Airlines take different routes to building capacity back up


In August, U.S. airlines are scheduled to fly 58% of the capacity they offered a year earlier, according to the flight data provider OAG. That represents a large uptick from the second quarter, when capacity at Delta and United was down more than 85%.

The process of building and adjusting networks is especially challenging during the pandemic, as airlines must deal with a volatile demand environment.

“There’s virtually no good news for the airlines here,” said Peter Belobaba, the airline industry program director at the Massachusetts Institute of Technology. “The best-case scenario is that recovery is going to be measured in years, not months.”

Under such conditions, Belobaba said, American, Delta and United will surely focus buildups on reinforcing connectivity from their hubs, which will help them avoid dropping too many small destinations from their route maps.

“When you are down to 40% of your previous capacity, I would think some of the smaller points will lose service,” Belobaba said. “But the fundamental strength of hub-and-spoke networks is you don’t have to drop a specific spoke. You can just serve it once a day.”

Conversely, point-to-point discount carriers such as Southwest, Allegiant and Frontier are taking advantage of their nimbler business models to move capacity around quickly, chasing demand as they grow their networks. OAG data showed that as of July 22, Southwest was scheduled to fly 80% of its August 2019 seat capacity next month. Allegiant was showing a capacity increase of 5%. Frontier planned to offer 72% of its August 2019 seat count.

Read more…