstar Pacific subsidiary (which might be a short term financial band-aid), which mainly operates Vietnamese routes.
- Unfortunately for Air New Zealand, where their home country had been declared coronavirus free, they have had to cut much of their routes connecting them to Australia.
- And in Vietnam again, Vietnam Airlines just entered in a round of cuts, cutting a fifth of flights after what would likely seem driven by locals in Da Nang contracting COVID. That, and the subsequent evacuation of 80,000 tourists, whom the government seemed to blame for the outbreak.
As such, with outbreaks occurring in a countries that have managed the pandemic quite well to date, Australia and Vietnam will seek short term pain and suppression of outbreaks. This will certainly make any sort of recovery quite difficult for operators in these countries, but as with all things COVID-related, none of this is easy. This is in stark contrast to Europe and the US, where cases will never be contained at this point. We're now seeing how once the cat is out of the bag, the market becomes leisure driven by younger travelers hoping to snag a cheap fare on a ULCC for a quick getaway. Plan accordingly.