Robert W. Mann

Airline-Industry Analyst

I don't see the 2019 level of airline service being close to fully reinstated until 2023. As a result, the fly-in meetings market will likely experience a slow recovery too. Closer in, the air-service landscape will be informed by the rate at which the health system is able to vaccinate the traveling-age population, understanding that it’s likely the most vulnerable segment (senior citizens) will be prioritized.

Because North America and Europe are heading into 2021 in pretty bad shape from a rising case-rate perspective, I don't see 2021 capacity levels improving much domestically or across oceans. Regionally, results will continue to differ, but the overall capacity level through mid-2021 is unlikely to improve dramatically from right now. 

Global-network carriers in the U.S. will continue their pivots to domestic and nearby international leisure markets through 2021. To fill the vacuum, leisure-oriented discount carriers will take footholds in markets normally closed to them due to congestion and gate-slot limits, but which now have significant slack and availability—Southwest going into Miami and Chicago O'Hare is a prime example. 

Summer 2021 is likely to see modest demand improvement, and later in 2021 we will likely see demand surpass year-over-year numbers from 2020, including a re-opening of key international borders to North Americans. And 2022 will start to see a wider re-opening of borders plus further improvement in domestic demand.

But secondary-city service could continue to be limited by a lack of business fare-level demand. And despite low fuel prices, the retirement of 50-seat jets in favor of 76-seat jets will mean travelers in tertiary cities that offered some air service will have to drive to a nearby larger city market for air service.

The bottom line is that since spring 2020, North American airlines have added over $100 billion in debt to their balance sheets to maintain liquidity. As a result, airlines will first have to focus on paying down this unanticipated higher debt load before expanding service again, meaning recovery will be focused heavily on markets that bring good revenue and put upward pressure on fares. For meeting and convention planners, this all means that service-capacity increases should come in mid-2021 for events in leisure-oriented domestic destinations, and in early 2022 for events in business-oriented domestic destinations and certain international markets.