In aviation, especially right now, it's probably not so much trying to (re)build a customer base as it is to cover at least some of their fixed costs, which are VERY large by the standards of most industries.

You have to pay for crew, plane mortgages, gates, and a lot of Mx even when planes are parked. So as long as you can cover your variable costs (things like fuel, some mx, hotels, per diem, ldg fees, peanuts, soda pop) they're better off making SOME money to offset at least a little fixed cost.

Also helpful to maintain market share, with an eye to the future. The mid-tier domestic carriers set the pace for that by retaining capacity (no pilot furloughs) that led to the big-3 taking surprising measures to also mitigate furloughs, which in their case would starts years of costly training cycles which would cripple their future capacity flexibility.

Edit edit edit

yeah, except our primary product sold is air travel. pricing lawn chairs at 50% off at the entrance to Home Depot store, so that you can sell some full priced $1000 BBQ grills, is a little different.

your example is not unnoticed, indeed the airline industry is becoming more like K-Mart every day.

You forgot to mention the BLM extortion tax!

I think the legacies are also trying (somewhat desperately in some cases) to retain gates and slots, which with the Big Three all downsizing won’t be that easy. The LCC/ULCC crowd would be real happy to have better access to a lot of ‘fortress’ hubs, and barring a prompt rebound they are likely to get it.

Part 1/X

I realize I didn't include a range of days in my post 3 weeks ago regarding October 9th being the day we achieve 750K passengers on a 7-day rolling average basis. I have included that information for the below forecasts. The predicted date is the "center" of the forecast.

If we reach the numbers earlier than expected, we are trending better than expected relative to forecast and vice-versa.

Forecasts further in the future have wider ranges to accommodate greater uncertainty.

For example, predicting the day we achieve 1 Million for the 7-day rolling average for passengers would have a smaller band than predicting when we would achieve 2 Million for the 7-day rolling average for passengers.

The below forecasts assume approximately a 4% growth for the Year-Over-Year numbers (~36% for the entire month of October versus ~32% for the entire month of September). This is simplifying the forecast but it works as an approximation.

Like I said a few weeks ago, the forecast is based on data + analysis. Not feelings of what people think will happen or anecdotal comments. That is not to say that we can't revert to negative growth with the no stimulus + layoffs, or change in public sentiment. It just hasn't manifested itself yet.

750K
Our 7-day rolling average of passengers is now 745,008.
We will achieve 750K on a 7-day rolling basis on October 3rd (+/- 1 day). This would correspond to data that would be released October 4th. This convention applies for all below forecasts as well.
See Chart Below


7-Day Rolling Average of Passengers
The (post-lockdown) 7-day rolling average high for passengers was on September 9th with 779,564. This incorporated the entire Labor Day weekend (data from Sept. 3 - 9).
We will surpass this number on a 7-day rolling basis on October 9th (+/- 3 days). This means that starting in early October, on an ongoing weekly basis, more passengers will be travelling than any other time since the lockdowns began (including Labor Day Weekend).

Today is identified in red.



Mythical 10% 15% 20% 25% 30% 35%
As of today, our 7-day rolling average percentage is 32.9%.
We will achieve 35% on a 7-day rolling basis on October 14th (+/- 4 days).


Post-Lockdown % High
The (post-lockdown) 7-day rolling average % high was on September 8th with 37.2%. This incorporated the entire Labor Day weekend (data from Sept. 2 - 8).
We will surpass this number on a 7-day average % on October 27th (+/- 7 days).



Cheers,
AirlineAnalyst

Thanks. Stick around. I like your analysis.

Friday 10/2

857k, 33.9% YoY, 3.7% WoW

Upward trend continues.

Leisure should be down. Business returning?

I don’t think that it’s necessarily a safe assumption to believe that leisure travel will follow normal trends. To truly make an estimate of what leisure travel would do, we would need to break it down into different subsets of historical leisure travel (families, single road warriors, college kids, etc.) This is obviously information we don’t know and, since we started with a lower than normal baseline going into the fall travel season, it’s possible that a drop off in one category could be backfilled by an increase in another as leisure travel demand slowly comes back.

With a lot of kids doing remote learning and most people working from home over zoom, leisure travel is far easier right now than it has previously been this time of year. My wife’s company has been keeping everyone remote since May. Her counterpart just spent a week in Mexico on vacation while working remotely. Got the job done, took zoom meetings on his hotel balcony and had a one on one phone meeting with my wife Oceanside on a beach chair. All without using a single day of vacation time. For the most part, “normal” travel demographics are out the window this year.

Other food for thought... a decent indicator of leisure travel could likely be seen in the bookings of airlines like Frontier, Spirit and Allegiant who’s bread and butter is leisure. There is too much of a clientele mix at the big 3 and SWA to make a good determination. F9 loads and future bookings have, for the most part, been continuously ticking upwards since the mid summer drop off and aren’t showing much signs of sag...Yet. I can’t speak for Spirit or Allegiant bookings, but I’d imagine they are similar. To me, this is indicative of leisure travel showing a steady comeback (at least for now). Trust me... the only business execs stepping on F9 airplanes are our own.