US Memorial Day air travel drops first since 2020, on higher prices, airline capacity cuts

The unofficial start of the US summer travel season showed a drop in air travel demand year over year for the first time since the COVID-19 lockdowns in 2020, the Transportation Security Administration said May 26, amid headwinds from high fuel prices and airline capacity cuts.

Passenger checkpoint volumes in the five days ended May 25 fell by over 26,000 persons/day from the same time last year to nearly 2.710 million persons/day, according to the latest TSA data. Air travel demand during the US Memorial Day holiday travel period fell to over 328,000 persons/day in 2020 from almost 2.435 million passengers/day in 2019 -- before the COVID lockdowns later that year, according to the TSA.

Multiple US Airlinesannounced capacity cuts in response to elevated fuel costs during the US-Israel war with Iran, and customer demand destruction surfaced during the US Memorial Day holiday travel period.

Platts, part of S&P Global Energy, assessed the US jet fuel benchmark -- Gulf Coast Colonial Pipeline -- at the end of last week at $3.4191/gal on May 21, which is up by $1.0331/gal since the conflict broke out in late February and almost one and a half times higher than the same day last year.

The US jet benchmark rose to an all-time high of $4.7811/gal on April 2, as disrupted oil flows out of the Strait of Hormuz lifted demand for US refined products, Platts data dating back to October 1993 showed.

Spirit Airlines began shutting down operations on May 2, the company said, which could have added to lost demand this year if travelers did not rebook with other airlines. The four biggest US airlines -- American Airlines, Delta Air Lines, Southwest Airlines and United Airlines -- hold more than three-quarters of all US capacity, and Spirit Airlines accounted for only 1.4% before the shutdown, according to OAG.