When will demand return?

May 15, 2020

When will demand for air travel return? This is the central question that airline executives and investors globally want to know.  While no crystal ball exists, Volantio's SmartAlerts data provides one leading indicator of future trends which may be helpful to airlines as they monitor signs of recovery.

As a bit of context - SmartAlerts works by enabling an airline's customer to indicate travel intent - often weeks or months before actual purchase.  A more detailed explanation can be found below or by clicking here.

The analysis below presents macro level data, comparing transactions and weekly new alerts over the first 9 weeks of this year. What does the data show?

1)  Weekly sales transactions hold relatively constant over the first 9 weeks of the year

Indexed to the first week of the year, weekly transactions in week 9 are almost equal to those in week 1.  An airline planner looking at this data might not see anything out of the ordinary.

2)  However . . . alerts data tells a different story over the same period

There was a STEADY and SUSTAINED week over week decline in new alerts, starting around Week 2 of the year.  In fact, the new alerts set in Week 9 were only ~70% of those set in week 1, while transactions were almost equal in Week 9 to those from Week 1.

3)  Which presaged what ultimately happened in the following weeks . . . .

Here we see the bottom fall out, starting after week 9.  Movements in transactions typically lag those in new alerts by 1-2 weeks providing a useful additional signal to airlines regarding consumer sentiment. Ultimately the lines converge, but once again the alerts data reaches the bottom first.

Why might this be the case?  SmartAlerts is an engagement tool for customers who are interested in traveling but not yet ready to transact.  As such, it's a strong tool to gauge customer sentiment ahead of transaction activity.

Airlines will be monitoring multiple signals to understand when demand will resume. In the absence of a specific rebound date (which is impossible to know), SmartAlerts is one additional tool to help understand trends.  Please contact us if you would like to learn more.  A video which explains a bit further how SmartAlerts works can be found by clicking here.