I regularly write about new flight routes. But I recently received an email from a reader who pointed out that we don’t pay the same attention when an airline pulls out of markets shortly after its arrival.
“I would also like to see an article on all of the new routes they have already phased out, such as a majority of their flights to Nashville,” Kirsten Petterson said in the email. “I feel like they continue to get all this press around their expansion, but they’ve retreated to other markets and it hasn’t gotten any press.”
It was a reasonable question: How do airlines decide where to fly? And how often is it that flights are choppy, even after fanfare about new routes?
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Bijan Vasigh is a professor in the Department of Accounting, Economics, Finance, and Information Sciences at the David B. O’Maley College of Business at Embry-Riddle Aeronautical University, and he said it’s quite common for airlines – especially newer airlines – to and add routes regularly cut back as part of their growth plans.
“You have to test the markets,” he said. “If a route turns out to be unprofitable, they will exit that market and move their assets to more profitable markets.”
How do airlines decide where to fly?
According to Vasigh, most airlines have entire teams tasked with analyzing potential routes for demand and profitability, and with high upfront costs of launching flights to a new city, airlines are typically careful to ensure there is sufficient demand appears to be present after a new flight.
Sometimes, he added, cities or airports will create financial incentives or other perks to attract new air services, but airlines typically won’t stay unless demand is self-sustaining.
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“About four or five years ago, Daytona Beach gave JetBlue an incentive to begin service from Daytona Beach to New York City,” he said. “JetBlue came into this market, after two years they realized that this market does not generate the level of revenue that they can generate from other destinations,” so the airline shortened the route and reallocated the planes.
When Avelo Airlines began service from Wilmington, Delaware on February 1, even the airline’s CEO admitted there was some trial and error in opening new routes.
“It’s too early to know if this will work,” Avelo CEO Andrew Levy told USA TODAY. But he added that early signs gave him reason to be optimistic.
“I feel even better now that we’re seeing three months of sales data,” he said.
How often do airlines cut routes?
Vasigh said it’s very common for airlines to optimize their networks and while there are some costs associated with moving out of a city, it’s relatively easy to do when a location just isn’t viable.
“If this market doesn’t generate enough revenue for them, they can take their highly mobile assets, their assets are planes, they can use them in another market,” he said.
Such changes were particularly common during the peak of the pandemic. As travel demand collapsed and borders closed, airlines were forced to relocate their planes to locations where they could still fly, and in many cases had to ground planes temporarily.
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Now that demand for flights has largely returned, airlines are poised to grow and test new markets.
Established airlines, Vasigh said, already tend to have high aircraft occupancy rates, but newer airlines often need to grow quickly, both to make the most of their aircraft and to achieve the economies of scale needed to make numbers work in the airline business.
“New airlines need to grow aggressively to reach a size that is optimal to drive down costs,” he said.
Much of this growth can often come from trial and error, as newer airlines don’t always have as much market data available as incumbent airlines, although even more established airlines sometimes launch new flights only to find that demand is never quite as high as expected .
Zach Wichter is a travel reporter based in New York. You can reach him at [email protected]