The great United Airlines Australian capacity dump of 2023 and 2024

The recovery of international air travel to and from Australia since the COVID-19 pandemic has been characterised by cautious approaches from both Australian and foreign carriers. Extended border closures combined with challenges returning aircraft to service have plagued airlines across the world. In the year to February 2023, data from our Analytic Flying Capacity Tracker shows international seat capacity to Australia was 11% lower than its pre-pandemic baseline. While Qantas’s capacity was 13% lower, many of the largest foreign carriers in the Australian market experienced even larger declines (e.g. Emirates down 18%, Singapore down 15%, and Cathay Pacific down 33%).

One exception has been the Australia - United States market where all US carriers have returned all of their pre-pandemic capacity and then some! Combined seat capacity by US carriers surged 29% over their pre-pandemic baseline while capacity by Australian carriers plummeted by 46%! The most prominent growth has come from United Airlines who have increased capacity on Australia routes dramatically, providing 60% more seats compared to their pre-pandemic baseline.

Following the recent publication of United’s financial results, an article on Cranky Flier highlighted the poor performance of United’s Australian routes over the Christmas and New Year period, with load factors plummeting alongside seasonal capacity increases.

We’ve opined on the Australia-US (and New Zealand-US) market on social media in recent months, arguing that Australian and New Zealand carriers face different headwinds compared to their US counterparts, affected by differing macroeconomic conditions, markets, and geopolitical consideration.

We wanted to follow-up and explore the Australia-US market in more detail, exploring why US carriers are liberally adding capacity to Australia while their Australian counterparts appear very cautious returning capacity to one of their largest and profitable markets. Our apologies in advance for the length and detail of the analysis - it’s worth it!

Australia-US market: how has it changed since the pandemic?

The Australia-US market is yet to fully recover from the COVID-19 pandemic. Seat capacity in the 12 months to January 2024 was only 77% of the pre-pandemic baseline (i.e. 12 months to January 2020). However, the recovery has accelerated with January 2024 seat capacity 91% of January 2020.

An important detail in the post-pandemic capacity recovery is that US carriers have returned capacity more rapidly than Australia carriers. In the 12 months to January 2024, seat capacity by US carriers was 140% of the pre-pandemic baseline, while Australian carriers only delivered 46% of their former capacity.

Note: we use the US DOT T-100 data for this analysis rather than the usual BITRE data in our Capacity Tracker since the US data is more granular. Furthermore, for the purpose of this analysis we limit the data to the mainland US.

The most significant contributor to the slow return by Australian carriers was the withdrawal of Virgin Australia’s long haul flying during bankruptcy. In the year to January 2020, they contributed 18% of total Australia-US seat capacity (28% of the capacity provided by Australian carriers). Their withdrawal contributed significantly to the overall capacity loss. Virgin’s withdrawal doesn’t explain it all, with Qantas only returning 64% of their former capacity compared to their pre-pandemic baseline.

The most significant contributor to increased US capacity was United. In the year to January 2024, United have returned 141% of their pre-pandemic capacity, compared to 119% and 97% by Delta Air Lines and American Airlines, respectively. Due to their much larger pre-pandemic baseline, United accounted for 89% of the net capacity increase.

Capacity delivered by US carriers shows far more seasonal variation than their Australian counterparts. When considering only the last three months (November 2023 to January 2024) to the same period in 2019 and 2020 we observe more dramatic increases by United, American and Delta (185%, 105% and 181%, respectively).

If you build it, they will come!

Even with Ray Kinsella like optimism, people won’t just fill seats because airlines provide them. The argument has been made that the dramatic increase in airline capacity within the European Union in the mid-1990s resulting from the combination of deregulation and the growth of low cost carriers stimulated demand sufficiently to absorb the additional capacity. However, Europe is not comparable to trans-Pacific long haul flights. In Europe, cheaper flights meant flying was displacing demand from other forms of transport like ferries, trains, busses, and cars.

Good luck driving a car or taking a bus from Los Angeles to Sydney, but what about stopover carriers? Unlike many long haul markets, there are limited stopover options between Australia and the United States. Data presented to the Australian Competition and Consumer Commission (ACCC) during the Qantas-American Airlines joint venture approval process indicating that 82% of the market was served via direct flights (in 2019). Many stopover options align with existing joint venture arrangements, reducing the incentives for carriers to promote these routings. For example, United’s additional direct capacity to Australia could displace capacity provided as part of their joint venture with Air New Zealand (New Zealand accounts for 6% market share between Australia and the United States).

