Florida’s economy which remains highly dependent of tourism is going to take a major hit thanks to COVID-19. The question now is whether or not the recovery here can be as swift as in other parts of the nation with more diversified economies. That largely depends on how aggressively airlines restore service to Florida after receiving federal bailout funds.

Prior to this current crisis, the “Big four” carriers, Delta, American, Southwest and United carried about 80% of passengers domestically. The rest of the airlines carried only 20% combined. Each of the big four had a similar market share, Southwest being ever so slightly larger than the other three domestically based on passengers carried in 2018.

Many analysts have bemoaned the consolidation in the industry that took place between 2010 and 2015. What ended up happening after all the mergers were huge carriers more or less the same size and a bunch of smaller competitors struggling to stay afloat or make a dent. Antitrust laws seemed to not be enforced on the airline industry, DOJ using that four huge competitors were still around as a justification. This crisis could force another round of consolidation but would that pass antitrust muster? I really have no idea.

Before diving too deeply into this topic, I must inform readers as someone fairly privy to the economics of the airline industry, Florida’s tendency to attract working class-type tourists who look for cheap fares or tour packages already is a deterrent to traditional network carriers.

Planes can be full, but if not enough business travelers are being premium class tickets or at non-refundable economy class tickets, full planes do not mean much. In addition airlines may become more dependent on cargo to break even, a reality much of the industry faced in the 1980’s after deregulation. A full cargo belly of a plane, particularly on long-haul service could justify some city pair flights that otherwise may not be profitable.

Unfortunately business travel and cargo aren’t big commodities for flights to Florida, with the exception of flights to/from Miami. So the rest of Florida could be at a massive disadvantage as airline make decisions on where to scale back. Miami might still be hurt by Delta shrinking as we will discuss shortly.

Let’s look at the airline’s with major Florida operations.

Delta

Delta Airlines has since the late 1980’s, when Eastern Airlines contracted and then collapsed been the primary carrier bringing tourists to Florida. Delta also has a huge frequent flier base in the state.

The Atlanta-based carrier has already stated they’d become “smaller” after the COVID-19 crisis lifts. Already Delta has zeroed flights to India and many European destinations until the fall.

Generally speaking, Delta funnels traffic in this-day-and-age almost exclusively through hubs to Florida, with a secondary reliance on origin & destination (O&D) traffic from the New York & Boston areas. In the past, Delta had lots of direct flights from secondary cities to Orlando, Tampa and Fort Lauderdale but during the 2010’s most of those flights have been pulled down.

Earlier this year Delta began putting in place plans to eventually ramp up Miami into a hub with its joint-venture and equity partners. It is unlikely now this will happen – between joint-ventures and airline’s Delta has taken an equity stake in, Delta serves nine South American and three European destinations nonstop. Linking domestic Delta flights to this partner service would have grown Miami into a bonafide hub or at least a major international gateway similar to how the airline uses Seattle currently. Unfortunately these plans may never come fruition but it must be emphasized Miami is the one place in the state with extensive business travel and cargo demands.

American

American’s Miami hub, its third largest behind Dallas/Fort Worth and Charlotte will likely remain intact but other aspects of the airline’s flying will be pulled down. Hubs in Phoenix and Los Angeles might get smaller and the new Seattle international gateway launched presumably as retaliation for Delta’s Miami plans will be delayed if not scraped. The first major route American announced from Seattle, a flight to Bengaluru, India has been postponed until summer 2021 according to media reports. The flight was due to begin this October.

One caveat which will reappear in discussion of Fort Lauderdale later is that the O&D sector American does cater to in/out of Miami is largely tied to the Cruise industry. Will cruise demand recover? Probably not to previous levels for sometime. So maybe Miami will be trimmed by American slightly.

Orlando gets a lot of American passengers and is one of its largest non-hub stations. I anticipate travel demand to Orlando will not recover for sometime so service levels very well could be impacted.

In 2019, American carried the most passengers to the state of Florida, but much of that was transferring customers through its massive Miami hub.

Southwest

In theory, no airline will be hurt more by a downturn of traffic to Florida than Southwest, the nation’s largest domestic carrier. The theory may hold in this case, but perhaps not. Southwest enjoys a market recognition and penetration in the state so consistently high over the last two decades they might be okay.

Orlando, Tampa and Fort Lauderdale are all among Southwest’s top stations in terms of destinations served. Orlando and Tampa cater primarily to point-to-point traffic dependent on tourism and those visiting friends and relatives (VFR). Whether demand for tourism recovers quickly is anyone’s guess at this point but VFR in areas with the population of Central Florida and the Tampa Bay area will recover immediately after the current lockdown is lifted.

