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Opinion
Brooke Sutherland

The Customer Demand Is There. The Supply Still Isn't.

Whether it’s airlines, railroads or the manufacturing industry, demand isn’t yet a problem. Service is another issue.

At CSX, labor is the biggest limitation.

At CSX, labor is the biggest limitation.

Photographer: Luke Sharrett/Bloomberg

There’s a famous scene from “Seinfeld” in which the lead character has a reservation for a rental car but the agency says it has run out of the kind of vehicle he booked. “You know how to take the reservation, you just don’t know how to hold the reservation,” Jerry Seinfeld laments. “That’s really the most important part of the reservation: the holding. Anybody can just take them.” There’s a similar dynamic playing out across the US transportation sector today. 

Passengers have proved more than willing to pay high fares for air travel, but the industry is cutting flights to improve reliability amid widespread complaints about delays and cancellations. United Airlines Holdings Inc. said late Wednesday that it would increase capacity next year to no more than 8% above 2019 levels, a significant adjustment relative to earlier forecasts for as much as 20% growth. The airline will offer 13% fewer seats this year than it did pre-pandemic. “We’re still probably in the sixth or seventh inning of the Covid recovery,” United Chief Executive Officer Scott Kirby said on an earnings call on Thursday. For now “the Covid recovery trend is at least canceling out — arguably exceeding — the economic headwinds.” But despite that strong demand, 8% growth next year is the most that it’s “physically possible for us to fly” because of limitations at regional partners, a slower recovery for long-haul travel out of Asia, delays in aircraft deliveries and broad infrastructure problems across the industry, Kirby said. Pilot recruitment, retention and training challenges are other “real constraints,” Chief Commercial Officer Andrew Nocella said.