COVID 19: United Airlines offers insight on demand patterns


Throughout the progression of the COVID-19 pandemic in the US United has offered candid assessments of how the crisis will affect its operations, and has often modelled for a worst case scenario. 

The airline has largely been slower to add capacity back into the market than its larger US airline peers, and as a rapid climb in US case counts has occurred during the last few weeks, United, American and Delta have all been forced to rein in some of their planned capacity increases for Aug-2020. United aims to tilt most of its capacity to leisure and visiting friends and relatives (VFR) markets, since corporate demand remains severely depressed.

United has also concluded that the decrease in demand will reach 50% and plateau until a vaccine is widely distributed, the timing of which is tough to determine. 


  • United is expecting revenue headwinds in 3Q2020 as demand has currently stalled, and its passenger revenue for the quarter is projected to fall by 83%.
  • Close-in demand has fallen off as some US states are instituting quarantines on travellers arriving from other regions of the country. 
  • The airline has concluded that demand, measured by revenue, will reach a decrease of 50% and plateau until a vaccine is widely available. 

United feels the pain of a pullback in demand triggered by rising COVID 19 cases 

Back in Mar-2020, as the spread of the COVID-19 virus was triggering 'stay at home' orders in the US, and before the country instituted a ban on travellers from Europe, United offered a worst case scenario for a decline in revenue.

At that time, the airline’s current dire scenario-planning assumption was a revenue decline of 70% in Apr-2020 and May-2020, 60% in Jun-2020, 40% in Jul-2020 and Aug-2020, 30% in Sep-2020 and Oct-2020, and 20% in Nov-2020 and Dec-2020. 

See related report: COVID 19: US airline capacity plummets as demand vaporises 

Since that time, US airlines have parked thousands of aircraft. 

US aircraft in service and inactive aircraft, as of 23-Jul-2020

Although demand was moving off near zero in May-2020 as some states began to reopen, the spike in cases in Jun-2020 and Jul-2020 has stalled that recovery. United’s total revenue in 2Q2020 fell 87% year-on-year on a capacity decrease of 88%.

For 3Q2020, United expects its capacity to drop 55% year-on-year, and passenger revenue to drop 83%, compared to 93.5% in 2Q2020. During the second quarter United’s total revenues were boosted by a 36.3% increase in cargo revenue. 

“The recent uptick in COVID [19] cases in late June and early July have temporarily stalled demand improvements we have seen in June”, said United's chief commercial officer Andrew Nocella. He warned that United’s unit revenue in Jul-2020 and Aug-2020 would not be as good as late in June-2020, given aviation industry dynamics, stalled demand “and our own capacity increases”. 

In light of that stalled demand, United has cut its capacity for Aug-2020.

The airline now plans to fly 35% of its schedule from the year prior, versus previous projections of 40%. Data from CAPA and OAG show that for the week of 17-Aug-2020, United will represent nearly 13% of the seats deployed into the US domestic market.

Obviously, airline schedules are extremely fluid, and these levels could change. 

Percentage of US domestic seats by airlines for the week of 17-Aug-2020

United is planning to tilt its capacity to leisure and visiting friends and relatives (VFR) markets, said Mr Nocella.

He explained that United saw high close-in demand in May-2020 and early Jun-2020, but that tapered off as some states initiated quarantines for travellers arriving from other states that had growing numbers of COVID-19 cases. 

The US states of New York, New Jersey and Connecticut, have expanded their quarantine requirements to 31 states. Anyone travelling to the tri-state area from those states has to self-isolate for two weeks and be tested for COVID-19. 

In Jun-2020 those states (NY, NJ and CT) issued a quarantine requirement for travellers arriving from Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Texas and Utah. The climbing caseloads resulted in Texas putting its planned reopening on pause.

“Once things start to get back on the road to recovery, I do expect the booking curve will have moved closer in”, Mr Nocella said. 

United offers insight into how a recovery in demand is tied to widespread vaccine coverage 

According to Mr Nocella, United’s “best guess” is that demand, measured by revenue, “will recover over time to be down approximately 50% and then plateau at that level until a vaccine is widely distributed”. 

The company’s management fielded an important question about shrinking the gap from an 83% decline in revenue in 3Q2020 to a 50% decrease. United CEO Scott Kirby stated that the air filtration on an aircraft, along with mask and cleaning policies, makes an aircraft “a uniquely safe environment”. 

In order to reach that 50% benchmark it is important for United and the industry to ensure that individuals understand that flying can be safer than driving for 13 hours, said Mr Kirby. That should lead to a reasonable recovery in VFR traffic, but other forms of leisure travel will not get back to 100% in the immediate future. 

Mr Kirby also believes that “business demand will start to come back” – but in small groups. Large conventions that draw big crowds, such as the annual Consumer Electronics Show in Las Vegas, are not expected to resume for some time. 

All of those elements will help drive revenues to a 50% decline. “And then I think there will be a rapid recovery once we kind of get to a widespread vaccine”, said Mr Kirby. 

An uncertain delivery time for a widespread vaccine clouds a recovery in demand 

The current fluidity in demand is unlike any time in the history of aviation, and it is creating tough challenges for airlines as they attempt to deploy capacity into the marketplace. 

Although no entity is definitely declaring the pace of a recovery, United appears to have offered a reasonable assessment of the demand trajectory pre- and post-vaccine.

However, the timing of a widespread vaccine being available remains undetermined, placing another layer of uncertainty on a recovery of demand. As Mr Kirby noted, it will "require multiple vaccines that have been tested, found to be effective, manufactured, distributed and given to a wide percentage of the population.”

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