Holiday Travel Update: Where Have All The Flights Gone?
A few weeks ago, we wrote a piece on the recent troubles afflicting US airlines and why they are likely to continue
It was a popular piece and we got a lot of inbound messages and also interest. It can be found on our blog here if you missed it.
One of the questions that came up frequently was some variation of:
So, I have to fly in the coming weeks to see my family in X, but I can still change my flight. What do you suggest?!
Well, rain and storms are in the forecast across most of the continental US and the AAA expects over 54 million passengers to travel over the Thanksgiving holiday.
That number of people is, as predicted, nearly 2019 levels and underlines the (unsurprising?) idea that, after nearly two lonely years, there is suppressed demand to fly and see family and friends over the holiday.
So....if you are intrepidly stepping out your front door and heading to the airport or the highway, what should you do?
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Now, we are not exactly airline specialists let alone travel consultants but, as we stated before, when most of the media seems to be focusing on whether or not pilots have gotten Covid-19 vaccines or not, providing a better quality of analysis isn't a big hurdle to cover
We ran some data - once again from the fine folks at Cirium - to try and understand what is determining the high incidence of:
late flights
perma-delayed flights
outright canceled flights
We came up with an answer though it may not be helpful for all of our readers (or most fliers!), sadly.
The number one factor for recent flight delays are airlines that use what is called a "point-to-point" system for their travel network.
Now, point-to-point is an approach that flies directly between different points around the country, which is starkly different from the more traditional "hub and spoke" model.
See our fancy effort to be pseudo-travel consultants right here:
The statistics support the idea that the likes of JetBlue (or Southwest etc) that operate these types of networks are struggling to have their flights land on time.
The numbers reveal that point-to-point flights are roughly 12-14% worse (depending on whether the flights are hub or spoke) of the time above their hub-and-spoke counterparts like Delta or United.
This probability rises by nearly a factor of 2 when you filter by airline. Hint: No one wants to be on a Spirit or Allegiant or American Airlines jet this week.
The reason?
Because the point-to-point travel system is far more vulnerable to delays. Once a problem occurs it begins to spiral throughout the entire flight network (and country) wreaking havoc throughout the system.
This is particularly bad when flights get canceled. Delayed flights can still occur and save at least some of the schedule. A canceled flight - for weather or any reason - will ripple through the network wreaking destruction because so many airlines are dramatically understaffed.
And if Covid should rise thanks to the Omicron variant……
This gets messy real quick.
To simplify, the "hub and spoke" model have planes that go back and forth between a single point all day, every day. This means that if and when they have issues the problem remains contained to that spoke.
Other commentators and publications seem to be catching onto this theme as well. Here is one Southwest flight's intended vs actual routes during a weekend of disruption:
It will be interesting to see whether these problems persists and gets reflected in the share price or whether airlines start to react to their predicament by changing their operating style to keep more planes and crews in reserve.
That strikes us as wishful thinking.
Airlines are desperate to maximize their revenues and profits and are taking large risks as a result.
The real challenge however - that we alluded to above - is that after several decades of consolidation a lot of travelers do not have much choice to reach their destination.
So, the positive news is that you may have a better understanding for why you are screwed but you will still be screwed.
As we said the other week, fly safe out there and be prepared to pay up and stay flexible.
Good luck!
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Have questions? Care to find out more? Feel free to reach out at contact@pebble.finance or join our Slack community to meet more like-minded individuals and see what we are talking about today. All are welcome.
