The uneven recovery of North American airlines

March 2023 kicked off the third spring break travel season since 2019 – that glorious year before everything changed.  While revenues have long since recovered, the airlines’ ability to deploy capacity has not.

ASMs for the big three in the U.S. are just now nearing 2019 levels.  However, within this ASM recovery trend is a distinct divergence with block hours.  Each of the legacy airlines is within 2% of March 2019 levels, however block hours are still over 11% down.

This highlights a trend of longer stage lengths and increased seat gauge at the legacy airlines.  In other words:  regionals aren’t flying but mainline is.  We are watching this trend closely for signs of eroding pricing power since more people are being packed into fewer flights.  (Hint:  We’re already seeing some early signs of this very thing)

The second tier of airlines which we lump into LCC-like, has shown better recovery, though limited growth.  Alaska stands out as having a divergence between block hours and ASMs – again a sign of regional angst.

The ULCCs keep ULCC-ing.  No sign of doom for the sector in terms of growth, which continues to out-pace all other airlines.  However, much of this growth arrived early in 2021 and 2022, from which it has recently slowed.  Take Allegiant, for example, an airline that is up 17% over 2019, but actually down 8% versus 2022 according to Cranky Network Weekly.

Canada… well, they’re behind.  Of course, the U.S. had a head-start during COVID, and both WestJet and Air Canada are dealing with a slew of new competition – Flair, Canada Jetlines, Lynx, Porter jets.

Of course, with the uneven progression of the recovery comes the inevitable follow-up:  What will the end of the COVID recovery look like?