All else being held constant, large capacity increases are going to have a significant effect on prices and yields, ostensibly decreasing both. Lower prices can stimulate demand, making Australia more competitive as a destination to US travellers, and vice verse. This argument that supply creates demand is tenuous since it is dependent on the balance between destination specific business and VFR travel. Nevertheless, let’s consider what the data tells us.

Now you built it, did they come?

The simple answer is no! The post-pandemic capacity recovery was carefully managed by airlines, with the total market load factor remaining above 80% from June 2022 through to January 2023, falling below 80% for the four months between February and May (low season), recovering again in the June and July holiday season. However, the increase in seasonal capacity from November 2023 through January 2024 coincided with a dramatic slump in load factors to 60% in November and December, and 70% in January. Comparatively, the load factors in the same months a year earlier were 81%, 84%, and 82%, respectively.

Reviewing the absolute numbers shows just how poorly the market performed and how this was driven by an oversupply. Passenger numbers increased significantly in December and January compared to previous months, but this was insufficient to support even larger capacity increases. 525,147 passengers traveled between Australia and the US in November, December and January. This was 53,723 more than the previous year, but airlines put on 229,812 more seats than the previous year. Thus, only 23% of the additional seats were occupied.

As previously identified, much of these capacity increases were driven by United. Of the 229,812 additional seats, United provided 52% alone. Separating United from other carriers highlights that United’s poor performance was not systematic. United’s combined load factor over these three months was 58%, compared to 81% the previous year. All other carriers combined for a load factor of 72% compared to 86% the previous year. Of the 119,034 seats that United added to the market, only 8% were occupied, compared to 33% of the additional 110,778 seats added by all other carriers combined. Traffic patterns do vary directionally by month, however the poor performance doesn’t appear to have been a result of the direction of flow (i.e. flights were not going out empty and coming back full, or vice versa).

This is grim reading for United, but to assuage accusations of this analysis being a hit piece on United, let’s also consider the same metrics for others. Clearly, Delta and Qantas also added significant capacity, at similar relative magnitudes. While the incremental load factors of all carriers are not great reading, United’s performance appears somewhat diabolical. While Delta’s incremental load factor was fairly poor, only filling 28% of the additional seats they provided, the absolute effect was limited. Ordinarily, Qantas may have been disappointed with an incremental load factor of only 49% given their larger absolute numbers, but they are likely satisfied with their relative performance.

What were United thinking? The increase in capacity was not an accident, but it does raise questions what their strategy was. The magnitudes are simply too large to be incremental growth exceeding market expectations. Furthermore, it’s also clear that United weren’t alone, but why were United so much more aggressive in adding capacity, and did they get it wrong?

Interlude: there is nothing to fear but over capacity

In a social media discussion a few months ago we argued that one of the most frightening things for an airline network planner is over capacity. We weren’t referring to route specific over capacity, but systemwide over capacity. Modern aircraft are incredibly expensive to acquire requiring airlines to invest huge sums of capital compared to many other businesses. For example, in recent years Qantas has spent 13-16% of sales in capex. Comparably, Australian supermarkets behemoths Coles and Woolies have only spent 3% of sales in capex.

If an airline has a fleet of older aircraft, many will be fully depreciated or paid-off, allowing them to reduce capacity with little cost by storing or retiring aircraft. However, if an airline has a newer fleet they’ll be under pressure to utilise it as these aircraft will still be attracting depreciation or loan payments even if stored. With new aircraft widebody aircraft costing hundreds of millions of Dollars, parking an expensive asset in the desert gathering dust while depreciation is being raised and debt payments draining cash is simply not an option.

Tis but a scratch

Australia represents a very small portion of the total long haul capacity of US carriers. For example, in 2019 Australia represented just 1.2% of American and Delta’s long haul seat capacity, and 3.2% of United’s. It’s somewhat obtuse to view their capacity allocations to Australia in isolation of macro trends.

Prior to the pandemic, US carriers dedicated a significant portion of long haul seat capacity to Asia, particularly China and Hong Hong. While international travel has recovered in most of the world, recovery of travel to and from China and Hong Hong has lagged. Notably, capacity returns between the US and China have also been complicated by Bilateral Air Service Agreement limitations.

