The US Summer Surge: The Domestic Market Is Likely To Have Too Much Capacity

This summer, airlines expect an increase in passengers. Combined with a steady stream of vaccinations and a relaxation of travel restrictions in much of the country, airlines expect pent-up travel requests to lead to an increase in passengers over the summer. In preparation, the airlines have added a large number of new flights across the country. However, with airlines adding more flights in anticipation of a busy summer, domestic capacity is likely to be way ahead of demand.

U.S. airlines had a tough 2020, but as they prepare for a summer, airlines are showing a willingness to fly more capacity than is demanded. Photo: Getty Images

American airlines are increasing their capacity

US airlines are already planning to improve their domestic flights. A variety of airlines have announced several new routes for the summer. One of the more conservative airlines in the US, Delta Air Lines, is planning expanded flights to over 20 vacation destinations this summer. These flights extend to Montana, Wyoming, California, the southeastern United States, and more. Delta has also announced an Alaska expansion for the summer.

Southwest Airlines has now launched or plans to launch flights to nearly ten new airports before the summer. One of the places where new services are seeing massive expansion is Myrtle Beach. In South Carolina, a whopping ten cities will receive Boeing 737 non-stop service from the southwest this summer.

Southwest Boeing 737Southwest Airlines is focused on expansion. Photo: Getty Images

United Airlines also announced its own domestic expansion this summer. In addition to the expanded hub-based flight, the airline offers point-to-point services from cities in the American Midwest to South Carolina, Maine and Florida.

Spirit Airlines was also on an expansion course. The airline announced that it would add Louisville, Milwaukee, Pensacola and St. Louis to its route map. Further flights from New York’s LaGuardia Airport (LGA) are also pending for Spirit.

Spirit Airbus A321Spirit is betting on a new transcontinental flight from LaGuardia this summer. Photo: Getty Images

American Airlines essentially makes Austin a focus city. Ten more routes from Austin take the airline to 26 destinations that fly through its Metal and partner Metal and will be served from the Texas capital this summer. American has also upgraded some flights to Alaska.

Hawaiian Airlines added new flights to Austin and Orlando for the summer and expanded flying in California. Domestically, Hawaiian plans to run much of its network this summer.

HawaiianHawaiian Airlines is expanding its US mainland network for the summer. Photo: Getty Images

And let’s not forget, Alaska Airlines on the west coast is aiming for an aggressive capacity increase this summer. This includes targeting new flights from Anchorage.

There is evidence of a summer wave

Since March 11th, over a million passengers have passed through a TSA security checkpoint every day. Seemingly a regular occurrence, the spring break in the US suggests that pent-up demand is easing.

With numbers already staying above a million a day this summer, those numbers could hit up to two million passengers a day if the vaccinations are introduced. The US is already planning to open vaccination eligibility to all adults by May, although many individual states are exceeding that schedule.

Passengers GettyThe TSA consistently registers over a million passengers per day. Photo: Getty Images

The more people vaccinated, the more they show that they are ready to travel. With fares at some of their lowest points in recent history, vacationers travel where they can.

Vacation trips are groundbreaking

Vacation trips are groundbreaking. When pandemic-weary travelers prepare to see the world again, they mostly travel to various destinations such as the beaches of Florida, the Hawaiian Islands, and the national parks in the western United States. The airlines are significantly expanding their capacities here. One of the top growth destinations this summer is Bozeman, Montana, a gateway to Yellowstone.

Passengers GettyFamilies and vacationers make up the majority of passengers. Photo: Getty Images

Business travel will continue to lag behind, which is why airlines are focusing specifically on leisure travelers. Leisure passengers prefer weekend flights or fly on major holidays.

Domestic overcapacity is very likely

Airlines have never faced recovery from such a widespread public health crisis as this one. With this in mind, the airlines assume that vaccinations and the number of cases will determine the outcome of this summer.

With many airlines planning to reach capacity on or near 2019 this summer, there will certainly be overcapacity in the market. The daily passenger numbers compared to the same time in 2019 are still around 50% of the value at that time. These numbers are expected to trend higher into the summer, but they certainly won’t be enough to keep all of these new flights full.

United planeIn early 2021, United hypothesized that there would be overcapacity domestically. Photo: Vincenzo Pace | Easy flying

This puts loads and tariffs under pressure. With inland capacity still ahead of summer demand, load factors should be below 2019 levels even if passengers continue to return. And on routes with more competition, fares should be a little lower, but not all passengers will benefit.

Overcapacity in some, but not all, markets

Some markets will continue to have limited capacity. In most cases this will involve driving from spokes to hubs. For example, consider cities like San Antonio, Spokane, Birmingham, and others.

American GettyWhile some US airlines are focusing on their hub-and-spoke strategy, they haven’t hesitated to add some point-to-point flights, albeit a few. Photo: Getty Images

These cities have not seen mass expansion of air services to recreational destinations. For many of these passengers, the best option to get to a recreational destination is to connect through a major hub. These passengers can see higher fares.

Why overcapacities make sense for airlines

It may seem strange that airlines are willingly operating more capacity than they can possibly fill. There is a reason for this. First and foremost, the recovery will not be linear and demand at the beginning of summer may be lower than at the end of summer.

JetBlueAirlines have left their usual positions to chase demand where it has been seen. Photo: Getty Images

The problem for carriers is increasing capacity to meet this demand. In most cases, it is so much easier for airlines to cut capacity than to add them at the last minute. Adding capacity at the last minute can lead to breakdowns if there are not enough crew or ground personnel to handle the new flights.

If the airlines are ahead of the demand, they have the opportunity to take advantage of the overcapacity if it comes to another spike. The calculation is that the airlines keep capacity open when people want to fly. If people don’t want this, expect some tweaks and cuts to schedules. But this summer it seems much more likely that there will be an increase in the summer, but there will likely still be more capacity than demand this summer.

Do you think there will be more capacity than demand this summer? Are you planning to fly this summer? Let us know in the comments!

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