Numbers from the TSA have shown a substantial reduction in traffic over the last month. The beginning of the month showed almost normal numbers on March 1st. March 31st TSA throughput levels dropped down to 7.22% of the beginning of the month.
Total reduction on average for the month of March this year after the declines saw traffic at 48% of 2019 levels.
Compared to the SARs drop for Asian carriers and the 9/11 Domestic reduction in the U.S this is without question more significant. Average values for the worst month after 9/11 were about 50-55% of the previous healthy month. The question remains how long will traffic levels remain at ultra-low values since they can’t go much lower?
For traffic levels to reach what has been forecast by some carriers of 80-90% of pre-drop levels we will need to see some recovery of the ultra-low passenger levels in April.
Looking closely at China’s recovery we can see that their “capacity” dropped to 25-30% of pre-drop capacity over the course of about 21 days (3 weeks). Making the U.S. capacity (not revenue traffic refected in the TSA numbers) drop not too far removed from the Chinese capacity change and still relevant.
It is worth noting that the epidemic in the U.S. has been worse than China, and that could affect recovery timing. However, the drop looks very similar to China, and it is very possible that the recovery will also look similar. The time the U.S. remains in the drop remains the question and is closely tied to the countries ability to contain the virus. China was able to contain it relatively quickly compared to places like New York due to some significant differences. There are some things we can look for in the U.S. and China statistics to give us an indication when things might improve.
Interestingly, as total “Active Cases” peaked in China airline traffic levels began to recover. According to WorldMeter the Chinese Active Cases peaked on Feb 17th. Compared with the data in the “Chinese recovery article” from this website we can see that the airline capacity in China bottomed out around Feb 17th in China. Likely NOT a coincidence.
The capacity change shows a correlation to another industry – hotel bookings. Drops in hotel books closely match the drop seen in TSA throughput in the U.S. The significant portion of the reduction in airline and hotel traffic occurring within the first 3-4 weeks of the epidemic in China. Also of note, is the relationship between the drop of TSA throughput and Chinese hotel bookings. It’s likely we could see something similar in the U.S. as active cases begin to subside and travel markets begin to recover.
Noteworthy takeaways from the chart above include
- The deepest part of the booking trough occurred at the peak in active cases, not necessarily daily cases.
- Recovery has seen an increase of about 30% of trough levels per week through the end of March. That rate of improvement looks to be continuing.
- Hotel bookings recovered to 36% of pre-drop bookings 5-6 weeks after the peak in Active cases.
- Note that the majority of bookings are “short term demand” which has returned by about half of pre-drop levels, while long term demand is understandably vacant from existing bookings.
The good news is it appears the U.S. (if containment methods hold) is on track to peak in Active cases soon. Once that happens we can expect to begin the slow road to recovery. There are parallels that allow us to learn from the Chinese recovery as we appear to be about 1.5-2 months behind them.