Rather than restoring previous entitlements, the US and China have returned entitlements in a phased manner. From March 2024, US and Chinese carriers were each allowed to operate 50 weekly round trips between the two countries, up from 35 per week in the preceding months. This is just one third of the 150 weekly round trips allowed before the pandemic. Furthermore, US airlines have lobbied the Biden administration not to increase capacity, citing “unfair” advantage that Chinese carriers have by exploiting Russian airspace.

In 2019, United dedicated 12.3% of their intercontinental seat capacity to China and Hong Kong, compared to 6.8% and 6.5% at American and Delta, respectively. Collective, this amounted to 2.4 million seats, of which only 16% have been returned to the market. All else being held constant, the three airlines need to reallocate approximately 2 million seats annually, of which nearly half belong to United given their relatively dominant position in those markets!

So how did the airlines reallocate this capacity? United dramatically scaled up capacity to Europe, Africa, and Oceania. In absolute terms, most of this was directed at Europe (1.1 million seats), but in relative terms their largest increases were to Africa and Oceania, with Australia receiving the bulk of the latter, adding 175,000 seats (56% increase).

Comparatively, American didn’t significantly reallocate capacity from China, choosing to reduce network capacity substantially (back to this shortly). Delta reallocated capacity broadly across the network. Higher relative capacity increases were applied to Africa and Oceania, including a 25% increase in capacity to Australia, however this represented a smaller absolute increase (only 26,500 seats) due to their smaller baseline capacity.

United seems to have gambled on increasing network capacity with total seat capacity increasing by 806,000 seats (8% increase). Delta also increased network capacity, but by a significantly smaller amount of 289,000 seats (3%). On the other hand, American pursued a more cautious approach, reducing network capacity by 669,000 seats (8% decrease).

It’s clear that one can’t view the increased capacity to Australia by US carriers outside of their macro context. Since Australia is a relatively small part of their global capacity, their macro choices affect downstream allocations. When they’ve chosen to increase the aggregate capacity it’ll have downstream affects through the network, augmented by other network decisions. It’s also important to consider how and why the carriers ended up with increasing or decreasing capacity, and how deliberate were these decisions.

Pandemic roulette?

In the wake of the COVID-19 pandemic, most airlines took dramatic steps to cut capacity including the accelerated retirement of aircraft and placing a large portion of their remaining fleet in long term storage.

In Australia, Qantas’s fleet strategy during the pandemic focused on three key elements:

• Retirement of older aircraft that had limited carrying value of outstanding debt. This included accelerating the retirement of their 6 remaining B747-400ERs that had been slated for retirement in the coming year, as well as two A380s.

• Deferring deliveries of new aircraft including three outstanding B787-9s to conserve capital.

• Placing of larger aircraft in long term storage (ten of their twelve A380s and several older A330s) and limiting remaining long haul flying to smaller aircraft (e.g. B787-9s and A330s) to limit capacity and cost risk. If you were going to be flying rather empty aircraft, you’d rather that be a smaller aircraft with lower trip cost.

Importantly, Qantas kept their newest aircraft flying (all B787-9s and most A330s), operating ad hoc charters and repatriation flights, but mostly carrying cargo. While they also served the purpose of limiting cost risk, this also limited the fiscal impact of impairments or debt refinancing given their precarious liquidity position at the time. However, this created serious constraints on the airline scaling-up capacity in the last two years.

Returning the A380s from storage has been met with a range of challenges including short term overcapacity risk, limited heavy maintenance capacity as many aircraft were due major checks, and supply chain issues affecting cabin refurbishments. Rescheduling of deferred deliveries of B787-9s were also impacted by Boeing’s well-publicised certification issues.

Primary research conducted for this analysis shows that US carriers responded very differently to each other. American took the opportunity to simplify their fleet by retiring both the A330 (24 aircraft) and B767 (15 aircraft) fleets. While they received 3 new deliveries (B787s) in the next year, by February 2021 their long haul fleet was 24% smaller, reducing their total seat county by 22%. Replacement aircraft including previously ordered B787-8s are now slowly recovering capacity, but their fleet and seats capacity remains well below the pre-pandemic baseline (15% and 14%, respectively). This correlated with the previously described declines in their long haul seat capacity.

The A330 retirement surprised many observers as the youngest A330-300 was just 6 years old at retirement. Comparatively, the oldest B777-200 ER was 21 years old at the time and remains active. However, the oldest A330 was approximately 20 years old in early 2020 and a partial retirement of the A330 fleet would have resulted in a very small sub-fleet. Rather than retire a combination of older A330s and B777s, the entire A330 fleet was retired to reduce the number of aircraft types in the fleet. As the smaller or the two fleets, retiring the A330 made sense and shouldn’t be considered a poor reflection on the aircraft’s performance.

