Why Airlines Keep Flying Empty Flights During COVID-19

This video was made possible by CuriosityStream. When you sign up at the link in the description, you'll also gain access to Nebula, the streaming video platform that RealLife Lore is a part of. Follow the link below to start your free trial today. The airline industry is in the midst of an unprecedented slowdown as a result of the coronavirus global pandemic. If you were to walk through almost any airport in the world today, you will find empty security lines, empty terminals, and nearly empty planes. According to the United States' Transportation Security Administration, or TSA, there has been a 96% reduction in the amount of passenger volume compared to normal levels of just one year ago. Although there have been many other events throughout history that have adversely affected the global aviation industry, from recessions to terrorist attacks, nothing like this has ever occurred before where now passenger levels are essentially what they were at the onset of commercial aviation in the early 1950s. Back in early March before the height of the pandemic reached the United States, the number of flights per day was roughly equivalent to what they were at the same time last year in 2019. And similarly, the percentage of seats filled versus total available on each flight was approximately 92%, meaning that airlines could make a comfortable profit for almost all of their routes across the country. Fast forward nearly two months later, and things are a much different story. The number of US flights per day is now down under 40% of what they once were a few months ago, and worse off, less than 1 in 10 seats per flight is ever being occupied. And this is not unique to the United States, as airline travel across the world has dropped dramatically. With over half of the flights being cancelled across the United States, that means a lot of empty planes are sitting around. While typically at any given time, there are a few hundred aircraft considered idle due to maintenance or other reasons, this number soared to approximately 46% of all United States-based carrier's planes and are now sitting idle in storage just waiting to be reactivated again once the crisis is over. This presents a real problem as storage space for these aircraft is limited as typically these aircraft are, well, they're in the air. But what about the other 54% of aircraft that are still flying with perhaps just a few passengers? Why are the airlines continuing to fly at all if they are losing money? The evidence is suggesting that the number of people flying has dropped way faster than the number of flights per day, thus leading to a lot of empty planes, which is primarily due to some strange economic factors at play. While most of the country, and the world for that matter, has been staying at home, the federal government has forced planes to stay in the air throughout the crisis. This is because according to the U.S. Department of Transportation, airlines are only eligible for their portion of the $25 billion aviation bailout if minimum service is maintained. Essentially, the aim of this is to provide funds to motivate airlines to continue air service and not furlough any employees through this period of record low demand for air travel. The conditions state that if an airline flew a route at least once per day, five times per week before March 1st, 2020, it must continue to do so during the pandemic or request an exception to remain eligible for any bailout funds. The economics behind maintaining flights, which essentially are less than 10% filled, are quite startling. Since the beginning of the pandemic, every time an aircraft takes off, it is losing money, and a lot of it. Obviously, the more passengers on a the more revenue that flight will generate. Take this total revenue amount and subtract out costs to the airline, such as fuel, maintenance, landing fees, and employee wages, and you are left with the profit produced from the actual flight. Now, drop the amount of passengers on the flight to just 10%, and as revenues fall, you can quickly see that each flight is operating at a loss, causing airlines to suffer greatly. Although each airline is different, they can all calculate what is known as the break-even point or the percentage of passengers versus the available seats at which the airline needs to fill in order for the flight's revenues to equal the flight's cost. Hitting this point will allow the airline to operate the designated flight without losing money and potentially even make a profit with each additional passenger added. Of the big four U.S. airlines, American, Delta, United, and Southwest, all of them have different break-even points based on amount of revenue generated and costs associated with running each flight. These are approximately 78.9% for American, 74.2% for Delta, 75.6% for United, and 72.5% for Southwest. Seeing as no airline in the world is able to maintain these types of load factors during this time, it is easy to see why airlines are in trouble. And as load capacity hovers near 10%, losses on a per-flight basis are approaching nearly $30,000. While this may sound bad, it gets even worse for smaller, more budget-focused, point-to-point carriers and these next few months could be a real nightmare. Larger airlines like say, United, that operate in more traditional hub-and-spoke models are able to slash existing flights while still complying with the Department of Transportation rules much easier. Remember, the rule is that if an airline flew a route at least once a day, five times a week before March 1st, it must continue to offer the service. As an example, let's take a look at United Airlines' service to Salt Lake City, Utah. During the good times and before the coronavirus outbreak, United would fly to and from Salt Lake City, Utah from six of its main hubs daily and many of these would often see multiple flights per day. However, during the current coronavirus operating state, United can cut flights to just once per day in line with the Department of Transportation regulations and still receive the bailout funds and will still be able to cut the total amount of flights by nearly 75%, thus saving them a substantial amount. On the contrary, this is much more difficult for budget-focused, point-to-point carriers like Frontier or Spirit Airlines. While United typically flies in and out Salt Lake City 23 times per day, airlines like Frontier and Spirit may only fly to a small city just once per day. In the case of Frontier Airlines, they operate a once-daily flight from Sacramento, California to Las Vegas, Nevada and since this flight flies daily in order to adhere to the rules of the bailout, it must continue flying. The thing is, Frontier has so many other routes just like this, meaning compared to larger airlines like United, they are unable to cancel as many flights, making this already difficult time for the industry that much more difficult. The airline industry as a whole is facing some very dark times ahead and it is not just limited to the airline specifically. Supporting industries like part manufacturers, internet travel agencies and global distribution systems that support the airlines will suffer as well. While governments across the world have pledged to help the industry with massive amounts of stimulus, undoubtedly several airlines might not make it. What is clear however, is that the airline industry is destined to change greatly as a result of these unprecedented times. However, the coronavirus is not just affecting the airline industry. If you want to learn more about how the coronavirus is affecting the world at large and how it originated, then head over and sign up for CuriosityStream. CuriosityStream has several documentaries that are already providing detailed information on how the virus began, how it spread so quickly, and what its effects have been across the world. Not to mention that this is just one of thousands of top quality shows and documentaries that you can watch at any time. 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