Furloughs, aircraft retirements put a ceiling on airline recovery

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• Air travel recovery in the United States has ample runway as long as the fleets and employees remain in position to receive it.
• The expiration of the airline provisions in the U.S.’s CARES Act puts the industry’s recovery at risk as airlines decide whether to keep staff in the face of mounting losses.
• Current 2021 schedules suggest airlines are still planning on sufficient capacity to enable a recovery, setting an expectation for a CARES Act extension that remains far from certain.

Once again, the United States has hit new record levels of daily passengers. According to the Transportation Security Administration, Tuesday, October 13 saw a 15% increase in passenger screenings from the week prior. The Columbus Day weekend, not normally a heavy travel weekend, rounded out a weekly growth in passenger numbers of 13%, compared to a same weekend boost of only 6% in 2019.

The U.S. traffic numbers are still far from their 2019 highs, but passengers are coming back, especially those traveling for leisure or to visit family and friends. Yet, with the positive signs a return of traffic brings, comes the concern whether the recovery will be paced by the passenger, or the available seat.

Related: COVID can’t keep passengers away from flying forever, but the economy can

In examining all the forces buffeting the airline business, there are secondary consequences that may guide, and even constrain a recovery eventually separate from the willingness of the passenger to fly. It remains very possible that the pacing item for the recovery may not be the passenger willing to fly, rather the seat in which to fly them. This, coupled with the return of demand to economic forces will dictate what 2021 will look like for the U.S. airline industry.

Since the beginning of the pandemic in the United States in March, available capacity has been in extreme abundance. Yet, as time progresses and longer-term decisions are made regarding the ongoing size of fleets and employee rolls, the largest threat to a recovery for the airlines could be the airlines themselves.

Related: Six months into the pandemic, it’s even worse for airlines than we thought

To be sure, this is a problem the industry craves. Yet, much attention has been paid to the essential recovery in demand, including our most-recent TAC Analysis. However, the analysis that follows below looks at airlines’ ability to supply a recovery and the role of capacity as either the enabler of returned passenger travel, or its limit.

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