The number of seats available for booking on the United States’s “big three” domestic airlines has taken a steep nosedive.
The COVID-19-related worldwide decline in air travel has pushed America’s traditional No. 4 domestic airline, Southwest, well ahead of American, Delta, and United, according to air travel data company OAG. It’s not clear that Southwest’s commanding lead can be overtaken any time soon.
Worldwide, Southwest led the pack as of June 15, with 2.4 million seats available per week. American came in fourth place, behind two Chinese airlines, with over 1.6 million seats open for the week. Delta came in sixth with almost 1.1 million seats, and United lost the No. 10 spot to Qatar Airways.
Southwest has also reduced seat capacity relative to where it was in January of this year. Still, most of that reduction is by design and for a specific, social distancing reason. Southwest spokesman Dan Landson told the Washington Examiner, “We are now capping the amount of seats sold on each flight to ensure the middle seats can remain open through at least the end of September,” when the government coronavirus bailout money ends.
“This means roughly one-third of each flight’s seats will remain open,” explained Landson. Throughout January, Southwest had a capacity of almost 3.8 million seats per week. The June figure of 2.4 million seats per week is roughly what you get if you fly the same number of flights as in January and take out the middle seat.
The Washington Examiner asked the three big airlines if they were concerned about this drop in weekly seats and what, if anything, they would do to improve their capacities. United did not reply by press time. Delta declined to comment.
A spokesman for American pointed to a press release celebrating the airline’s plans to fly with “more than 55% of its July 2019 domestic capacity in July 2020.” However, American CEO Doug Parker also said in a first-quarter earnings call that it’s essential for the airline to be “rightsized, properly sized, a good bit smaller than it is today.”
United has already announced sizable layoffs for Oct. 1, when recipients of federal bailout money are no longer obligated to keep current workers on the payroll. The airline did so because it does not expect demand for seats to return quickly and so sees little benefit in propping up capacity.
Other airlines may have different estimates of future travel demand and a corresponding willingness to expand capacity to cater to the expected passengers.
“JetBlue announced 30 new routes last week, including an incursion into United’s territory in Newark, [which] makes sense for them since they’re already strong in the New York area,” Gary Leff, author of the influential travel blog View from the Wing, told the Washington Examiner.
Leff also weighed in on Southwest’s current dominance and possible future expansion.
“Southwest can at least announce capacity this high — current plans have them at 2019 levels for seats by the end of the year — because they are a primarily domestic operation. Without premium, cabins don’t depend as much on premium business travel’s return,” Leff explained. “They also don’t have as heavy a concentration in the markets that were hardest hit by the virus early on, other than Chicago.”
Leff pointed out Southwest enjoys a “strong balance sheet.” Southwest enjoyed the least debt of any of the large airlines last year and had the most significant “liquidity balance” of any domestic airline except for JetBlue as of March 23 of this year, according to the business data website Statista. He speculated that its strong financial position could allow Southwest to “expand more and potentially take market share from other more risk-averse airlines.”
Southwest’s bet on flying about as many flights as it used to is costing the airline a lot of money, but it also appears to be slowly paying off and could gain market share. According to the most recent Securities and Exchange Commission filing, Southwest expects June to have had a “burn rate” of about $20 million a day. That’s down about $5 million a day from its initial projected losses.
