January 2024Travel, Logistics & Infrastructure PracticeHow airlines can handle busier summers—and comparatively quiet wintersAir travel is becoming more seasonal. What steps can airlines take to adapt to the new shape of demand?This article is a collaborative effort by Jaap Bouwer, Ludwig Hausmann, Nina Lind, Christophe Verstreken, and Stavros Xanthopoulos, representing views from McKinsey’s Travel, Logistics & Infrastructure Practice.The shape of passenger demand for air travel is shifting, as leisure travel’s increasing share of the total travel market is creating more pronounced summer traffic peaks. This demand shift is generating a new set of complications for airlines—which will require new solutions.Prior to the disruption caused by the COVID-19 pandemic, leisure travel grew at a faster pace than business travel in many countries and regions. Globally, from 2010 to 2019, the compound annual growth rate for leisure air trips was 6.6 percent, in contrast to only 3.3 percent for business air trips. This growth gap has widened further in some places during air travel’s postpandemic recovery. As travel demand continues to ramp back up from its 2020 standstill, leisure traffic—which is the larger category—has recovered more quickly than business traffic in some major regions, including the United States (Exhibit 1).The divergence between leisure and business travel has had a significant effect on the nature of monthly passenger demand. That’s because leisure travel is linked far more closely to the seasons—with spikes and lulls corresponding with the Northern Hemisphere’s summer and winter, respectively. (The end-of-year holiday season does not produce enough leisure travel demand to offset the winter lows.) This evolution in the shape of demand is creating sharper seasonality patterns for airlines (Exhibit 2).Seasonality is most pronounced in Europe, where leisure travel is especially concentrated in the summer months. North American vacationers, by contrast, can take shorter flights to warm, popular beach destinations all year round, which tends to spread leisure travel more diffusely across the calendar. In Asia–Pacific, 2023 results were partially affected by the region’s different pandemic Exhibit 1Web <2023>
Exhibit <1> of <4>US airline tickets sold, by agency type, % of 2019 yearly average1 Agencies that primarily focus on leisure travel and do not primarily execute sales through websites or mobile applications. ²Includes corporate and leisure agencies. Also includes data from online travel agencies, which are not independently shown. Does not include direct sales through airline websites. ³Agencies that primarily focus on managed corporate or government travel. ⁴Based on data from March to Dec 2020. ⁵Oct 2023 YTD average.Source: Airlines Reporting CorporationBusiness travel demand for US airlines still lags behind leis...