The Fort Lauderdale situation is more complex – Southwest has the usual O&D & VFR traffic using the airport as an alternative to Miami (which is the only major city in the US that Southwest doesn’t serve as the airline has despite enticements from the airport, chosen not cannibalize its large Fort Lauderdale operation by serving Miami), but connecting traffic to Latin America and the Caribbean is critical to the airline’s Fort Lauderdale operation. In addition, funneling passengers to cruise ships at nearby Port Everglades is part of the airline’s Fort Lauderdale success. The 737 MAX safety debacle hurt Southwest’s Fort Lauderdale operation as the airline had been considering using the MAX’s extended range and fuel economy to launch longer thin international routes from the airport. That might still be on the cards if the MAX ever returns to service.

As for other Florida destinations, Fort Myers a primarily O&D airport with a large Southwest presence might be hurt disproportionately. Pensacola and Panama City are also highly dependent on Southwest so any severe downturn for the airline might really impact those markets.

jetBlue

No airline gets higher marks from Floridians than jetBlue. The airline’s service is so beyond what Floridians are accustomed to, many people I work with or am friends with will drive great distances or become incredibly flexible with flight times just to fly them and avoid one of the other carriers. JetBlue has a unique brand and is a widely admired company in this state.

But jetBlue has been a victim recently of intense competition and entered this crisis period, arguably the least healthy major US airline. It’s four primary bases, Boston, New York-JFK, Fort Lauderdale and Orlando are intensely competitive and in each of those cities an airline with either a lower cost structure or intense network advantages have worked to chip away at jetBlue’s market share.

Florida is very important for jetBlue and its positive brand recognition should help the airline. Competitors might be forced to change priorities – for example Delta may not be able to continue its current Boston build-up and if long-haul international travel to places like Europe, the Middle East and India drops, Delta’s advantages at New York-JFK dissipate. Fort Lauderdale might see lessening pressure from Southwest and Spirit.

Unfortunately though jetBlue will face continued pressure and might be a merger target if another round of consolidation in the industry takes place. But for the sake of the consumers and maintain some sort of quality air travel it would be best if jetBlue survived as an independent carrier.

Spirit

No airline engenders more passion, most of it negative than Spirit (though American seems to be a close second). Spirit’s business model appeals to people who may not otherwise be able to fly or afford a vacation. Particularly for Florida, this is critical.

Spirit’s main hub has been Fort Lauderdale since the early 2000’s but Orlando has become an increasingly important city in its network. In fact, Spirit’s two biggest bases outside Fort Lauderdale are now Las Vegas and Orlando. This gives an idea of the sort of traveler Spirit is looking to attract.

The airline has the youngest and most fuel efficient fleet of jets in the country. Part of Spirit’s business model not only revolves around ala-carte pricing and a lower cost workforce, but it also depends on newer planes that are more fuel efficient and thus burn less gas. With oil prices plummeting, this cost advantage Spirit had over its competitors could disappear at least for a time.

So will Spirit be able to get those bargain basement travelers again to come to Florida given likely diminishing demand for cruises, amusement parks and other Florida trappings? It’s tough to tell.

Frontier

Frontier has basically copied Spirit’s business model. Orlando is the airline’s second biggest station behind it’s home of Denver and this month Miami was to become a new base with flights to Latin America and the Caribbean.

The airline has differed from Spirit in that it has fewer new planes and has taken a scatter-gun approach to its route network. No telling what decisions they will make regarding Florida.

Allegiant

Allegiant sells travel packages and cheap fares to secondary airports in Florida- Sanford (instead of Orlando), St Petersburg (instead of Tampa), Punta Gorda (instead of Fort Myers), Sarasota/Bradenton and Destin/Fort Walton Beach. They also link Fort Lauderdale with a few second-tier cities not served by Spirit, Southwest and jetBlue. In recent years they’ve added similar services from Jacksonville and West Palm Beach.

If this airline’s service levels drop we will be able to predict about whether tourism to Florida is recovering because Allegiant flies from second and third-tier cities to the state. For example you won’t get a flight from New York, Boston, Atlanta or Los Angeles to Florida on this airline but will from Peoria, Lexington, South Bend, Des Moines or Asheville.

United

United’s traditional weakness in Florida begs the question if this is the opportunity to merge with a carrier like jetBlue that would give them a larger presence in the state. United only serves hubs and focus cities from Florida destinations.