The global airline industry's capacity cuts might be nearing the bottom, with week-over-week reductions over the past week reaching their lowest level in about a month, according to analysis by OAG.
Carriers around the world in the seven days ending Monday removed about 5 million seats of capacity, including a 26 percent week-over-week capacity reduction by U.S. carriers. American Airlines, Delta Air Lines, Southwest Airlines and United Airlines all cut capacity by about a quarter over the past week.
Cuts this past week are well below the four-week average of about 58 million seats per week reported by OAG, though there is increasingly little left to cut. Western Europe, the Southwest Pacific and Lower South America all are operating at 90 percent lower capacity levels than they were in January. About 200 airlines have paused passenger operations altogether, including Turkish Airlines, Air Asia, Ryanair and EasyJet.
Over the next week, airlines likely will continue cuts, reducing available seats to below the 30 million level—compared with nearly 110 million available in January—which will be the point from which capacity begins to recover, according to OAG analyst John Grant. "For many airlines, the middle to end of May appears the latest thinking in terms of bringing back some capacity, but the situation remains extremely fluid," he said.
In terms of full recovery, Cowen analyst Helane Becker said it could take up to five years for capacity to reach pre-Covid-19 levels. Should people return to work beginning in June or July, there could be "an initial surge in business travel, but nothing we would view as sustainable," she said. Right now, the firm is working with an assumption that airlines' 2021 revenues will recover to the levels seen in 2016.
China did see some recovery in capacity over the past week, with Air China, China Eastern and China Southern all growing capacity week over week, though all three are operating at less than 50 percent of their Jan. 20 capacity levels, according to OAG.