Impact of Covid-19 on Capacity Planning and Revenues

In this edition of mba Aviation’s Insight Series, Steven Harokopus takes a look at the impact of Covid-19 on capacity planning and revenues.

The eight largest US air carriers by revenue have reduced capacity to varying degrees in response to lower demand and in an effort to save costs through smaller operations.

In the first half of 2020, the Subject Airline reduced their offering of available seat miles (ASM) approximately 43%, compared to the same period last year  Despite this drastic reduction in capacity, revenues per ASM decreased by an average of US¢2.6.

LCCs took advantage of their flexibility and maintained more capacity compared to their mainline competitors.  Southwest reduced capacity the least, cutting only 32% with a RASM reduction of US¢4.4.  Among the three mainline carriers American maintained the most capacity allowing them to overtake Delta in revenues for the first half of the year, even with a US¢3.2 reduction in RASM.

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