Air travel demand remains significantly down over 2019 levels, despite a Thanksgiving uptick.
Even the distribution of a COVID-19 vaccine is unlikely to revive business travel in the near term, meaning airlines like Delta, American, and United may continue to struggle.The global collapse of air travel demand in 2020 has devastated the world's airlines. But the loss of one particular type of ticket has been especially ruinous for America's biggest carriers — and will likely continue to wreak havoc even after a COVID-19 vaccine has been widely distributed.
Now the vast majority of those premium passengers stuck in their home offices, and airlines are feeling the pain. In the third quarter of this year, the airline's business class and premium ticket revenue was down more than 85% over the same period in 2019. With travel down overall and pricing power significantly reduced, passenger revenue was down 83% over that period, with total revenue down 75% as Delta and its brethren have sought to capitalize on increasing cargo demand wherever possible.
It's especially helpful for gauging an airline's financial health because it's not strictly tied to revenue. Say an airline sees its overall revenue fall because fewer people are flying. If it can control capacity — meaning it cuts flights to match demand — and still command decent prices, PRASM should hold steady. Basically, it shows pricing efficiency: The higher it is, the more the airline is making from its capacity.
A number of factors could explain that drop, including airlines not cutting schedules quickly enough, and in the case of Delta, blocking middle seats to allow social distancing. The scarier number comes from looking at the third quarter, when the decline was around 50%. By this point, months into the pandemic, airlines were doing a much better job of matching capacity to demand. Plus, American and United weren't limiting per-seat revenue by blocking middle seats.
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