Delta also took the opportunity to simplify their fleet by retiring their fleet of eighteen B777-200s (both ER and LR versions) and accelerate the retirement of eleven B767-300s. While they did receive four new aircraft (A330neo and A350-900) in the next year, by February 2021 they reduced their long haul fleet by 15% (reducing their total seat count by 16%). Replacement aircraft including previously ordered A330neo and A350-900 as well as opportunistically acquired second-hand A350-900s has led to a slowly recovering fleet. Delta’s fleet returned to their the pre-pandemic level in December 2022 (number of aircraft), although total seat capacity was achieved a few months earlier (September 2022).

The decision to retire the B777-200 LRs took many observers by surprise given their importance to Delta’s ultra long haul route network and relatively young age (10 to 12 years). Their performance advantage was somewhat of a necessity on these routes (e.g. ATL-JNB, LAX-SYD). The same principle applied to Delta and the smallest fleet was first to go. This may have been influenced by a strong second-hand market for the LRs as demand for freighter conversions surged during the pandemic. The LR is one of the most in demand feedstock for freighter conversions and Delta had no problems selling these aircraft. However, the retirement of the B777s resulted in Delta raising an impairment of US$ 1.4 billion in 2020, however it’s not possible to segment this between the ERs and LRs.

By comparison, United’s response was extraordinary! United made no attempt to accelerate the retirement of older aircraft, even those which are fully depreciated. In fact, United’s only aircraft retirement since the pandemic was a forced retirement of a B767-300 due to the discovery of extensive corrosion during a repaint. United had ample scope for scaling back their fleet with a large number of relatively older B767-300s and B777-200s. In the last year, United even went as far as conducting an extensive repair to a 33 year old B767-300 damaged during a heavy landing, highlighting zero intent to limit or manage capacity.

Not only did they not retire aircraft but they continued taking delivery of new aircraft, including twelve B787s and a single B777-300 ER. By February 2021, the fleet had increased by 5%, and at present is 10% and 12% larger in terms of aircraft and seat capacity compared to the pre-pandemic baseline (note: these data exclude the domestically configured B777-200s which are also still flying).

Some may argue that maintaining capacity could be ascribed to offsetting capacity during the reconfiguration of existing B777s and B787s and the temporary grounding of the Pratt and Whitney powered B777-200 sub-fleet. While the latter was an extensive grounding lasting nearly a year, its occurrence in 2021 was subsequent to most fleet decisions. Furthermore, following the return of the B777 fleet to its full complement they have continued to upgrade and reconfigure the cabins of older B767 and B777 aircraft.

So what was United’s thinking? This is a point of speculation, but were they taking a calculated risk in the hope that the pandemic would be less severe or shorter than others were predicting? Were they making a strategic decision to win market share from other carriers in the post-pandemic aftermath?

This is a topic for another time and outside the scope of this analysis, but United’s differentiation from American and Delta, combined with their greater vulnerability to slower capacity returns to/from China meant that this capacity had to go somewhere. As the data shows, this capacity was allocated far and wide, including Australia. But why have capacity expansions to Australia fared worse than other regions?

Strong dollar, but which dollar?

Travel demand between Australia and the United States reflects a wide range of segments, including significant business, tourist and VFR demand. The simplistic view of network strategy asserts that airlines favour business traffic because it generates high yields and many lay commentators get fixated with this as the primary determinant of a route’s importance and success. Rather, we propose a more nuanced hypothesis affecting the Australia-US market:

1. Market is dominated by sales in Australia with the large majority of point-of-sale occurring in Australia.

2. The strong US Dollar has weakened sales in Australia and boosted sales in the US, but the relative point-of-sale imbalance has meant declines in demand from Australia haven’t been offset by increases in demand from the US.

3. US carriers have stronger catchment of US based sales, while Australian carriers have a stronger catchment of Australian based sales.

4. The market is seasonal, but seasonal variations are more pronounced in US based sales compared to Australian based sales.

The empirical data strongly supports this hypothesis, but we’ll attack the data (somewhat) in reverse order!

Analysis of passenger numbers shows stronger demand between Australia and the US in the northern summer months of June and July, as well as the Christmas and New Year period (December and January). These seasonal trends are evident both pre- and post-pandemic. Furthermore, seasonal trends differ by origin with seasonal trends from the US to Australia being concentrated over the Christmas and New Year period rather than the northern summer months, while Australia to the US is associated with both peaks.

