Bumpy Skies Amidst Holiday Travel

• U.S. based carriers’ scheduled flights had increased but cancellations more than tripled

• Airline sales fell because of lower average ticket prices and passenger trips

• Travel remained concentrated among leisure travelers, who opted for international trips

Chaos abounded airports as massive disruptions collided with strong holiday travel demand. A paralyzing harsh winter storm hit much of the nation days before Christmas, stranding holiday travelers across the country. Scheduled flights for U.S. based carriers had increased (3% MoM/ 1% YoY/ -14% YoY3), but cancellations had more than tripled (327% MoM/ 120% YoY/ 314% YoY3). Earnings were negatively affected as companies took a hit on revenue from cancellations and a blow to the bottom line from extra costs, such as reimbursements for hotels, meals, etc., aimed to repair damaged reputations.

 

While U.S. airport throughput reflected solid demand (2% MoM/ 12% YoY/ -7% YoY3), airline sales fell (-16% MoM/ 76% YoY/ -10% YoY3). Despite performing better than during the Omicron wave, it remained below the pre-pandemic trend due to a combination of lower average ticket prices (-5% MoM/ 16% YoY/ 11% YoY3) and passenger trips (-15% MoM/ -23% YoY/ -16% YoY3). Notably, travelers continued to pay expensive airfares amid higher inflation and a slowing economy.

 

Travel remained concentrated among leisure travelers, who opted for international trips. Entering 2023, airlines contend with modernizing operations, delayed plane deliveries, and a pilot shortage; however, demand is expected to be resilient. Additionally, employees at small and midsize companies are traveling again, but those at larger companies haven’t returned in full, causing business travel to rebound slower.