Airline Capacity Reduction Reaching its Bottom, Says OAG

The reductions in airline capacity have been steep. Before the advent of the coronavirus pandemic, airlines were running with passenger loads of 80 to 90 percent. Currently, they are running up to 90 percent empty.

However, OAG, a global resource for digital flight information, the dramatic contractions we have been seeing worldwide in the airline industry may be slowing and should be bottoming out soon. A report this week from OAG, notes that last week saw a 7 percent reduction in seats, one of the slowest rates of decline since the pandemic began making itself known as a pandemic mid-March.

The industry is now down to 29.8 million seats a week with further cuts expected in the next few weeks. Supported by strong domestic capacity, although not demand, markets such as Japan, the US, Indonesia and Saudi Arabia continue to show much smaller rates of decline than the rest of the world. Nearly 9 in every 10 seats scheduled this week will be on domestic flights compared to 6 in 10 at the beginning of the event.  

Carriers around the world last week removed some 5 million seats of capacity as part of a 26 percent week-over-week capacity reduction by U.S. carriers, according to reports.

American Airlines, Delta Air Lines, Southwest Airlines and United Airlines all cut capacity by about a quarter over the past week.

Quite a few airlines, said OAG, plan to add capacity beginning in the middle of May. John Grant, OAG analyst, said, “we will have a look at some of that data in the coming weeks and identify more of the green shoots of recovery that will be coming along. But as always; only time will tell…

“It seemed a bit of a no-brainer to us that domestic capacity would always be stronger than international given the physical distances and lack of alternate travel modes available in some very large markets; it’s nice to see others now recognizing that pattern,” Grant wrote in a recent blog post. “Nearly nine in every ten seats scheduled this week will be on domestic flights compared to six in ten at the beginning of the event. Looking forward to the recovery phase, the implications for those markets that have a heavy reliance on international tourism as part of their economy; it is going to take them much longer to see any significant increase in both capacity and demand.”