It would be an error to argue that tourism and VFR traffic is the primary driver of demand since seasonal demand increases are significantly smaller baseline demand throughout the year. However, it is likely that tourism and VFR traffic is the driver of seasonal variations in demand. This has significant implications for yields as carriers supplying seasonal increases in capacity may do so at the cost of degrading yields.

The hypothesis argued that the market is dominated by Australian originating passengers. US immigration data allow analysis of this with significant granularity. In 2019, non-US citizens accounted for 68% of arrivals in the US on direct flights from Australia (to US mainland), meanwhile US citizens accounted for 32% of departures on direct flights to Australia (from US mainland). US point-of-sale was weak during the initial post-pandemic recovery period with only 18% in 2022, but recovered to 33% in 2023. Furthermore, US point-of-sale drives the seasonal capacity increases over the Christmas and New Year period with consistent increases in all years.

These data also support the hypothesis that Australian and US carriers have point-of-sale advantages in their home markets. For example, in 2019 US citizens accounted for 48% of departures on direct flights to Australia on US flagged carriers, but only 24% on Australian flagged carriers. These proportions have remained relatively unchanged over time. A simpler interpretation is that 76% of passengers carried by Australian carriers were likely Australian point-of-sale compared to 48% of passengers carried by US carriers were likely US point-of-sale. While less than a majority of passengers on US carriers were “home market” passengers it’s important to remember that 68% of all passengers in 2019 were Australian point-of-sale.

Seasonality and point-of-sale should be considered in the context of macroeconomic fundamentals, particularly foreign exchange rates. The contemporary global macroeconomic climate is one characterised by a strong Dollar - a strong US Dollar that is!

In 2023, it cost an average of 1.51 Australian Dollars to purchase each US Dollar. This was 5% more than 2019 and 12% more than 2018. While the strength of the US Dollar boosts demand for US travel to Australia, it creates a drag on travel in the opposite direction. Since Australia dominates the point-of-sale with 68% of passengers in 2019, strengthening of the US Dollar since 2019 is likely to generate a net drag on market demand as the increase in US demand isn’t large enough to offset the decline in Australian demand.

The impact of the exchange rate on Australian and US carriers is very different given their relative home market point-of-sale advantages. Australian carriers are at a greater disadvantage from a strong US Dollar since 76% of their passengers are likely emanating from an Australian point-of-sale. This provides a strong argument why Qantas have been more cautious returning capacity to the US compared to their US counterparts.

This presents opportunity for US carriers as the expected growth in US point-of-sale would likely be sufficient to offset Australian point-of-sale declines as only 52% of their passengers are likely emanating from an Australian point-of-sale. This goes a long way to explain why US carriers have sought to increase capacity as they would expect to gain a larger of the increased demand from US.

However, this is simply not supported by the data. As previous figures highlighted, total passenger numbers between Australia and the US are still well below pre-pandemic baselines. Immigration data supports the prior findings with a more granular look by point-of-sale. Estimates of total passenger numbers show that the total passengers in the year to February 2024 were 539,000 lower than the same period ended February 2020. Total Australian point-of-sale was down by 388,000 (proxied by non-citizens), while US point-of-sale was down by 151,000 (proxied by US citizens). The latter number is somewhat unexpected since the foreign exchange narrative would support this being positive, even if smaller in absolute terms than the decline from Australian point-of-sale.

While the strong US Dollar has certainly not helped Australian demand and likely weakened it, it has not supported US demand at all, or at least not meaningfully. While US carriers did experience increased passenger numbers from both US and Australian point-of-sale this is to be expected given their increased seat capacity to Australia alongside Qantas’s reduction in capacity. Essentially, they mopped up capacity rather than enjoying the gains of market growth.

Given our interest in recent trends, we should also examine recent trends in exchange rates in more recent months. The relative peak in the US Dollar strength (relative to the Australian Dollar) was 1.58 in October 2024 (18% weaker than the 2018 average). This occurred shortly before the peak Christmas and New Year travel period, ostensibly at a time when many travellers may have been making or solidifying their plans, and an exactly at the time when carriers were starting to implement seasonal capacity increases aligned with the IATA scheduling season which begins in late October. In some respects, existing overcapacity may have been made even worse by further declines in demand once capacity was already committed.

