Wednesday, March 11, 2020

Schedule Reductions: Spirit's Day-of-Week Approach and RDU Reductions

Yesterday at the JP Morgan Industrials conference, airlines did not have a lot of great news. As we all know, booking rates continue to be extremely dry as the Coronavirus continues to spread across the United States. United was extremely blunt in their assessment. Booking and revenues are terrible. But the employees of United should be incredibly proud of their new CEO. Scott Kirby did not sugarcoat the situation, and they appear to have a plan (or plans) in place to keep the airline operating in the most economical condition. Other airlines have capacity reductions and soft booking trends, but no one was as blunt in their assessment as Scott Kirby. 

But United is not the target of today's post. Instead, Spirit, along with multiple other carriers, announced capacity reductions effective in April as well. Spirit announced they were decreasing their capacity by ~5% in April. While this was not unexpected, I did not expect their capacity would be loaded while they were discussing these reductions. Thankfully my provider loads schedules nightly, so we have a sneak peek at Spirit's schedule. 

Spirit has kept its reductions almost entirely isolated to the April travel window. These reductions can be summed up in a few parts: Day-of-week reductions to/from leisure destinations and larger Spirit cities as well as Raleigh-Durham deferrals and exits.

Spirit's day-of-week cuts were the most substantial reductions in their network. In Spirit's 3/7 published schedule, there was minimal variation in day-of-week flights for Spirit's operation. This trend currently continues in the published May schedule. However, based on the guidance other carriers are providing, I think it is safe to say we will likely see Spirit extend these Tuesday, Wednesday, and Saturday reductions. This approach at least keeps the network somewhat whole on other higher demanding days. 

The vast majority of the Tuesday and Wednesday reductions were associated with Fort Lauderdale, Orlando, and Las Vegas. None of these targets should be a huge surprise since they are more significant in Spirit operation. Also, given these are more leisure-focused cities, demand tends to be softer during the middle of the week

Finally, Spirit took their ax to their Raleigh-Durham operation. Towards the end of April, RDU was scheduled to increase to 7 daily departures. In the last schedule, the city will drop to as low as once a day service to New Orleans. There's a lot of moving parts to get Raleigh-Durham to where they are at:
  • Boston service is canceled effective 4/4 (re: American entrance)
  • Baltimore service will be suspended from 4/4 through 4/22
  • Fort Lauderdale and Orlando will be cut on Tuesdays and Wednesdays during the first half of April 
  • Chicago service scheduled to begin 4/22 will be deferred until 5/4
  • Detroit service scheduled to begin 4/22 will be deferred until 6/10
When Spirit only operates once daily service to New Orleans, it really feels out of place. During this period, Spirit drops all of their large focus/hub cities, but keeps New Orleans. This feels as if they had to keep something in RDU on these days or they have found a relative goldmine no one else is operating. I’m betting the former. The flight might have been just too difficult to remove from the schedule compared to FLL and MCO.

While all of these cuts are unfortunate, I think it is pretty clear cuts will be the new normal for the foreseeable future. I expect to see schedule reductions by JetBlue, Delta, and American to be filed over the next few days. As they come out, I will try to get a post out as soon as possible. 

As you will see at the end of all of these posts, please reach out if you need help. I am happy to refer you to a few great consulting groups. If you need data to run your analysis, please feel free to reach out to Airline Data, Inc. Their tool made it possible for me to capture Spirit's schedule load so early. 

For any referrals, I do not get any commissions. I just want you to have access to quality analysis and data as we all work through this together. While you will not stop capacity cuts from coming in this environment, do not lose your messaging to your board or your community if you wait until airport activity reports start coming in. 

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