Economic Snapshot Overview by Dr. Reid Cummings - August 2020
Posted on August 26, 2020 by Dr. Reid Cummings
Greetings, and welcome to the August 2020 Mobile Bay Economic Snapshot.
The COVID-19 pandemic brought about significant changes for all Americans, indeed, for people across the globe. In so many ways, dramatic shifts in attitudes, habits, and routines, have led to changes in processes, structures, and policies. From the onset of the pandemic only a few months ago, individuals, industries, institutions, and companies faced the reality that things were vastly different, and most likely, would be so for some time.
The question on the minds of many since then is how long ‘some time’ will be? While no one has a clear answer to the question, we do see signs of improvement. In recent editions, we highlighted the many positive signs experienced by residential real estate markets. This month, we examine one of the industries hardest hit by the pandemic: the airlines. Though passenger traffic is still down year-over-year, the good news for our region is that air travel is on an upward trend. Our newest dashboards for Mobile and Pensacola airports help tell the story.
Through July, total passenger traffic is down for both airports year-over-year, with Mobile off -70.8% and Pensacola down -71.3%. Passenger traffic declines for both airports began in mid- to late-March, and by far, the worst month was in April when much of the regional and national economies were in shutdown mode. Beginning in May though, passenger traffic for both airports has steadily been on the rise and finished July with the best monthly performances since April.
Airline market share is another interesting story. While we cannot gauge any impacts of Coronavirus-related federal funding for the airline industry, or how different airlines reacted to the downturn, we can illustrate the market share changes among the major airlines servicing Mobile and Pensacola airports. For February, Mobile’s major carrier market shares were 37% for American Airlines, 37% for Delta Airlines, and 22% for United Airlines. Pensacola’s February numbers were 35% for Delta, 33% for American, 13% for Southwest Airlines, and 11% for United.
By July, things were much different in both markets. In Mobile, American and United increased their market shares, rising to 56% and 24%, respectively, while Delta lost market share, falling to 20%. In Pensacola, American and Southwest increased their market shares, finishing at 40% and 33%, respectively, while Delta and United fell to 15% and 5%, respectively. But what is to come? To help us look ahead, we reached out to airport executives in Mobile and Pensacola.
Chris Curry, President, Mobile Airport Authority: “The impact of COVID-19 has been devastating to the airline industry and Mobile Airports, with April being the worst month thus far. Our traffic levels decreased by 90% and we lost Frontier Airlines’ direct service to Orlando. Traffic has since improved to a 50% level.
Despite the overall impact of the pandemic, the Mobile Airport Authority has forged ahead with the completion of our Master Plan for the Mobile Downtown Airport. The emergence of a new International Airport in Downtown Mobile will allow us to better serve our residents in Baldwin and Mobile counties and further advance logistical synergies with the Port of Mobile.”
Matt Coughlin, Executive Director, Pensacola International Airport: “In the aftermath of the pandemic, airlines are working to develop strategies to meet new demands in the marketplace. Pre-COVID-19, we viewed Pensacola’s market as having three distinct lines of customer travel: leisure, business, and military. This diverse customer base will continue to provide us a steady, more consistent way forward. For many airports that are more reliant on a single customer base, recovery could be a challenge.
Our current numbers indicate our diverse customer base is a beneficial competitive advantage for us. Our most recent weekly numbers are down 41% from a year ago, while we see national enplanement decline rates of as much as 70%. Relatively, we are well situated for recovery and view this time as an opportunity to get ahead of the next growth cycle.”
Airports in Mobile and Pensacola are crucial not only for area businesses and residents, but also for our regional economy. Given these trying times, it is promising to see such important economic contributors on the upswing and all signs point to continued improvements in the months ahead!
Until next time, from everyone at the Center, we wish you and yours all the best.