Via Wolf Street

What the TSA said in its PR stunt and what it forgot to say.

By Wolf Richter for WOLF STREET.

Our dear stock jockeys drove up airline stocks this morning after the TSA said in a press release – reported by the gushing media – that it “screened over 1 million passengers Sunday, representing the highest number of passengers screened at TSA checkpoints since March 17, 2020,”  and that it “screened 6.1 million passengers at checkpoints nationwide during the week (Mon., Oct. 12 through Sun., Oct. 18). That weekly volume also represents the highest weekly volume for TSA since the start of the COVID-19 pandemic.”

OK, that wasn’t “6.1 million” but actually 6.01 million, according to the TSA’s own figures. But fine, a typo by some underling. Happens to me too. We won’t quibble over typos.

But there was zero numerical context, such as the comparison with the same period last year. And this context that the TSA failed to discuss, and that the media then failed to mention, is still unchanged-horrible.

For that week the TSA hyped – the least-worst week “since the start of the COVID-19 pandemic” – passenger traffic remained 64.5% below where it had been last year. And, despite TSA hype, it wasn’t even the least-worst week, as we’ll see in a moment.

Nowhere could you see in the TSA’s PR announcement that, into the eighth month of the crisis now, passenger traffic for the week that the TSA hyped was still down 64.5% from the same period last year. Nor could you see in the TSA’s PR announcement that it wasn’t even the least-worst week, that in fact the least-worst week had been a month ago, which the TSA makes that clear in its own daily figures of passenger throughput. It didn’t try to hide it. It just forgot to mention it, as any good PR stunt would.

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The chart below shows the seven-day moving average of TSA checkpoint screenings this year (red) and last year (black). Last year, screenings surged after Labor Day as business travel took off following the summer calm, and as people with no kids in school started traveling. This happens every year, normally. But it didn’t happen this year. The last data point, the average of the seven days through October 18, covers the week the TSA hyped, and it’s down 64.5% from the same period last year:

But it wasn’t even the least-worst traffic for a seven-day period. It was another TSA PR stunt – in terms of leaving out the important stuff. The seven-day average of checkpoint screenings had been down “only” 62.8% to 64.4%, compared to the same period last year, for four days after Labor Day, involving the calendar mismatch of Labor Day. This chart shows the percentage of how far down airport checkpoint screenings have been for seven-day periods, compared to the same weekdays last year. The least-worst plunge was over a month ago:

What this boils down to is this: Airline passenger traffic, compared to the same period last year, has recovered a little bit from the catastrophic near-zero April lows, but remains down about 64% from a year ago, in a phenomenon I have called the “worst recovery ever”.

While leisure travel has ticked up a little, business travel remains dead. Inflation data by the Bureau of Labor Statistics show that ticket prices have plunged as airlines grapple with the collapse in demand. This combination of ticket prices and collapsed demand caused Delta Air Lines’ passenger revenues, measured in dollars, to collapse by 83% in the third quarter.

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This collapse in demand has given birth to a new metric in the industry: “daily cash burn,” which continues to be huge. To provide fuel for this daily cash burn, airlines are raising tens of billions of dollars, from taxpayers, from investors, from banks, from wherever they can, and the biggest single source of borrowing has become their frequent flier programs. Shareholders should worry. Read…. Airlines Raised $$$-Billions via Frequent Flier Programs. Delta alone Raised $9 billion via SkyMiles as Collateral. How?

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