To say it has been a whirlwind month for those who live in Washington, DC would be an understatement. It has been an absolutely insane month, truth be told. Now, American is pulling back at its primary airport in the region, Washington/National, or DCA, and I’m guessing that these two things are directly related.
Just think about everything that region has had to endure since inauguration day. With the new administration in “slash and burn” mode, it seems that about 75,000 federal employees took an early-out and left while more than 30,000 have been laid off. Not all of these are in DC, of course, but DC has a high percentage of its population that works for the federal government — probably at least 20 to 25 percent if you include contractors — so that means there is likely to be an outsized impact on the region.
But the impact on airlines is not just from those who have lost their jobs or even those who work for the feds. Think about the entire DC ecosystem. There are consultants and lobbyists and restauranteurs and so many more who make a living based on what happens in the federal government. And right now, the federal government is looking for austerity spending to guide the way.
This creates the first hit to air travel demand. There are fewer people in the federal government and the government is cutting back spending, so there is likely to be less demand for those traveling on or to government business in the region. Less business travel means lower demand for flights.
There are obviously still hundreds of thousands of people who live in the area and haven’t lost their federal jobs, but… they are worried they might. There is a tremendous amount of uncertainty in the region, and what does that mean? People are more afraid to spend on unnecessary things that might deplete savings.
This brings us to the second hit to air travel demand. When people lack certainty, they spend less and travel is one of the first things to see cuts. That means air travel demand will drop on the leisure side as well.
This is already a bad story, but if that’s not enough, well, we can’t forget the accident at DCA last month. Yes, the loss of so many lives was a national story, but it always hits people harder when it’s at your home airport. On top of that, you have the delays that resulted when capacity was reduced. It just feels harder to travel by plane in the DC area, especially if using DCA, and anxiety is rising. That is the third hit to demand in the region since it might cause some to delay travel plans — or pick a different mode of transport — even if they have the money. I don’t think this is a major driver, but it’s icing on the top of this demand-dropping cake.
With demand on the ropes, what can airlines do? DCA is slot-controlled, so American can’t just cut back on flights without risking losing the slots in the future. So, it is doing the next best thing and downgauging to smaller airplanes.
For the May schedule — probably the closest one that can be adjusted without causing severe pain for travelers — American filed several downgauges from 128-seat A319s to 76-seat regionals. We imagine we will see future months get the same treatment. What dropped?
- Atlanta 1x daily to CRJ-700
- Boston 1x daily to Embraer 175
- Burlington 1x daily to CRJ-700
- Charleston (SC) 1x weekly to Embraer 175
- Fort Myers 1x daily to Embraer 175
- Fort Walton Beach 1x daily to Embraer 175
- Hartford 1x daily to Embraer 175
- Indianapolis 1x weekly to CRJ-700
- Jacksonville 1x daily to Embraer 175
- Pittsburgh 1x daily to Embraer 175
- Providence 2x daily to CRJ-700
- Raleigh/Durham 1x weekly to CRJ-700 and 1x weekly to Embraer 175
- Syracuse 1x weekly to Embraer 175
Where are all those A319s going? Well, here’s a map we published in Cranky Network Weekly this week showing that they are being scattered around in various places where American thinks it can make more money than it can flying them in DC.
Looking at a sample week using Cirium data, that cuts about 2.5 percent of departing seats for the airline at DCA. This is not a big number, but it’s also an easy cut to make. If things continue to drag on or even get worse, then I’d imagine American will have to take an even harder look at what it is planning to fly.
This could very well be the proverbial canary in the coal mine. The actions of the federal government won’t just impact DC, and an economic slowdown is a real possibility here, if not likely. It may be time to strap in and get ready to ride out some, shall we say, less robust times.