Future prospects

This analysis doesn’t to speculate on the immediate or future system capacity of United or other carriers flying between Australia and the US. It it beyond the scope of this analysis. However, we do anticipate that all carriers will continue to closely monitor and adjust capacity between the Australia and the US.

Qantas have significant short-term fleet constraints and will likely continue to pursue a conservative strategy to the US in the context of the continued exchange rate pressures. In light of this, they will likely favour capacity increases from American, their joint venture partner. This includes American’s recent announcement of new daily flights between Dallas and Brisbane from October 2024. These flights complement Qantas’s existing flights to Dallas from Melbourne and Sydney, and reinforcing the joint venture strategy of shifting connecting traffic from Los Angeles to American’s Dallas hub.

Delta have also made a similar move, adding 3x weekly seasonal flights between Los Angeles and Brisbane from December 2024. However, this flight offsets capacity reductions between Los Angeles and Sydney. In the 2023/24 northern winter season, Delta’s daily flights between Los Angeles and Sydney were supplemented with a second daily flight, however aeroroutes reports that the seasonal flight will only operate four times per week this coming season.

We’re also starting to get a view of United’s plans. Typically, United have adjusted capacity on Australian routes with both frequency and aircraft changers. The latter option provides significant flexibility switching between the B777-300 ER (350 passengers), B777-200 ER (276 passengers) and B787-9 (257 passengers), sometimes at short notice.

Aeroroutes also reports that United will not return their 3x weekly Los Angeles - Brisbane flight this coming season, but will continue their daily San Fransisco - Brisbane flight. San Fransisco - Brisbane will be operated by a larger aircraft, partially offsetting the capacity decline, however the net capacity reduction amounts to between 253 and 638 seats per week. Similar capacity adjustments to Melbourne and Sydney are also likely.

Conclusions

The analysis has highlighted the complex market dynamics that are often overlooked in the public discourse. Superficial explanations do not account for an airline’s macro-level strategic decisions nor do they recognise the impact of macroeconomic trends and local market idiosyncrasies. It highlights how isolated data points can be over interpreted without more comprehensive analysis that using a range of data analysed in context.

This analysis identifies a variety of important trends and supports several conclusions:

1. Capacity between Australia and the US has recovered slowly following the COVID-19 pandemic. The speed of capacity returns have been affected by a multitude of factors including airline strategy, market dynamics and macroeconomic trends.

2. Slow capacity returns are ascribed to the effect of the strong US Dollar and a historical bias towards Australian point-of-sale, complicated by different incentives for Australian and US carriers.

3. The loss of Virgin Australia’s capacity has been consequential although the impact is difficult to assess as other carriers have attempted to cover the shortfall. While not discussed here, Virgin previously partnered with Delta through a joint venture. Since exiting bankruptcy they have entered into a codeshare partnership with United.

4. Qantas’s capacity has also been limited by short-term fleet shortages resulting from retirements, slow deliveries of replacements, and continued delayed in returning aircraft to service. However, their slow return of US capacity likely goes beyond fleet constraints impacted by the strong US Dollar which disproportionally affects them resulting from their historic Australian point-of-sale dominance.

5. United have dramatically increased their global capacity, bucking trends amongst other US carriers. Furthermore, their relatively large pre-pandemic capacity to China and Hong Kong has resulted in an even larger net capacity increase that has been reallocated throughout their global network. This has meant sizeable increases in capacity to most regions, including Australia. Some observers may also point to their partnership with Virgin as supporting their capacity growth, however evidence suggests that United’s strategy is global rather than local.

6. Meanwhile, Delta has also increased their global and Australian capacity but at smaller magnitudes. American has reduced their global capacity limiting their ability to increase their Australian capacity in the immediate aftermath of the pandemic.

7. Seasonal capacity increases over the northern hemisphere winter generated a sharp spike in capacity, with over half of the incremental capacity added by United. The capacity increases were met with poor passenger take-up as passenger demand was still well below pre-pandemic levels. While all airlines suffered from declines in load factors, United’s existing large capacity as well as large capacity increases made them the most vulnerable and consequently experienced the lowest load factors.

Forward scheduling remains surprisingly optimistic. Qantas and Delta are maintaining capacity while American is increasing capacity. United appears to be reducing capacity although at levels still significantly higher than baseline. They appear to be holding course - at the end of the day, unless they reduce system capacity they’ll have to send it somewhere!

This is a vulnerable time for the global airline industry. Will fuel prices rising and airspace closures due to tensions in the Middle East, it’s an “interesting” time for airlines to be stuck with excess capacity. Good luck to them all!