With the unprecedented grounding of aircraft around the world due to global travel restrictions to combat the spread of COVID-19, some airlines are continuing to operate flights.
There is a key difference between chartered repatriation flights that are still operating with special permission to bring citizens home and scheduled operations that are in place.
With many airlines still operating domestic flights in the U.S., frequency and load factors have been impacted. The data-based research project is related to the load factors (percentage of passengers vs. available seats) U.S. airlines need to break even.
With the passenger loads down, airlines requesting federal funding, and layoffs inevitable at almost every major airline the data illustrates how, for example, an American Airlines a320 loses $24,009 every time a plane takes off on a 1,000 mile trip at 20% full.
David Angotti, an Airline Transport Pilot (ATP) and data-statistician has compiled an analysis with Florida Panhandle about airline profitability statistics in the U.S.
The report illustrates that the load factors on flights needed to breakeven range between 72.5% and 78.9% depending on the airline. With ghost flights and undersold planes departing constantly, it should not come as a surprise that many airlines outside the U.S. that make the majority of their revenue from international flights have temporarily shut down.
The U.S. airlines represented in Florida Panhandle’s analysis operate approximately 20,000 flights daily and every flight is potentially losing tens-of-thousands of dollars.
As a baseline reference, if a narrow body short to mid-haul aircraft flies an empty ghost flight, an airline can expect to lose about $30,000 from operating the flight over a 1,000-mile journey. This is a direct loss from fuel, maintenance, landing fees and wages, to highlight just a few costs airlines face.
Southwest Airlines has the lowest required load factor for a break-even flight at 72.5%. American Airlines has the highest required load factor for a break-even flight at 78.9%. While the maximum loss to operate one flight of 1,000 miles is $32,357, the maximum profit with 100% of all seats sold is only $11,038.
With 75% of the seats sold, only half of the airlines represented break even in the U.S., demonstrating just how competitively priced the market has become. This further demonstrates that even operating flights at 50% capacity leads to a substantial economic loss for all airlines.
Angotti says that “with tens-of-thousands of dollars lost on every departure, it should not come as a surprise when airlines reduce flights, furlough employees, and in more extreme cases cease operations. The Coronavirus has led to plummeting demand for air travel and near-empty planes criss-cross the country and globe. This interactive helps visualize the delicate balance between profit and loss for some of the most established major airlines in the U.S.”
Every empty seat on an aircraft is a direct hit to the airline’s profitability. The most profitable airline in the U.S. needs to sell 73 out of every 100 seats just to break even. The expense to maintain aircraft, staff ground and flight crew, fuel the aircraft, and the many other costs associated with operating an airline is extensive. Angotti said: “simply put, no airline can survive long-term with the low passenger counts we have been seeing. The talk of significant flight reductions and staff reductions is inevitable and will likely happen sooner rather than later.”
David Angotti: “By law, each airline is required to report certain profitability and operational metrics to the U.S. Securities and Exchange Commission (SEC) on a periodic basis. Our data research team accessed these public filings and developed a model that illustrates the profitability potential of a 1,000-mile flight with 216 seats. Since the revenue metrics are based on industry-standards including the breakeven load factors, cost per available seat mile (CASM) and total revenue per available seat mile (CASM), we have an extremely high degree of confidence in the accuracy of the data model.”
Some of the data points processed by the algorithm and data interactive include:
- Breakeven Load Factors by Airline
- CASM (Cost Per Available Seat Mile) – The total cost to operate each seat per mile averaged across all flights
- TRASM (Total Revenue Per Available Seat Mile) – The total revenue to operate each seat per mile averaged across all flights
- Number of seats on a sample flight
- Number of miles on a sample flight
- Maximum potential operational loss for the airline
- Maximum potential operational gain (profit) for the airline.