United States air travel has been devastated by the Covid-19 pandemic, with airline passenger travel plummeting to levels not seen since the 1950s. However, carriers are reporting signs of improvement.
According to the Official Aviation Guide (OAG), which tracks data from roughly 15 countries, as of mid-November 2020, the U.S is showing signs of a modest recovery albeit a lower reduction in flights versus the same period 12-months earlier. Despite rising cases, there was an increase of nearly 5,000 additional flights operating within U.S. airports compared to the week prior. This translated into a year-on-year change of -42.5%, the lowest seen since the crisis started.
Front month futures prices for jet fuel in the U.S. Gulf Coast traded at an average of $1.0502 per gallon in October 2020 compared to $1.8498 per gallon in October 2019. Jet fuel prices have also declined for December 2021 delivery indicating a possible longer timeframe towards a significant recovery.
Futures markets are indicating that the decline in airline travel may be longer lasting with prices remaining at lower levels in the first half of 2021.
Jet fuel production continues to steadily rise since reaching a low of 443,000 barrels per day in May 2020. Based on data from the EIA, production was at 1.1 million barrels per day in the week ended December 11, 2020.
U.S. airline carriers started to add new and returning routes in October as airlines compete for leisure traveler business in the visiting friends and relatives market segment. American, Delta, and United airlines have eliminated change fees and offered discounted fares to holiday hot spot destinations. JetBlue announced new flights to Montrose, Colorado and expanded its service through Thanksgiving to meet the uptick in demand while Southwest airlines added flights to Palm Springs and Miami.
The U.S. Transportation Security Administration (TSA), which is responsible for security at over 440 airports across the country, screened more than 1 million passengers on the days just before and after the Thanksgiving holiday. Checkpoint data below shows signs of optimism with passenger travel tiptoeing up steadily. Since the onset of the pandemic, throughput dropped to a low of 87,534 on April 14, 2020 compared to 2,208,688 on the same day in 2019. According to data provided by the TSA, checkpoint data was at 641,966 on December 16.
Looking further ahead, declines have become less steep offering some signs of recovery in the months ahead as passenger numbers start to return. With the holiday season around the corner, coupled with the beginning of vaccine distribution, perhaps air travel will become increasingly compelling in 2021.
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