American Airlines could drop up to 30 cities this fall because of coronavirus

Aug 13, 2020

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American Airlines is considering ending service to up to 30 smaller cities across the U.S. as travelers continue to stay home due to the coronavirus pandemic.

The Fort Worth, Texas-based carrier is still evaluating possible suspensions and would make any changes after minimum-flight service requirements under the federal coronavirus aid package, or CARES Act, end on Sept. 30, a source familiar with the airline’s plans confirmed to TPG.

American declined to comment. The news was first reported by CNBC.

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The fact American is considering ending service to so many destinations is indicative of just how bad the situation is for airlines. Far fewer people are flying this year than last, with the latest Transportation Security Administration (TSA) screening data showing numbers hovering at around just 30% of 2019 levels.

Of those travelers who are flying, they are predominantly going to holiday destinations with a lot of space — think beaches and mountains — or to visit family. Business travel is nearly non-existent and few expect corporate flyers to return in significant numbers until at least 2021.

This leaves most U.S. airlines in a bind. They continue to serve the vast majority of the cities on their domestic route maps — as required by the CARES Act —  even as many carriers are now flying just over half of the seat capacity of what they offered in 2019. Analysts widely agree that the aid provisions have led to unnecessary levels of service considering the number of people flying.

Related: Airlines may face a tough fall after that summer uptick

“We know from the airlines that some markets are just not covering variable costs,” Kevin Schorr, a vice president at air service development advisors Campbell-Hill Aviation, told TPG. “If an airline cannot cover the cost of fuel [and] the cost of flight crews — how can you argue that an airline should serve those markets?”

Schorr added that every airline, not just American, is likely considering similar cuts this fall.

News of American’s possible cuts also comes as pressure mounts on Congress to extend CARES Act airline employee protections through March 2021. While the effort that has been led by airline labor unions would temporarily preserve tens-of-thousands of jobs, it is unclear whether the air service rules would be extended too.

Related: Should Congress dole out more money for airline employees?

Under the first CARES Act, the U.S. Department of Transportation has the authority to mandate service levels through March 2022. However, it only elected to do so through Sept. 30 and, in March, told airlines that it would notify them by Aug. 1 if it planned to extend the requirements. The regulator has not notified airlines of any changes.

“We’ve been hearing the threats about job cuts… and now we’re hearing threats about service cuts, which I don’t think people have been really thinking about,” said Schorr.

The news that American is considering ending service to up to 30 small cities could ratchet up the pressure from local leaders on Congress to extend the CARES Act airline employee protections — and flight schedule requirements — he added.

Related: American ends service to Oakland, is first US airline to permanently drop a city after coronavirus

American has dropped just one U.S. airport from its map since the pandemic began. In June, the airline exited Oakland (OAK), which is located a short drive from San Francisco (SFO) and San Jose (SJC) airports in California’s Bay Area.

The carrier has also temporarily suspended service to Worcester, Massachusetts (ORH).

American has not indicated what cities it could cut this fall. However, airports that could disappear from its map would likely be ones that rely more on the business travel that has yet to return since COVID-19 hit. Other options could include smaller airports — like Oakland and Worcester — that are close to other nearby major airports, for example Boston (BOS) in Worcester’s case.

The carrier could also lean more on its new partners Alaska Airlines and JetBlue Airways to get travelers to smaller destinations. For example, this could mean American ending service to somewhere like Eugene, Oregon (EUG) and connecting flyers onto Alaska, or exiting Worcester and codesharing there with JetBlue.

Related: How will airlines rebuild their route maps after the coronavirus?

In all past recessions, be it 9/11 or the Great Recession, airlines have shrunk their route maps and ended service to some cities. For example, American ended service to five U.S. cities as part of a broader schedule contraction after 9/11.

Analysts and airline executives have warned that similar cuts are necessary this time around. And they are already occurring internationally where flights are not protected by the CARES Act. American has cut six long-haul destinations altogether, ranging from Berlin (TXL) to Brasilia (BSB) and Casablanca (CMN).

Under its latest forecast, the International Air Transport Association (IATA) does not expect air travel to return to 2019 levels until around 2024.

Related: American Airlines ends 6 LAX routes as Alaska partnership expands

Featured image by DANIEL SLIM/AFP via Getty Images.

 

 

 

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